Colleges are better than universities at teaching sub-degree higher education courses and are poised to take a big slice of the expansion in higher education, according to further education leaders.
This follows a report by accountants KPMG, commissioned jointly by the funding councils for both sectors. It found that students on college courses had "significantly more" contact time with teachers and better access to computers than in universities. They were also more likely to find a job.
However, the cost of providing courses, such as Higher National Diplomas, was roughly the same in colleges and universities.
John Brennan, director of development at the Association of Colleges, said:
"Because HNDs offer the pinnacle of college provision, colleges give a lot of time and attention to them. It may also be the case that in some universities, HNDs are the bottom of the pile, and are not given the same degree of time and attention."
The Further Education Funding Council is understood to be privately furious that HEFCE sources have suggested that colleges have been subsidising their HEFCE grants with additional resources.
Dr Brennan said that many of the 80,000 new higher education students planned for next three years should end up on sub-degree courses in colleges. "We would expect that a significant share of the expected 80,000 - 35,000 next year - will come in the direction of FE colleges."
A spokesman for the Higher Education Funding Council said that it would be wrong to interpret the report as an indication of which sector will absorb the new cohort of higher education students. "A lot of good sub-degree provision is done in universities and there is no reason why that should stop," he said.
The report, aimed at establishing the relative costs of provision between the sectors, has been seen as the climax of a turf war between the two funding councils.
The FEFC is to transfer responsibility - and the budget - for funding HNDs to HEFCE, but the two councils have been funding provision at different levels and apparently disagree on how much cash should be transferred.
This week any dispute was strongly denied. Both funding councils said that they had "reached agreement in principle on the basis for calculating the transfer of funding for HE students from the FEFC to HEFCE".
But one FEFC insider said: "HEFCE has been funding universities at far higher levels to provide the same courses."
Dr Brennan said: "Colleges can't lose. Either HEFCE funds the provision at the same level for colleges and universities, or it brings university funding down to further education levels."
WHAT KPMG SAID
Accountants KPMG were commissioned to compare the relative costs of degree and HND programmes in further and higher education, and the differences in student experiences.
Researchers looked only at HEFCE-funded provision in colleges and universities. They did not look at FEFC-funded higher education provision. The study cannot "cast any light on the relative costs of FEFC-funded and HEFCE-funded higher education provision", the authors said.
The report looked only at business studies, engineering and art and design courses.
* in business studies - with the highest proportion of all HE students in FE colleges - unit costs between provision in the two sectors were "very similar"
* college courses were just as expensive because, although staffing costs are lower, the FE courses had more teaching hours
* in art and design, "somewhat higher costs" for the higher education provision were identified, but the findings were inconclusive and will be studied further
* costs were higher in HE in engineering because of higher central costs.
* in higher education institutions, there is a clear distinction between large-group lectures and smaller supporting tutorials. There is no distinction in FE, largely because of a lack of large lecture theatres.
The report is based on data from 12 further education colleges and seven higher education institutions.
* students on HND courses in FE were "substantially more likely" to have entered employment on completion
* students on HND courses in FE were just as likely to achieve the qualification as in HE
* the proportion of students progressing to further study is "broadly similar" between the sectors
* the students in colleges were older, and less likely to have A levels as entry qualifications
* the students in college were more likely to live near the institution.
* student-taught hours and staff-timetabled hours are higher in further education colleges
* there are more computer workstations per 1,000 students in colleges than in higher education institutions
* there are fewer library study spaces per 1,000 students and "significantly fewer" quiet study spaces in FE colleges.