Alison Utley relays colleges' fears of merging funding. Rapid changes taking place at the further/ÖйúAƬ boundary have prompted funding chiefs to re-examine the financing of courses that stray outside traditional limits. Colleges had until Monday this week to respond to the ÖйúAƬ Funding Council's reform of the way it backs ÖйúAƬ programmes in further education colleges. Given that more than 10 per cent of ÖйúAƬ students are in colleges, HEFCE is worried that the diversity of provision is leading to a more complex and disparate service for students.

"This may hinder the rational and systematic development of ÖйúAƬ provision in response to local and regional needs," HEFCE warns in its report, A Future Funding Approach.

The solution is a radical restructuring of finance for ÖйúAƬ courses in further education to channel it through regional clusters or confederations of institutions, including at least one university or ÖйúAƬ college.

The model could be introduced gradually, it says, directing any future growth in student numbers only to those universities and colleges which had established this kind of regional arrangement. This would encourage universities and colleges to coordinate and jointly plan ÖйúAƬ programmes according to local circumstances.

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Some bilateral partnerships have already become multilateral, the report acknowledges, and collaborations are already "deepening through closer links, formal associations and even merger".

The report also suggests that funding ÖйúAƬ in further education colleges might become the sole responsibility of HEFCE, overturning the present arrangement that split the task with the Further Education Funding Council.

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Colleges are keen to avoid some centrally defined model of how it conducts its ÖйúAƬ business, a business which for many is central to their college mission.

The Association for Colleges said it was crucial that no barriers were erected to partnerships or collaboration between institutions.

"We would not wish to see a federal university approach imposed on us," said the AFC's John Brennan. "Neither would we want a funding mechanism which drives us all down one route. There needs to be a variety of links between colleges and universities depending on local requirements. It is important that no prior constraints should be placed over the shape of these arrangements which must be left to local partners."

Links were not always geographically determined, Mr Brennan said. Validation agreements could often take place between colleges and universities in different parts of the country, depending on where the subject expertise lay.

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David Melville, vice chancellor of Middlesex University and newly appointed chief executive of the FEFC, said HEFCE's approach was right but that much broader issues still needed clarification.

"Regional groupings of further and ÖйúAƬ institutions are certainly going to become more important but it will be unacceptable to colleges to impose some partnership arrangement which does not allow for flexibility, fluidity and dynamism," Professor Melville said.

"It is very important that ÖйúAƬ is not seen as some big brother determining ÖйúAƬ provision in further education colleges. That is not the way the most effective partnerships for post-16 education will be created."

A HEFCE spokesman said a good number of responses to its proposals had been received and all the issues raised would be considered by a new joint policy review group with members from both funding councils.

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