The association also commends the funding council for its first moves towards sweeping away the highly criticised funding methodology in what it believes is “a step-change in funding arrangements to establish a more forward-looking and more transparent formula”.

But it expressed surprise at the huge variations in grant increases. Fourteen colleges will receive the minimum of 2 per cent for the academic year beginning in August, while James Watt in Greenock gets 29.1 per cent (an increase partly inflated by its new Kilwinning campus in North Ayrshire). Three colleges have been given just over 16 per cent more, while others are on rises of from 3 per cent to 15 per cent.

Bob Kay, the ASC’s chairman, says the colleges receiving no more than 2 per cent extra are effectively getting no increase at all in real terms despite the requirement for additional teaching activity and growth in the coming year.

These colleges will receive pound;7 million in “transitional relief”, of which pound;3 million will come from other colleges. The colleges most dependent on this safety net will have to agree recovery plans with the council.

Mr Kay commented: “It is worrying that so many colleges have been put in the position, yet again, of having to prepare recovery plans. In time the new funding formula will give a more reliable basis for colleges to plan ahead. In the short term, however, 14 colleges will be in a very tight position to achieve financial health and to reward staff adequately.”

Stevenson in Edinburgh and Langside in Glasgow are having to rely to the greatest extent on transitional support, pound;2.2 million and pound;1.4 million.

Ray Harris, Stevenson’s principal, told staff: “The disappointing news is that not only are we the biggest losers but the new method is fairer than the previous one.” His recovery plan will be based on “growth, innovative change and improved efficiency”.

Graeme Hyslop, principal at Langside, said the collee’s prospects would have been even worse under the old funding model, which allocated funds retrospectively based on student numbers from previous years. Langside has been concentrating in the past year on balancing its budget, which meant a decline in student activity.

Mr Hyslop welcomed the move to “real time” funding which will reward colleges for delivering agreed levels of activity, based on future student targets not previous numbers. He promised that any redundancies would be voluntary. “The emphasis will be on efficiency not job losses.”

The funding council says transitional support is necessary while it moves from one system of awarding grants to another. The main reasons for large decreases in funding are non-delivery of previously funded levels of activity and non collection of fee income. The council still has to make changes to the methodology, including the grant weightings given to different subjects and the costs of further and higher education courses in colleges.

It warns that there may be “a further redistribution of resources between colleges in 2001-02” but adds that “there should be no presumption that transitional relief will be extended beyond the first year”. It will decide “in the light of circumstances” whether the support should continue.

The increasing number of conditions being attached to grants (see panel) is also worrying the ASC. Tom Kelly, its chief officer, contrasts FE’s “onerous funding arrangements” with those for universities. “The higher education institutions are simply funded to provide places while colleges are funded to provide activity,” Mr Kelly said. “There are too many bells and tweaks within FE funding and we believe those things which we all agree are desirable, such as widening access and ensuring high standards, can be delivered without them.”

But he predicted that the fundamental difficulty with FE funding would not disappear entirely even after the methodology is fully revamped. “It is not what a college does in attracting funding that will matter but what it does in relation to activity and growth in the sector as a whole. That will still continue to create planning headaches for colleges and make year-on-year decisions on funding unpredictable.”