THE National Audit Office’s report on managing finances in FE colleges (FE Focus, May 5) omits the main reason for financial difficulties in FE.

The Further Education Funding Council’s funding methods are complicated, difficult to forecast and change retrospectively.

The NAO report’s explanation of the system, which runs to 11 pages, culminates in six reasons why it is difficult to monitor.

These do not highlight that cash is paid to colleges during the academic year, but only in February of the following year is the claim completed and reclaimed.

For 1998-99, the FEFC told colleges four months after the year-end about extra targets for the previous academic year. The FEFC now tells us we will know in June how we did against these targets and can reclaim the money in August - two years after most of the students were enrolled.

Student numbers are of limited use in pedicting the funding being earned, which is dependent upon many factors relating to each student, as set out in a 300-page “support” manual.

Clearly, a profitable service has developed where experts charge colleges for finding funding that they are not claiming - on a “no find, no fee’” basis. The NAO report identifies inadequate management information as a cause of colleges’ financial problems and blames colleges rather than FEFC.

No part of the public sector has such a complex funding regime or such a long delay between funding being paid and repaid if targets are not met.

With year-on-year “efficiency gains” being required (in our own case, a 32 per cent fall in the unit of funding over the past five years), the NAO’s recommendations will do little to improve the financial health of colleges.

Lisa Dean

Director of finance

Tower Hamlets College

London E14