The Smaller Colleges Federation is to put its case for changes, possibly to a banded funding system, to balance out the advantages of economies of scale.

However, early indications of the progress of the Fundamental Review Group, the committee set up to re-examine the FE funding principles, suggest that radical change has already been ruled out.

The group, which held its second meeting this week, is scheduled to meet only once more before issuing a paper at Christmas containing its recommended changes.

The brief timescale has prompted suspicions that the group will propose little more than tinkering with the formula. Committee sources confirmed that “radically different approaches” were unlikely to be recommended.

The consultation paper would suggest that the funding mechanism and moves to level the playing field between high- and low-funded colleges should remain unchanged, the source said. But it was likely to propose a system of weightings in which colleges falling into a range of categories such as rural or inner-city locations could claim extra cash.

Another committee insider said: “We are looking at funding methodology not funding policy.” Many colleges would “want more than could be expected”.

The Smaller Colleges Federation is preparing a paper setting out the disadvantages it claims affect small institutions. It suggests they lose out because of a lack of economies of scale and that they have been hit hard by the FEFC’s process of converging funding levels.

The federation, representing 15, mainly rural, general FE colleges, stresses it does not want to create division in the sector, and suggests greater fairness can be achieved without fundamental changes to the funding methodology.

It proposes dividing the core part of college funding into bands, with institutions funded at the same level for a certain base volume of activity, with the rate gradually decreasing above that.