has learnt that a number of principals are refusing to help the Learning and Skills Council with its plan to increase the fees for courses not funded by the quango.
Some principals say the council is overstepping its responsibilities by attempting to interfere in the price of courses it doesn't subsidise. David Collins, president of the Association of Colleges and principal of South Cheshire College, says colleagues should say "no" to the latest initiative. He has led the way by refusing to meet the council to discuss setting income targets for his own college - one of the best-performing in the country.
Colleges have been contacted by administrators from local LSCs requesting information about their income from courses where adults pay the full fees themselves. The quango wants to set targets for such income for each college.
"Effectively, I have told them it's not their concern," said Mr Collins. "We are autonomous institutions. I have recommended to my colleagues that they respond in the same way and, to my knowledge, most of them have. Our suspicion is that if we haven't met our targets, the LSC might say it will provide less funding in future. They've asked to come and see us, and I've suggested they save the petrol."
The LSC theoretically could penalise colleges that fail to set and meet such targets by reducing the level of funding for over-19s.
Geoff Daniels, director of funding policy at the LSC, said: "We recognise that this is quite a shift. The Government is now interested in the whole picture of what colleges do; it's not just about the courses we fully or partly fund. We want to encourage people and, in some cases, pressure them."
Geoff Hall, principal of New College Nottingham, said the LSC would be going too far if it set targets, but he defended its attempt to gather data about how much money colleges are making from courses where students pay all of the fees. All courses potentially benefit indirectly from LSC subsidy - including capital funding for new buildings - even if the fees are paid in full by students.
"Colleges are publicly funded institutions," said Mr Hall. "The LSC has overall accountability for the financial health of the sector and colleges, and has a right to ask about - but not to prescribe - fees for cost-recovery provision."
Eversheds, the leading firm of solicitors working with colleges, refused to comment on the legality of the LSC's position to avoid prejudice to any challenges that might be made over the coming weeks.
Already, the prospect of a challenge - similar to one made in 1997 against the LSC's predecessor, the Further Education Funding Council - is looming.
The FEFC had attempted to block colleges from recruiting students part-way though the year, but climbed down at the threat of a judicial review by Newham College in east London.
Peter Pendle, general secretary of the Association for College Management, who was chair of governors at Newham College in 1997, said: "I think it's outrageous. I would be surprised if the LSC pursued this to the extent that it tried to penalise colleges for not setting or hitting targets.
"If the LSC tried to penalise them financially, I would be staggered if there was not some kind of legal challenge."