New research suggests that as much as £2.6 billion could be cut from sixth-form and further education colleges under the Government’s spending plans.

Unprotected government departments have been asked to model how they would cope with 25 per cent and 40 per cent budget cuts. According to analysis by the House of Commons library, released by the Labour party, this would equate to £1.6 billion or £2.6 billion respectively for FE and sixth-form colleges in 16-19 funding alone.

Colleges have already faced cuts to the adult skills budget  in February (11 per cent) and again in July (a further 3.9 per cent). A statement issued by Labour said this had already led to FE providers dropping courses, increasing class sizes and cutting staff. It added that even the projected £1.6 billion cuts would equate to the annual budget of four out of every 10 colleges.

But a source close to education secretary Nicky Morgan dismissed the calculations as “back-of-a-fag-packet nonsense.”

Labour’s shadow education secretary Lucy Powell said:  “It is simply not possible to build a 21st century economy on falling investment in education. Yet this government is putting post-16 education on a cliff edge, harming opportunities for the next generation and holding our young people and our country back.”

Martin Doel, chief executive of the Association of Colleges, said college budgets “have been decimated in the last five years and the sector, as innovative and flexible as it is, simply cannot take more cuts”. “Further swingeing cuts would irrevocably damage the country’s economic prospects, the skills development of our young people, the ability of colleges to offer apprenticeships and the opportunities for adults who want to retrain,” he added.

David Batten, principal of Barrow-in-Furness Sixth Form College, said: “We have made many efficiency savings already; we have restructured management, increased workloads, cut non-pays costs, especially energy and have had to say goodbye to many good colleagues, but we are getting to the point where the funding available for sixth-form students is simply not enough to offer a good education to students and to keep a small sixth form college running.”

A spokesperson for the Department for Education said: “We have protected the schools budget and ended the unfair difference between post-16 schools and colleges by funding them per student, rather than discriminating between qualifications. We have [also] provided sufficient funds for every full-time student to do a full timetable of courses regardless of institution - and increased support for those who successfully study four or more A-levels and large TechBacc programmes.”