Colleges which set up high-profile franchise deals are the biggest losers in this year's funding settlement for colleges, published this week.
Only one in every seven colleges will receive more cash from September in the tightest budget round in FE for years. But the belts are tightening most at most rapidly-expanding colleges who have taken advantage of deals with the private sector.
Biggest losers include Halton College, Cheshire, East Durham Community College, St Austell College, Stafford College, St John Rigby Sixth Form, Bilston Community College and Bishop Auckland College, which will all lose more than 10 per cent of their budget.
All mushroomed last year, taking on thousands of new students in on-the-job training or on community courses. But ministers said growth was getting out of hand and put the brake on expansion by capping previously unlimited funds for growth in January.
The problems estimated to mean a loss of 250,000 places from September, stems from the Conservatives' decision to end so-called demand-led funding,which provided an unlimited budget to fund college expansion.
Further Education Funding Council chief executive Professor David Melville said: "This has been an exceptionally difficult funding round. The council receives a fixed sum to allocate to colleges. It is not therefore able to make up for the end of the growth money which has been available for the last few years."
But big losers said the cuts would put an end to innovative courses, destroy hard-won relationships with business and hinder change in the future.
Martin Jenkins, Halton College principal, said contracts with business would have to end and 14, 000 students could be denied places.
He said: "Some of our courses will have to cease because we are not getting the money for them. It will curtail what we have been doing to a large extent."
He said the sudden loss of cash would do great harm to relations with businesses, some of which would not come back for training in the future.
He said: "We believe we were at the stage in FE for work-based training to take off. That will be hindered by this and it will not do the reputation of colleges any good."
Joanna Tait, principal of Bishop Auckland College, said 5,000 places would be lost in franchised courses. She was hoping for cash to be made available in Chancellor Gordon Brown's emergency Budget, and warned that cuts would hit efforts to widen participation in education.
She said: "These are courses for adult students to give them their first taste of FE. There are so many people who have been excluded and what they need is help to put their toe in the water. We will be cautious in the future about things because we have been left with a most embarrassing business situation to sort out."