Losses will be across the board including managers, lecturers and support workers. Staff were summoned to a meeting the day before half term and talks began this week with representatives from lecturers’ union Natfhe and public-service union Unison.

Natfhe regional officer Nova Gresham described the situation as “a bloody mess”. “I’m profoundly shocked and very angry,” she said. “The college has been running a deficit and wants to jump to a surplus. This is too draconian in too short a time. I’ve told the principal I think the chances of avoiding a dispute are very slim.” She protested that Natfhe had not been consulted earlier. But principal David Percival said that was because the size of the problem was not fully clear until shortly before the announcement.

Up to 60 full-time equivalent posts could go. “However we hope the number will be significantly less,” said Mr Percival. “We will explore all avenues to reduce the need for redundancies. Our priority must be to ensure the service we offer students, employers and the community is maintained.”

He claimed cuts were necessary because income per student has dropped even though the college is attracting more full-time learners. “The change in funding methodology means we have a shortfall of around pound;400,000-pound;500,000 compared with previous years,” he said. Like other institutions, Plymouth is also struggling to absorb additional pension and national insurance costs. Adding in the lack of funding for these, the college would be around pound;1.5 million worse off next year, said Mr Percival.

He said the funding changes had been “very destabilising”.

Meanwhile an information systems failure has resulted in Wiltshire College being asked to repay pound;4m to the LSC.

The information systems director has resigned and a deputy principal taken early retirement since discrepancies came light. The mix-up related to errors in the the way the college recorded what students were doing which resulted in it receiving too much funding.

The money must be repaid over two years, though the college does have pound;2.6m in the bank. Mr Bright expects “a worst-case scenario loss” for 2002-03 to be around pound;2m.

Among the errors were coding mistakes that led to work-based students being recorded as FE students.

Mr Bright said the college was struggling with the LSC’s bureaucratic demands. “We don’t have the resources to do all the administration that the system requires,” he said. “To do that we’d have to deploy them away from teaching.”