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Two-thirds of colleges now in debt

Two out of three FE and sixth-form colleges in England are in debt, according to the latest figures from the Further Education Funding Council.

With the entire sector running at anPounds 82 million deficit, the number of colleges facing financial difficulties has gone up to almost 300 - a rise of 50 over last year.

The FEFC insists this is due to staff restructuring and early retirements. But this is rejected by the Association of Colleges, which blames the continued government squeeze.

John Brennan, the association's policy director, said: "We warned that this would happen. Growth is demanded, without which we get no money. But when you do grow, you get a declining amount of cash for doing so."

The global debt is Pounds 16 million down on this time last year, but it is Pounds 31 million more than colleges had forecast when setting budgets, the FEFC estimates show.

However, a comparison year on year was meaningless because colleges had less in flexibility with the ever-increasing efficiency demands, said Mr Brennan. "Life gets more and more tough, and you have to work much harder just to stay where you are."

Last year, 58 colleges were reported as technically insolvent, and the association fears that more now face similar funding crises.

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