There are fears that "efficient" colleges are being penalised by the fur-ther education funding regime as forecasts of hundreds of redundancies start to come true.

The most common reason given by college corporations for shedding jobs is budget shortfalls due to student recruitment targets not being met.

But college principals argue that the Further Education Funding Council should take more account of local conditions in its funding formula - not least the assumption that there is demand for 28 per cent growth.

If colleges do not grow, they can only receive 90 per cent of their core funding the following year. This year's growth was at the rate of Pounds 14.50 per funding unit, lower than most colleges' actual average levels of funding (ALFs), which range from Pounds 14 to Pounds 40.

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"If a college was successful before incorporation and had a lot of growth, they don't have the same capacity to grow," said Ruth Gee, chief executive of the Association for Colleges.

"It is not as a result of inefficiency, it is a result of being effective earlier. We would argue those who are already efficient and have the lower ALF should not be subject to the same degree of efficiency savings as others. There are colleges which are very efficient who have reached the point at which they have no alternative but to make people redundant."

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David Trueman, principal at North Devon College, has announced 17 job losses to tackle a Pounds 300,000 budget deficit. Although his college grew by 7 per cent last year, it was 1 per cent below its target.

"We had a massive growth in recruitment for the past two years with no additional funds, which is why our units of resource are relatively low," said Mr Trueman.

"But we have a higher proportion of staffing because we had to in order to teach them. It is the classic scenario for a college which is suffering at the moment."

He is writing to the FEFC to suggest changes to its aims to converge colleges' funding levels.

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"If you are a relatively lean college with an average funding level below the median, the reality is that the efficiency gains apply to you equally as to a college which is over-resourced," he said.

Chelmsford College principal David Percival argues that with an ALF of around Pounds 15, and growth of 25 per cent in one year shortly before incorporation, efficiencies mean redundancies.

As a result of missing recruitment targets this year, Mr Percival is shedding 19 staff to cope with a Pounds 330,000 budget cut.

"The process of convergence is intended to pull people to a common point. But in the short term, the same pressure applies to all colleges. If you were efficient already, this system does not do a lot for you," said Mr Percival.

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The FEFC admits that all colleges with an ALF above Pounds 14.50 came under pressure this year. Next year's rate has been raised by 8 per cent to Pounds 15.70.

"We require all colleges to make efficiency savings," said FEFC spokeswoman Patricia Stubbs. "We know the growth targets are challenging. But those who have higher average levels of funding are having to look at greater savings."

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