THE Government's learning and skills chief has called for a loosening of the bureaucratic grip on further education finances.
John Harwood, chief executive of the Learning and Skills Council, says a review is needed to improve the Standards Fund, which the Government uses for initiatives ranging from staff training to the creation of centres of vocational excellence.
The sector should be allowed more flexibility in the way it allocates the money, he said. "There is anxiety about the way criteria operate in some parts of the Standards Fund. But there is a bigger issue, not for next year, but in the next few years. We do need to think about what we are trying to achieve with the fund. There is an argument for saying that if we are to improve the Standards Fund, then we need to do it in a way that is appropriate for particular institutions.
"We could spend more of the Standards Fund to support agreed development plans with colleges and the local learning and skills councils, with agreed milestones."
He said it should not be a "one-off subsidy programme" to tackle problems which the institution had previously failed to address.
The LSC and ministers are being strongly lobbied by college employer groups who say that centralised "pots" such as the Standards Fund place a stranglehold on planning.
Many principals have complained that the fund has become a "tool to paper over the cracks" where core funding has failed. Also, they are increasingly offered cash in areas where they don't need it while being denied funds elsewhere.
David Gibson, chief executive of the Association of Colleges, said: "When extra money is put into higher education it is left to the discretion of the vice-chancellors and their councils. In colleges too, it is the people locally who know best how to use it effectively and efficiently."
A study by the AOC shows that there are now 73 different funding channels on which colleges draw. Many, such as the Standards Fund and New Opportunities Fund, are targeted at specific initiatives. "This creates a huge bureaucracy and makes it difficult for managers to manage," Mr Gibson said.
In response to college leaders' criticisms, the Government made it clear that the Standards Fund was here to stay. But this did not rule out a longer-term review along the lines proposed by Mr Harwood.
A government spokesman said a comprehensive evaluation of the effectiveness of the fund was underway to ensure that it was most effectively targeted. The fund was rising from pound;35 million in 1999 to pound;170m in 2003.
The Government's centralised approach came in for criticism from the Tories during an opposition debate on post-16 funding yesterday.
Tim Boswell, former Tory further and higher education minister, pointed to the growing gap in funding of schools and colleges, despite pound;1 billion extra cash for colleges over the next three years. "Such money as they are getting is conditional and is less overall than schools are getting."
Sixth-form colleges are protesting over the failure of ministers to address the problems. Sue Whitham, head of the Sixth Form Colleges Employers Forum, said: "The gap is getting bigger as sixth-form funding is protected in real terms for the next two years, while we have rises of 1 per cent less than inflation."