Colleges face a tougher squeeze than ever as a range of Government departments and quangos say they may pull the plug on training contracts as a result of Government cuts.
The 1996-97 Further Education Funding Council cash allocations for colleges were released this week. They show few colleges gaining significantly and 151 facing cuts. The big winners are those most efficient in raising private cash. Others, many in more deprived areas, say expansion is at a halt.
The effective cap on growth is made worse as other public- service bodies prepare to cut contracts to colleges and private trainers. This year may also be the crucial one for mergers. Sir William Stubbs, FEFC chief executive, told governors this week he was surprised not to see more colleges considering mergers.
A survey of 45 colleges and a third of prisons by the college lecturers' union NATFHE shows that 300 prison education jobs are to go. The Benefits Agency is reconsidering contracts following a Pounds 27 million cut. The Ministry of Defence has written to colleges to withdraw invitations to tender for some retraining programmes.
Inquiries by the Association for Colleges also reveal two successive years of cuts in European Social Fund cash for colleges. AFC policy director John Brennan, said: "There appears to be a pattern emerging, with the public sector being squeezed generally and colleges being forced to look elsewhere for growth."
Many principals say the role of the FEFC is fast becoming that of "pump-priming agency" as institutions are forced to look for more business from the private sector.
Colleges are divided over how beneficial this is. Martin Jenkins, principal of Halton College, Cheshire is one of a significant minority who say colleges must rethink their entire strategy.
"It's a question of Government money also being used to pump prime. They cannot provide all the funding we need," he said. His college is one of the biggest winners with a 17.9 per cent increase.
The college had applied to the FEFC for a 120 per cent increase. "This is not because we expected to get that amount but it was important to show just how big the market is."
Halton hit the headlines last year with extraordinary collaborative deals with the private sector, including the national retraining of 9,500 Tesco staff. Almost overnight, its balance shifted from a dependence on the public purse. More than 60 per cent of its revenue is from industry.
Other colleges insisted that despite this, Halton was using public cash for private training. But the accusations did not stick after an FEFC inquiry into college franchising programmes. Roger Maclure, FEFC finance director, told The TES it would not be known for a while how well Halton had reduced costs.
"But it could be that collaborative provision will become the provision of choice in future, using someone else's premises, and up-to-date equipment with no charge on the public purse. It also helps overcome the reluctance of employees to get qualifications."
Other principals were more cautious about the potential for private-sector growth. David Bunch, principal of North Derbyshire College, said: "A lot of colleges are restricted because of their social catchment area and other factors. We are in danger of ending up with very big winners and losers. "
His college, which has also been a big franchise operator is provisionally offered a 12 per cent rise - one-third of what it asked for - in the 1996-97 allocations.
Many college budgets have been cut by up to 10 per cent. Though this is often in line with the cash requested, as in North Tyneside, several principals said a period of contraction had been forced on them.
Following Chancellor Kenneth Clarke's tough November budget, colleges were pledged a 3.4 per cent increase. But that has dropped to 1.6 per cent because of a 30.8 per cent cut in capital spending. This must fund a 5 per cent increase in student numbers.