A CASH fund to help colleges meet the costs of restructuring will not be renewed this year, the Further Education Funding Council has announced.
The fund, which has paid out Pounds 77.2 million since being set up three years ago, was halted at the end of the 1995/96 academic year and the money redistributed through individual college budgets.
But principals lobbied the FEFC to bring it back claiming that without it they would struggle to make essential money-saving staff cuts.
Concerns grew after the Government unveiled changes to the Teachers' Superannuation Scheme, which from April will put more of the costs of early retirement onto colleges.
The council said it had taken these changes into account, along with the possible impact on industrial relations, in deciding whether or not to help with restructuring.
But it felt that the fund could lead colleges to favour redundancy or early retirement over other ways of cutting costs and was creating artificially high maximum severance payments. Most colleges were able to borrow to finance initial restructuring costs and the council had made provision in its contingency fund to help those who could not.
Finally, it estimated that 60 per cent of colleges using the fund claimed less than they would have received if the money had been distributed as part of mainstream funding allocations.
But John Brennan, director of development at the Association of Colleges, said: "If institutions cannot afford to offer redundancy packages they are going to find it much more difficult to persuade people to go voluntarily, particularly with changes to the superannuation scheme."
Jenny Shackleton, principal of Wirral Metropolitan College, said news of the end of the fund was a blow. The college spent Pounds 1.6 million on restructuring last year, including Pounds 500,000 from the FEFC fund, and is expecting to need about two thirds of this sum for restructuring this year.
"It raises the possibility of greater disruption which is unfortunate for students and staff," she said.
Ken Ruddiman, principal of Sheffield College, said: "It will mean we will have to make more staff redundant and in a more brutal fashion."