Further education college heads have accused university vice-chancellors of hampering their bids for new higher education money.
They claim that higher education funding chiefs are handicapping colleges competing with universities for a share of the extra 36,000 student numbers next year announced by the government last month. The number will rise to 61,000 in 2000-01.
The Higher Education Funding Council for England is being "inflexible" over its method for judging the bids and allocating the money because it wants to maintain a simple system and keep vice-chancellors happy, some further education managers believe.
David Blunkett, secretary of state for education and employment, has said he wants to see 35,000 of the extra 61,000 students studying for sub-degree qualifications by 2000-01, and most of them should be in further education colleges.
But college heads are worried that this may be difficult to achieve unless HEFCE is prepared to make more adjustments to its funding system to allow for significant differences in the way further education institutions recruit students and run courses.
An analysis of HEFCE's handling of bids for the extra numbers, conducted by Lewisham College registrar Julian Gravatt, concludes that funding council chiefs are operating on a "gentleman's club basis", which favours the status quo and therefore gives higher education institutions an advantage over colleges.
Seminars held by HEFCE to explain to college managers how the system would work revealed confusion on both sides and that much of the detail on how the extra numbers would be distributed had not been worked out.
Mr Gravatt said one of the biggest problems was that HEFCE was planning to continue to use maximum aggregate student numbers (MASNs) - which set for a year the maximum number of students HEFCE will fund for each institution - in its method for allocating the additional cash.
The use of MASNs presented no problems to institutions with large numbers of higher education students and recruiting through the normal annual university recruitment cycle. But it was too inflexible for colleges planning to take on small numbers of students who could be enrolled at almost any time in the year.
The HEFCE funding system also assumes colleges will charge a tuition fee, but many have been used to charging either nothing or much less than HEFCE expects.
Mr Gravatt said: "I don't think HEFCE understands what it is taking on. Although we are a low-cost institution in terms of the HEFCE funding method, we will end up high-cost because the system assumes we will charge a fee, but we don't. Colleges are in danger of losing out because HEFCE does not want to complicate things or upset the universities."
John Spencer, a senior manager at Sheffield College, the largest further education institution in the country, was equally concerned about HEFCE's approach. He said: "I think it's a device someone has come up with to favour the universities over colleges. It helps only institutions with large MASNs because they have more room for manoeuvre. It makes it very difficult for the average FE college to plan a programme."
Sue Carroll, director of curriculum planning and quality assurance at Barking College, said HEFCE's system was not flexible enough to cope with colleges wanting to open courses late in the academic year. "Further education colleges want to recruit more flexibly, responding to demand as it hits us. HEFCE's system does not allow that to happen," she said.
Jenny Smith, vice-principal of Tower Hamlets College, which is hoping to start two new sub-degree courses backed by the extra HEFCE funding, said:
"If we find we have to charge higher fees then it will be out of the window - we just won't do it. This could be a serious problem for further education."
A HEFCE spokesman said the funding council had been successfully using MASNs for higher education provision in further education colleges since 1994. This had not presented problems in the past, and it was not expected to in the future. As far as the overall system was concerned, colleges needed to plan well to make it work for them.
"The HEFCE method requires sensible planning in relation to these bids. Successful proposals for student numbers will show how they fit with the colleges' mission and strategy," the spokesman said.