FE providers will miss out on millions of pounds they had expected to receive in funding for 16-19 provision, with some experiencing a drop in their allocations of as much as 50 per cent, TES has learned.
The Association of Employment and Learning Providers (AELP) has been contacted by dozens of members who were shocked to receive allocations from the Education Funding Agency (EFA) that were at least 20-30 per cent lower than anticipated.
The AELP has warned that the confusion, which has led to some providers being told that they will receive more than pound;1 million less than expected for 2013-14, could jeopardise the raising of the participation age to 17 this summer in some areas.
The new pre-apprenticeship traineeship programme - which, according to skills minister Matthew Hancock, will "give young people the helping hand and experience they need to compete for apprenticeships and good jobs" - could also be affected, providers warned.
"We are concerned," said Graham Hoyle, chief executive of the AELP. "This is an issue for quite a lot of our members. There do seem to be some unexpected allocations."
The Department for Education is in the process of overhauling 16-19 funding, which will result in institutions being funded per learner rather than by qualification. Schools, colleges and learning providers will receive the same basic level of funding for each student.
The uncertainty over funding has been partially caused by the Education Funding Agency (EFA) using figures from 2011-12 in its calculations for independent providers, instead of more recent statistics.
Matt Garvey, managing director of the West Berkshire Training Consortium, said the firm's 16-19 allocation for 2013-14 is half of what it received a year earlier, as a result of the EFA using an "old snapshot of provision" taken during a "really lean period" for the business.
Independent learning providers had been told to expect protection over the next three years to help them adapt to the new funding formula.
But in a letter sent to providers, Alan Parnum, the EFA's director of young people for London and the South East, wrote that the agency used figures from 2011-12 instead of more recent statistics because funding- per-student figures for the current year are "artificially high". The claim has been contested by providers.
"It's certainly hit us," Mr Garvey said. "It was a complete surprise that the transitional funding formula protection was taken away.
"It's frustrating. Many of our learners come to us after being kicked out of school or college. It's going to be a hard slog for small, specialist providers who work with low-level foundation students.
"Next year, we're going to have even less money to support them. It will be these most vulnerable learners who will lose out."
Paul Warner, the AELP's director of employment and skills, told TES that it is "not clear" what has caused the funding discrepancies.
"What we can see is that there are some very significant contractual changes," he said. "The overall amount of funding looks considerably less than we thought (it would be). With the raising of the participation age being introduced, the allocations seem to indicate it's going to be a struggle to meet that.
"Everyone is very concerned, but we have a constructive dialogue with the EFA. Our message to members is that it's serious but we're working on it. Don't panic for the moment."
The Sixth Form Colleges' Association said its members have not been adversely affected by funding changes in the same way as training providers.
A DfE spokeswoman said that the funding reforms will ensure that "every young person is able to undertake high-quality study, which will lead to better education and employment opportunities. "One of the principal barriers to this has been the current funding system - based on funding per qualification - which has acted as a perverse incentive for schools to enter students for easier qualifications."
"Funding schools, colleges and learning providers per student instead (of per qualification) will free them up to deliver demanding and innovative courses that meet the individual needs of all young people," she added.
THE YOUNG ONES
16 - Current participation age
17 - Age from this summer
18 - Age from 2015
5.4% - 16-year-olds who are not in education, employment or training (Neet)
8.4% - 17-year-olds who are Neet
15.8% - 18-year-olds who are Neet
Source: Department for Education figures from the end of 2011.