A massive shortfall in sixth-form funding has left hundreds of schools in a desperate search for cash.
The Learning and Skills Council wrote to schools this week informing them of the money they would receive for sixth-form funding for the next academic year - months after most schools had set their budgets for the current financial year.
The result is that thousands of sixth-form students are not funded.
Graeme Hornsby, assistant principal at Lutterworth College, Leicestershire, said his 14-to-19 school will be Pounds 200,000 short.
He said: "On March 2 we received a final allocation from the local LSC office, which was for Pounds 3.5 million. Based on that, we made decisions about staffing and had to make some staff redundant, which we were able to achieve through voluntary redundancies, a process that is ongoing.
"Now we have been told that our total funding is going to be Pounds 3.3m. We have 750 students and the LSC has said they will fund us for 722, but we have more than 800 applicants for places in September."
Geoff Barton, head of King Edward VI school, Bury St Edmunds, said: "We had a letter a month ago with indicative figures. Then on Tuesday I was told I would get Pounds 89,000 less on a budget of around Pounds 1.5m. It smacks of incompetence. I will have to ask the governors to approve the budget as it was on Monday, and then find further resources from the local authority, Department for Children, Schools and Families and LSC."
John Dunford, general secretary of the Association of School and College Leaders, has written to the chancellor, Alistair Darling, saying there is "considerable anger" at the settlement.
The union has called for an urgent review of the decision.
The ASCL says that the settlement means 4 per cent of current school sixth-formers and 2 per cent of current college sixth-formers are not funded.
School and college leaders were particularly angered that the shortfall effectively penalises them for responding to the Government's moves to increase participation.
"I would strongly urge the Treasury to review the 2009-10 funding for 16 to 18-year-olds. At a very minimum, this must fully fund the learner numbers currently in schools and colleges and examine how, for subsequent years, it can best fund all 16-18 learners.
FE Focus, page 4.