A total payment of Pounds 4.5 million to cover higher staff costs, was confirmed in a letter from David Melville, FEFC chief executive to colleges this week. A special London costs working group set up by the FEFC had recommended Pounds 9m. But a full review of factors such as labour costs has been promised by the council in time for the 1999 funding round.
The council has also moved closer to eliminating differences between high and low-spending colleges in the new funding round, with the worst-off colleges receiving up to Pounds 1m extra in 1998-99.
But most colleges will be worse off after inflation as the efficiency squeeze set in train by the Tories leaves the sector Pounds 39m poorer.
Pounds 50m has been earmarked for policies aimed at widening participation, as recommended in the report from Baroness Helena Kennedy last year.