MORE money could be drained from further education on top of the crippling cuts to next year's budgets after a ruling by the European Court of Justice.
It could mean that organisations, including colleges and universities, bidding to run external educational services could be landed with huge redundancy bills if they lose the bids. The ruling is about to be tested in the Court of Appeal in London.
Many colleges are engaged in such provision, most commonly for prison education. If a college bids for and fails to renew its contract, and the new contractor decides to bring in its own staff, then the college will have to pay redundancy to the staff concerned.
It could also affect services, such as cleaning and catering, which are commonly contracted out by colleges. Contractors could start to build the redundancy risk factor into their bids in future, making such services more expensive for colleges.
Marcia Roberts, director of professional services for the Association of Colleges, said: "It has come completely out of the blue and most colleges don't realise it has happened yet. The shock waves are still to come."
It has also been revealed that the Government has raided the Pounds 20 million Competitiveness Fund, available to colleges to help them build collaborative links with training and enterprise councils and other organisations. The Government is thought to have siphoned off about a third of the fund to help pay for the demand led element of college funding (DLE) this year.
Both funding blows come after it was revealed last week that 86 per cent of colleges will have their budgets cut next year. This is due mainly to the Government's decision to stop paying for DLE after this year.