Further education college heads have warned that funding proposals will force them to increase fees for adult students by 10 per cent next academic year.
An Association of Colleges analysis of the Learning and Skills Council's new funding system has revealed that the fees hike is part of an overall 10 per cent cash boost for the sector from September.
In its system, the LSC assumes that colleges will find 25 per cent of the costs of courses for adult students from fees or sources other than the LSC. As most of the extra money will go towards higher costs and other elements in the funding package, colleges will have little choice but to go along with the assumed rise in fees.
Colleges are free to set their own fee levels, but any that do not raise their fees will face a funding cut rather than an increase.
The news has alarmed college principals, who have warned that a 10 per cent increase in fees for adult students will harm efforts to widen participation.
The AoC has also warned that higher fees will make it harder for colleges to hit LSC performance targets for recruiting students and engaging with employers.
John Brennan, the AoC's director of further education development, said: "I do not think the government or the LSC has thought about the implications of this.
"I do not believe that employers or individuals will bear that sort of increase. As a result, I think the sector will struggle to deliver the outcomes it is being set. To increase fees by 10 per cent will have a direct impact on recruitment, particularly on vocational courses for which students are more likely to be sponsored by an employer."
College heads and finance chiefs are only now beginning to realise how tight their budgets will be despite the funding boost. Most of the extra money will be accounted for by inflation, rising costs for pensions and National Insurance contributions, consolidation of funding for staff training and boosting standards, or linked to achieving targets for student recruitment and achievement, staff training and links with employers.
Tony Woods, deputy principal of Croydon College, said this meant that colleges would have little room to subsidise fees. "The problem we have is that even a very small increase can have a disproportionate effect on bringing in adult students."
Ron Pritchard, principal of North East Surrey College of Technology, said:
"We were going to have to put fees up by inflation. But a further rise would tend to deter people from paying for themselves or employers from sponsoring them."
An LSC spokesman said colleges were not being forced to raise fees. He said that even after covering extra costs, colleges were guaranteed at least 3.5 per cent more in funding. "It is true that the fee contribution goes up as funding increases," he said. "But it is always 25 per cent of the costs, and colleges are free to decide how much they charge. Yes, they are having to meet extra costs, but they will still be better off."