Principals are considering a three-year pay freeze and widespread course closures as part of their plans to tackle anticipated spending cuts of 25 per cent.
Although under no obligation as incorporated businesses to adhere to the two-year public-sector pay freeze announced by Chancellor George Osborne in Tuesday's emergency Budget, college leaders say they will be left with few options in the face of swingeing cuts up to 2015.
Principals have already effectively frozen pay for 201011, sweetening it with a 0.2 per cent one-off payment offer. So Mr Osborne's pay freeze, introduced in 201112, means that it could be 201314 before FE staff get their next rise.
A survey published this week by Capita Further and Higher Education revealed that 58 per cent of colleges were planning a joint approach of reducing expenditure and maximising income. A quarter said that that they would focus soley on reducing staffing and resources costs.
Martin Doel, chief executive of the Association of Colleges (AoC), said: "Colleges are self-governing, so are not directly affected by the two-year public-sector pay freeze, but this is a new factor in the discussions that AoC is currently holding with the further education trade unions."
The AoC has calculated that Mr Osborne's decision to increase VAT to 20 per cent from January could cost colleges an extra pound;45 million a year. Unlike schools, colleges cannot reclaim VAT on purchases.
Lynne Sedgmore, executive director of the 157 Group of colleges, said: "The size of the cuts facing the sector will leave colleges little scope for pay awards over the next two years. And, if the average cut of 25 per cent falls on FE colleges, cutting courses will be inevitable."
Mark Dawe, principal of Oaklands College in Hertfordshire, said: "While colleges are outside direct public-sector control, the majority of their funding is from Government and it will be hard for colleges to do anything other than follow the requirement for the broader public sector."
Sally Hunt, general secretary of the University and College Union (UCU), said: "UCU will resist any attempts to impose arbitrary pay limits on members who are already reeling from the impact of massive cuts in jobs and funding for the most vulnerable."
Seven unions have formed the United for Education coalition to call for all post-16 education to be protected from cuts, and a day of action on Monday saw demonstrations at around 70 institutions, including a strike at City College Birmingham.
The Government has also axed the pound;450 million Young Person's Guarantee of work or training.
Exactly how Mr Osborne's 25 per cent cut in public-sector spending will impact on further education and training will be revealed in the Government's spending review on October 20, which will set out departmental budgets from 201112 to 201415. Mr Osborne has opened a public consultation on ways to reduce spending and the most promising ideas will feed into the spending review.
Editorial, page 6.