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The Association for Colleges has dismissed gloomy predictions that one in five colleges could close within three years as a "cynical business exercise".

Management consultants KPMG said last week that weaker colleges will either sink as a result of cash-flow difficulties or merge with neighbouring institutions creating a much leaner further education sector. "It will become more and more difficult for small colleges to survive alone and as many as 100 may disappear in the next three years or so," said Martin Davies, director of KPMG's education service. He predicted that large numbers of colleges would amalgamate because of pressure from more successful competitors. Others would find themselves unable to meet ambitious student expansion targets while some would have no spare building capacity to house them.

John Akker, general secretary of lecturers' union Natfhe, said the expected contraction was the result of a substantial under-funding. While broadly supporting KPMG's predictions, Mr Akker said he could not share Mr Davies's upbeat assessment of the changes. We are bound to see job losses as so many colleges are in financial difficulties," he said. He is planning to raise his union's concerns on redundancies with Gillian Shephard, secretary of state for education, on Monday.

A spokeswoman for the AFC said any analysis of the future should take account of the colleges' location and community and their leaders' will to survive.