While England has benefited from an extra #163;40 million funding next year, following the Chancellor Kenneth Clark's budget last month, FE colleges have been told by the Welsh Office that they must cut their capital costs by #163;10m.
FE college principals are angry at being singled out for cuts since they have sustained a higher-than- average growth in student numbers for three years, compared with the UK as a whole.
As the full impact of the spending plans emerged this week, principals accused ministers of "hitting easy targets to plough cash into the politically sensitive schools areas" and of "robbing the most efficient parts of the FE sector".
FE student enrolments are set to grow by at least 4.5 per cent a year in Wales until the end of the decade. But the Further Education Funding Council for Wales warned this week that with capital support dropping from #163;17m this year to just #163;7m in 1998-99, colleges are faced with an overall cut in grant of 5.5 per cent for every full-time student, if they hit targets.
In subsequent years, the equivalent cuts proposed are 9.8 per cent and 5.2 per cent. The cumulative cuts over three years amounts to 19.2 per cent. The higher education sector faces a cumulative drop of 9.4 per cent over the same period.
A senior manager in one of the fastest-growing Welsh FE colleges described the impact of the so-called efficiency savings as "a disincentive to expand further". By axing some of the most costly areas, colleges could minimise the impact of the cuts. But these include areas such as engineering and construction, vital to economic recovery, managers say.
In an unprecedented condemnation of the moves by the Chancellor and William Hague, Secretary of State for Wales, the two council chairmen, Richard Webster for the FEFCW, and Sir Philip Jones, of the Higher Education Council for Wales, said they were "very disappointed with the levels of funding".
John Andrews, chief executive of both councils, said he understood the problems the Secretary of State had in meeting the demands of inward investment and other charges on the Welsh Office budget in what was a very tight financial year.
"Nevertheless, Welsh institutions, having heard the Chancellor of the Exchequer announce additional capital funding for colleges and universities and seeing significant increases in England, will find the Welsh settlement very disappointing. There will be severe pressure on staff and resources."
But principals of colleges in England are no happier. They condemned the "apparent" budget pledge of #163;40m, arguing that half of it had vanished, as ministers had clawed it back on the grounds that colleges would benefit from pension savings and European cash.
The real increase for England was just #163;23m, which was, effectively,a standstill budget for the sector next year, the FEFC said.