Further education leaders have warned that colleges are turning down funding incentives to grow because they fear they may be penalised by sudden policy changes.
Constant "tinkering" with funding formulas by the Further Education Funding Council has made colleges feel insecure in a period of uncertainty that surrounds the imminent creation of a new funding and inspection regime.
The funding adjustments have added to nervousness among principals about going for expansion, following problems brought about by the axing of demand-led funding and the sharp clampdown on franchising operations.
Frustration arising from the low levels of confidence in the FEFC's performance may surface when the funding council's chief executive, David Melville, addresses the Association of College's summer conference in Cambridge next week.
Principals attending the conference will be looking for reassurances from Professor Melville, believed to be the prime candidate to head the new Learning and Skills Council, that there will be a period of stability until the LSC is up and running in April.
John Brennan, the AoC's director of further education development, said:
"Colleges are being told to grow as much as they can, but the response so far has been very muted.
"The problem is, colleges are confused. They have not had a stable funding methodology to work with. The funding council thinks it has created the conditions for growth by tinkering with the funding tariff: but the message isn't getting through. Colleges are once bitten, twice shy, and they will remain very cautious until they receive some reassurances."
Principals will also be listening carefully to a speech at the conference from the outspoken Ofsted chief Chris Woodhead.
Again, they will be looking for reassurances that Ofsted, which will lead the new LSC inspection system, will not press for the kind of heavy-handed approach adopted in the schools sector.
The meeting will be Mr Woodhead's first opportunity to explain publicly how Ofsted intends to inspect the reformed post-16 sector, equipped with new powers contained in the forthcoming Learning and Skills Act.
Colleges are worried about the prospect of a possible "name-and-shame" inspection culture and the implications of proposals to focus more on teaching and learning than governance and leadership in quality checks. They are also anxious to ensure the process of college self-assessment and the position of college nominees for inspection visits are retained.