Colleges are passing up the chance of funding-council cash because of the bureaucratic costs involved in claiming it, college bosses said this week.
The Association of Colleges said that the year-long efforts of the Learning and Skills Council's bureaucracy-busting task force had done nothing to reduce red tape for colleges and that there was evidence that the bureaucratic burden had in fact increased, to the extent that the costs of claiming money outweighed the benefits.
The task force, led by Sir George Sweeney, will publish its second report at next week's AoC annual conference in Birmingham. It is expected to argue that it has brought about significant reductions in red tape over the past year.
But this week the AoC said the true position for colleges today was "rather the reverse".
AoC chief executive John Brennan said: "We appreciate the fact that the LSC has recognised that many colleges are being strangled by huge amounts of red tape and has sought to address the problem.
"However, at the moment there are no signs of any decrease - rather the reverse. Most colleges are spending even more taxpayers' money on meeting these red-tape demands than before. In addition, in some cases, colleges have given up on trying to claim new funds because the process of doing so is so complicated."
George Bright, principal of Wiltshire College, said the LSC's thinking on red tape was "going in the right direction".
But he added: "Our experience of all the regimes to do with funding and audit is that they continue to be very burdensome indeed."
Sir George dismissed the AoC's complaints as short-termist. He said his report would "ratchet up the agenda", turning bureaucracy-busting into a new crusade for the LSC.
He said: "These things do not happen overnight. Demonstrably we have already done things and there has been a real pressure for change. But these things have to be done carefully and cannot be rushed through."
Last year, Sir George promised "swift changes" and "deep cuts in red tape" to streamline the sector and save millions of pounds.
But Mr Brennan said many of the 47 local LSCs had introduced their own layers of bureaucracy. This had undone progress made by the national LSC, he said.
The LSC declined to comment before publication of the report.