The formula which allocates cash to English colleges is bureaucratic, wasteful and has damaged parts of the curriculum, according to research published today.

A draft study by the London University Institute of Education and lecturers’ union NATFHE found widespread complaints about the way the Further Education Funding Council pays for courses.

The unpublished report, produced for a conference on the future of FE funding today, found the FEFC had produced “waste and unnecessary administration” while failing to give colleges stability.

Managers and lecturers had become obsessed with funding, at the expense of effort to drive up standards. The report said: “A preoccupation with finance and funding overshadows the sector and every aspect of college activity. ”

Researchers, who will publish their final conclusions next month, did find widespread approval of the broad principles governing college budgets, and an acknowledgement that changes in the funding regime improved some aspects of college life. Staff interviewed pointed particularly to the improvement of guidance and support for new students under rules which pay colleges a sum for each student enrolled.

The FEFC has been criticised in the past for basing its formula on abstract “funding units” rather than real students, taught hours or courses. Principals have complained that officials “need a degree in astro-physics” to understand it.

The new research reinforces that view. Colleges had not developed any internal market, the researchers said, and few used the FEFC’s system to allocate internal budgets.

The research found that: * colleges complained of the burden of statistics, and warned that “increasing amounts of resources had been directed towards meeting the information demands of the FEFC”; * all colleges reported a cut in teaching hours on their courses; * there was evidence that some colleges recruited students onto inappropriate courses to keep them out of rival colleges; * staff were concerned about retention rates - with some even keeping on disruptive students who should have been thrown out; * curriculum development was hindered and groups of weaker or disadvantaged students failed to get adequate support; * extra-curricular activities had almost disappeared.

The report also gives new evidence of college “tariff farming” under which staff manipulate their courses to extract the maximum number of funding units. One senior manager said student reference numbers were changed each time their students changed courses to extract extra enrolment units, even though the practice made tracking students more difficult.

Researchers interviewed staff at 12 FE colleges, chosen to represent a broad spread of colleges. Interviews were carried out last year during the crisis over demand-led funding.

The report said: “Despite the aim stated in the FEFC consultation document Funding Learning in 1992 to produce a methodology that would provide the sector with a measure of stability, this has proved illusory. In particular the policy of convergence has failed to bring stability to the sector . . . this has presented colleges with a constantly moving platform on which to attempt to plan both their finances and their curriculum.

“The data and bureaucratic requirements of the FEFC and its funding regime is perceived as leading to waste and unnecessary administration. It was strongly felt that this is diverting resources away from teaching and learning.”