One of Scotland’s longest serving and respected further education principals has launched a blistering attack on the Government’s “Camelot-style” funding. The Scottish Office meanwhile admits that, while its funding model is not perfect, it is the start to a series of changes which will minimise the “volatility” in the system.

But Jim Neil, the principal of Dumfries and Galloway College, says chaos is now the main characteristic. “It is becoming more akin to a national lottery run by the Camelot organisation than anything resembling rational planning,” Mr Neil told The TES Scotland. He predicts many colleges could follow Clydebank into crisis, having to be bailed out by the Scottish Office or fold.

The grant for Dumfries and Galloway College has been cut by the maximum 6 per cent, representing a pound;289,900 reduction which leaves Scottish Office support of pound;4.5 million. The college faces a pound;150,000 deficit, assuming no pay increases or allowances for inflation.

Mr Neil said: “Bluntly, the college does not have the finance to meet its commitments. Our grant is below the level at which a rural college like ours can sustain the curriculum. We are not talking about cutting out courses this year but, if unbridled growth continues against declining resources, that could be the prospect next year.”

Dumfries and Galloway does have reserves of pound;600,000, which many colleges do not. But they are earmarked for what the college regards as essential developments which, ironically, are in line with Government policy. These include widening access by establishing FE in the Newton Stewart area, investing in IT and upgrading buildings.

The college’s board met on Monday and decided these projects should go ahead, but funded for next year only. “We are faced with the situation where we have no clear idea what our own financial position or that of the sector as a whole will be even in the next calendar year,” Mr Neil said.

Dumfries and Galloway is one of 12 colleges which have been safety-netted, given additional support to prevent grant falling by more than 6 per cent. Six other colleges have been affected in this way for the first time; five will remain in the net while six have escaped.

The Scottish Office has bowed to pressure from the larger colleges and funded these “vulnerable” colleges with pound;4.2 million taken from the grant for all the others rather than just the major gainers. This has pacified colleges like James Watt in Greenock, which has contributed pound;1.6 million to the safety net over the past two years. But the consequential 15.3 per cent rise in its grant has simply served to confirm the “volatility” which the Scottish Office is pledged to reduce.

Mr Neil said his college would be making strenuous efforts to improve its fortunes. “But I don’t know the likely sector growth against which I have to compete. It may be only 5 per cent in which case I might grow faster and get out of the net, but it might be 10 per cent in which case I might not. We are really just thrashing about in the darkness.”

At the nub of the problem is the Scottish Office funding model based on student activity. This is calculated according to the number of 40-hour modular study programmes, weighted to take account of differing costs of courses and students (engineering and special needs, for example). The “weighted student units of measurement” (WSUMS) for Dumfries and Galloway were pound;172.85 each in 1994-5, the first year of incorporation, but now stand at pound;130.15.

The picture is complicated, however, by the nature of FE. Student data on which 1998-99 grants are based is from the 1996-97 academic year. The fact that there are so many part-time students and short courses in FE, with students coming and going in the course of the year, means the Scottish Office has to wait until the end of the academic year to get an accurate picture of student activity. The information for 1996-97, for example, was not fully collated until last November.

The Scottish Office believes it has made a start on improvements by moving to “managed growth”. It has developed a complex model of a “broad band-width” to smooth out peaks and troughs in year-on-year student growth. This means that no increase or decrease in student activity in any one college would be funded beyond 6.5 per cent above or below the average for FE as a whole - which was 10.6 per cent in 1996-97. The maximum growth to be funded, in the future, will be 17.1 per cent and the minimum 4.1 per cent.

The original proposal from the Scottish Office’s funding review group that student activity data should be averaged over two years was dropped because it would have produced “too many anomalies”. Averaging would have included the extremes of activity; the broad band-width approach “chops off” the extremes.

“This is an attempt to even out the unfairnesses whereby colleges showing average growth are effectively paying for the performance of others at both ends of the spectrum,” the Scottish Office states. “Our intention is that the broad band should become narrower.”

Officials also hope that the gradual withering of the “fixed-cost” element in grant will act as a spur to mergers. This gave each college, irrespective of its size, pound;250,000 which is being reduced to pound;200,000 in the coming year as the first stage towards being phased out. “There are already signs that some colleges are reading the runes correctly,” the Scottish Office believes.

The Government hopes to publish its strategic framework for FE in the spring. This will include an examination of co-operative approaches, from collaboration to joint ventures to a federal structure to full merger, in line with the Education Minister’s wish to eradicate “needless competition” between colleges.

The 10 Glasgow colleges are likely to figure prominently in such a review, despite Mr Wilson’s recent rejection for specific reasons of the planned merger between Glasgow College of Building and Printing and Glasgow College of Food Technology.

Mr Neil remains unimpressed. “We are asked to draw up three-year development plans which are then invalidated by funding decisions announced four weeks before the start of the financial year. Only someone close to the Almighty could plan on such a basis.”