Money-spinning change attacked for spreading FE Lite
Lambeth College principal Adrian Perry said the Further Education Funding Council had produced a system "that is costly, over-complex, lacks planning and has lost the confidence of both its users in colleges and paymasters in the government.
"A good funding system should be effective, predictable, cheap and fair between institutions and sectors. It should support good academic practice and be hard to fiddle, as well as offering a degree of stability and links to social and economic goals," added Mr Perry, who has advised both the Tories and Labour on further education policy. "The current system fails almost all these tests."
Mr Perry's attack focuses on the way courses and other work in colleges are broken down into so-called units - with a tariff determining how many units, and therefore how much cash, each course attracts.
He called for a new system based on a standard rate for each full-time equivalent student, with weightings based on different courses and social conditions in each area, and a performance payment for expansion or links with industry and other initiatives to be agreed regionally.
Mr Perry's proposals are outlined in a discussion paper criticising the current funding system, which has been sent to the main political parties' education policymakers.
He said: "We seem to have arrived at a funding system that has the bad points of planning (bureaucracy and constraint) and of the market (uncertainty, duplication and social inequality), without the advantages of either. Continuing with it would throw good money after bad."
Mr Perry accused colleges of "tariff farming" - increasing their budget by manipulating the cash available for any particular piece of work.
"Careful attention to adjusting the course offer means you can increase your funding substantially without actually increasing student numbers or work I all this is just as likely to add to college income as marketing or working with the community, and without the tedious necessity of meeting additional need."
He attacked deals between colleges and the private sector, arguing that so-called franchises had diverted public money from mainstream courses in colleges into deals with the private sector to carry out training which would otherwise have been privately funded. "Much of this work plainly is diversion; St John Ambulance and sub aqua clubs existed and trained before FE became their godfathers I It seems that there are now two brands of further education: FE Classic in colleges and FE Lite in private trainers and employers.
"If franchising is carried on as at present, it will destroy FE as we know it. There is hardly a college in the country that wouldn't make very large surpluses by closing its main programme and buying in collaborative work from firms and private trainers."
Mr Perry also attacked planning carried out by funding formula rather than economic and educational priority. "The funding methodology is not just distanced from social concerns. It has no link with economic developments.
"I went to a meeting with training and enterprise council representatives from London which was a revelation. TEC dialogue about allocation of funds concerns levels of unemployment, number of business units, GDP and tax take and numbers in target age groups. This is as it should be.
"Local authority allocations depend on the numbers in particular age groups, plus social factors. FEFC processes by contract are an accountant's delight of fitting bids to curves on charts."
Mr Perry has long been a critic of the current college funding system, and argued that the reliance on colleges average levels of funding was inappropriate. He said: "The motto at the moment is 'cheap is good', by which criterion a second-hand Yugo represents the best value car."
But a FEFC spokeswoman said the system had the support of colleges and had been backed by watchdogs and insisted it was effective.
She said: "The National Audit Office has looked at economy, efficiency and effectiveness in the funding methodology and has supported it in broad terms. There can be no greater watchdog than the NAO.
"The paper is very entertaining and a good read, but at the end it suggests moving back to a weighted full time equivalent system. We did not find any support for that system."