Department for Education and Employment figures showed 37 of England’s 81 TECs registered a loss in 1994-95. The sector made a Pounds 2.3 million surplus overall, dramatically down on previous years.

But Chris Humphries, director of policy and strategy for the TEC National Council, insisted no TECs were at risk. The losses reflected spending of previous years’ reserves, he said.

Evidence of the squeeze on TECs has renewed concern sparked by the collapse of South Thames TEC in December 1994 with debts of Pounds 10 million.

Labour called latest figures “devastating”, claiming budget cuts jeopardise TECs’ survival. TECs said they were under pressure to spend reserves after being accused of hoarding cash.