Language schools accuse colleges of cheating on subsidised places, by Ngaio Crequer.
PRIVATE English language schools have accused public-
sector colleges of bending funding rules to undercut them.
They say they are losing students and that British taxpayers' money is being used to subsidise the teaching of English to overseas students.
The Further Education Funding Council guidelines say that students from European Union countries should be entitled to the same levels of subsidy as English students. However, this applies only to EU students living in the UK, as colleges in the state sector are not allowed to recruit directly from abroad for subsidised courses. There is no subsidy for non-EU students.
But James Rogers, principal of the Severnvale Academy, in Shrewsbury, claims FEFC-funded colleges regularly break the rules.
"We do know there are large numbers deliberately promoting their courses in the EU. They are also falsely declaring their students' nationality. They are saying a Korean is an Austrian and therefore can attract subsidies.
"Some FE colleges are even providing courses free of charge to EU students which they should not be doing."
Arthur Davis, a partner in the Cheltenham School of English, said that all they wanted was the chance to compete on equal terms. "As taxpayers our tax is being turned against us. If students can study English for less because they are getting subsidised, then that is very attractive. My impression is that we are losing a substantial number of students," he said.
"The private sector is not ding well because of the strength of the pound. Some schools are fighting for their survival. At the same time hundreds of millions of pounds are being spent by the British taxpayer to educate non-British students ."
He is seeking clarification from the Office of Fair Trading as to whether the FEFC is acting against competition law.
There are 210 private accredited English language schools in the UK. The industry brings in about pound;1 billion of foreign revenue a year.
Sandra Kaufman, principal of the Manchester Academy of English, has told her MP Tony Lloyd that her school attracts thousands of pounds worth of tourist and language investment to the city every year. Yet its survival is threatened because of the difficulty of competing with subsidised courses.
Tessa Blackstone, the education minister, responded by saying they could have access to FEFC funds if they applied with the help of a sponsoring college. But funding for new institutions can only be made if existing provision in the locality is inadequate.
Ms Kaufman said: "These two conditions are ridiculous, since having access to this funding, existing state provision is never going to be inadequate, nor are they likely to want to sponsor us to compete with them."
But the Association of Colleges vigorously refuted the claims. A spokeswoman said: "EU students are treated exactly the same way as home students. There are rigorous controls in place and I cannot think of any college that would falsely classify a student. We are able to offer cheaper courses because we are more efficient."