Finance crisis puts 50 colleges at closure risk

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The Independent Online
Funding cuts have left colleges facing a financial crisis, with deficits totalling pounds 129 million, it was revealed yesterday. Almost 50 could be at risk of closure as spending per student is reduced to half its 1989 level.

Six organisations representing more than 400 further education colleges nationwide have compiled a catalogue of their problems to present to ministers in an attempt to win more money in this year's public spending round. They say that cuts in funding for buildings and repairs add up to pounds 216 million and that on top of reductions in the money they are paid per student they are being put in an impossible position.

Both universities and colleges had their capital funding cut by 35 per cent this year. Both were also asked to make "efficiency savings" by taking more students at a lower cost per student.

Colleges said they were now expected to teach full-time students for less money than they were in 1989. In cash terms, their funding had dropped by pounds 80 per student to pounds 2,700 but when inflation and other extra costs were taken into account this amounted to a 30 per cent reduction. The government planned to cut by a further 17 per cent in the next three years.

By comparison, universities had pounds 4,270 to spend per student per year and schools had pounds 3,106 for each sixth former.

Some colleges are already cancelling valuable but expensive courses in subjects such as construction and engineering. A number of colleges are likely to merge or to be taken over by nearby universities as a result of the cuts, and there is a danger that some might close.

The total deficit run up by the colleges in the most recent financial year has not yet been worked out but a survey by the Association for Colleges showed that two thirds operated at a loss in 1994-5.

The government agency which funds the colleges has said as many as 115 could be at risk if they do not meet recruitment targets. A total of 48 are already in a weak financial position and have been asked to draw up recovery plans.

College representatives said that some areas could be left without further education courses for students if colleges closed. If that happened the number of students staying in education after 16 would be bound to drop.

John Brennan, director of policy for the Association for Colleges, said that Britain's future competitiveness could be jeopardised by the cuts.

A spokeswoman for the Department of Education and Employment said its officials had not had time to read the report in detail.

She claimed that recent assessments showed that the financial health of colleges was set to improve.