This was revealed last week as the Scottish Office began a round of consultations on future funding. Principals who have been involved with the Scottish Office group reviewing the funding methodology welcomed the proposals.

Jim Neil, principal of Dumfries and Galloway College, described them as an attempt “to inject stability into FE colleges instead of the helter-skelter chase for uncontrolled growth against a background of diminishing resources. Many of us saw disaster looming for the system.”

Janet Lowe, principal of Lauder College, believes the changes represent “a significant step in the right direction in which we move to managed growth which is to be funded but with no penalties for a failure to grow”.

While the shake-up in the FE funding formula is intended to ease the pressures of relentless growth, the sector insists that redistributing money will not solve the problem if the system remains under-funded.

Tom Kelly, chief officer for the Association of Scottish Colleges, said: “You can only solve funding by formula if there is enough in the pot to begin with. Unfortunately the outcome of the Scottish Office review looks like an attempt to squeeze pips out of a seedless orange. Using the formula to give strategic direction and to reflect student achievement might simply be asking it to do too much.”

Mr Neil agrees that the proposals “do not invalidate the need for more money for FE. But they will go some way towards stopping the rot. ” The group, chaired by Ed Weeple, head of lifelong learning at the Scottish Office, was concerned purely with improvements to the distribution of FE funding not the total kitty.

Mr Kelly, who was also on the review group, is concerned some students could be affected if funding is linked to attainment of vocational qualifications.

“What about those who study for non-vocational qualifications and for whom FE colleges are the first point of contact if they want to resume their education or get back into habits of study? We run the risk of excluding them, creating barriers to lifelong learning and wider access. The system must be student-centred and not entirely qualificat ions-driven.”

Ms Lowe points out, however, that the group suggests core funding should not be less than 94 per cent of the total, reflecting overall student activity as at present.

This means that the bulk of college funds, including support for non-vocational courses, would still be determined by “student units of measurement”, each equivalent to 40 hours of student course time, weighted to take account of different course costs - the so-called “weighted SUMs” or WSUMS. Colleges are presently rewarded for their success in recruiting and retaining students but there is nothing to reflect a quality assessment.

The major change which the review group proposes is that the remaining 6 per cent or so should follow student achievement and “strategic objectives” for FE set by the Government. The latter would include desirable developments but also include an emergency fund for colleges in financial difficulty.

“Student achievement will therefore account for a very small proportion of colleges’ overall grant, and people’s excitement should be contained by that fact,” Ms Lowe said. “It’s a toe in the water and represents a proxy for quality.” She believes that “non-recognised qualifications” could in any case be accredited and converted into certificated work.

There was 42 per cent growth in students on non-vocational courses between 1994 and 1996, almost a quarter of all FE students, which has alarmed the Scottish Office. It points out that these courses are not funded in England and Wales. Mr Neil said that, if funding ceased, students would have to be charged or money transferred from elsewhere.

But the ASC’s major concern is overall funding against a background in which colleges will receive #163;5 million less in Government grant next year. The total of #163;286 million for 1998-99 (on present spending plans) is not free to be distributed: #163;45 million is earmarked for student bursaries and up to #163;15 million committed to capital programmes, college projects for the University of the Highlands and Islands and other “minor grants” such as support for the Scottish Further Education Unit.

The remaining #163;226 million has to go on property costs, student fee waivers and certain fixed costs as well as the new strategic and achievement funds before anything can be distributed for basic student activity. Ms Lowe conceded that money should be found for the two additional funds. “Otherwise there will be considerable irritation, ” she said.

Mr Kelly said the Scottish Office continued to refuse funding the WSUMS at a particular price, which meant the problems of unpredictability and instability had not been addressed. He added: “The methodology contrasts with that of the Scottish Higher Education Funding Council. It is 90 per cent predictable, although there is some uncertainty about what the Government will provide and about the balance between teaching and research. The point is that the uncertainty is at the margins in HE: in FE the uncertainty is at the core.”

The Scottish Office says it cannot guarantee SUM prices in advance because the amount for FE depends on Government spending levels. Ms Lowe said the revised formula offered “stability which will fall short of certainty but which has enough in it for colleges to be able to plan ahead within certain parameters.”

Mr Kelly recognised that the proposals represented “a valiant attempt to exit from a system designed to encourage growth and efficiency. Perhaps the present formula has done its job too well. But you cannot turn the corner without an overall increase in funding”