Providers say measures are needed urgently to avoid redundancies and bankruptcy after the decision by the Learning and Skills Council to freeze Train to Gain numbers in April amid fears that demand would outstrip the available budget for 2009-10.
Calls by the Association of Learning Providers to introduce flexibilities such as shifting money from the adult learner responsive budget to the employer-responsive Train to Gain budget are said to have fallen on deaf ears.
The ALP said the Government has decided that only providers already in receipt of adult-responsive funding, mainly colleges, can temporarily move such funds into their Train to Gain budgets.
"Despite non-stop, open and frank discussions with the LSC during the last three months, no progress has been made," Graham Hoyle, ALP's chief executive, told members in the association's latest newsletter.
"To offer this facility to well under half of all Train to Gain providers will skew the market in a totally unacceptable way, dramatically disadvantaging most providers and all their customers."
The ALP is gathering evidence of providers in trouble and intends to present examples to government to back its case.
The Department for Business Innovation and Skills said that while the Train to Gain budget would rise to more than pound;1 billion in 2010-11, demand remained strong in 2009-10.
A spokesperson said it was therefore important to manage the finite budget to ensure continued delivery within the available budget.