The new bids for growth in the further education sector reveal that colleges are extremely bullish about the prospects for recruiting even more students next year, despite fears from some quarters that "saturation point" had already been reached.

If targets are met there will be a further 6 per cent growth next year according to the Further Education Funding Council, which released its allocations this week to 384 colleges and almost as many institutions outside the FE sector.

The council was overwhelmed with bids totalling 24 per cent more than the Pounds 2.8 billion available. This compares to overbidding of just 6 per cent last year. The money has had to be rationed to a greater extent this time round and some principals, bitterly disappointed with their allocations, will be asking questions about the allocations procedure and whether sufficient dialogue has taken place.

Sir William Stubbs, chief executive of the FEFC, said: "This has been a difficult funding round as colleges applied for considerably more funds than were available." Nevertheless, the allocations would secure a 6 per cent growth in further education student numbers next year paid for by a 4 per cent increase in council funds.

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The FE sector is now half-way through a four-year period in which it is projected to grow by 28 per cent. Between 10 and 15 per cent growth has already been achieved. The largest funding increases have been allocated to colleges with the strongest track record in meeting their targets - as long as they can demonstrate relatively low average levels of funding.

At the top end of the scale, Halton College will receive a 33 per cent growth in funding compared to last year. Astonishingly, Halton has outperformed targets by 372 per cent through franchised courses with industry to deliver NVQs.

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Although the funding council stressed that it was considering whether it was appropriate to continue to use council funds for such students, it said Halton was an example of a college taking the initiative in exactly the way the Government had anticipated.

Nine colleges will receive an increase of between 20 and 30 per cent and 74 will get between 10 and 20 per cent more than last year.

On the downside 39 colleges will receive a decrease of up to 5 per cent while 26 others will be coping with a drop of more than 5 per cent. Cannock Chase Technical College will have to live with a dip in its funds of more than 9 per cent although it will receive all of the allocation bid for.

In contrast Barking College will get just 29 per cent of its bid but will still receive a 12 per cent rise in its total compared to last year. Barking has overshot its expansion target by 15 per cent this year and obviously believes it can do even better next year.

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Overall 319 colleges (83 per cent) are receiving increases in funding and 83 (22 per cent) will get a rise of more than 10 per cent. About two thirds of the sector have had their funding application fully met by the Council.

That leaves 65 colleges with less funding than last year. Sixty are receiving all the funding for which they applied. The remaining five are suffering because they missed their targets by more than 5 per cent in the current year and four also had relatively high levels of average funding. Crawley College will only receive 85 per cent of its bid after missing its growth target by 14 per cent.

Troubled Derby Wilmorton College, severely criticised by the council last year, will also receive a cut in its funding of more than 9 per cent.

David Gibson, principal of South Manchester College, said that those colleges which still relied heavily on FEFC income would feel the pinch most severely. "The colleges not meeting their targets are those which have been slow to get into the adult market," he said. "That's where the growth is now."

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New College Durham missed its growth target by 15 per cent this year and as a result will have to cope with a cut in funding of more than 8 per cent.

Principal Laurie Turner said he could not rule out compulsory redundancies as he needed to shed 10 per cent of the workforce.

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"The new contracts issue and resulting industrial action hasn't helped us, coming as it did at such a critical time in the recruitment process," he said. "But also poor demand for GNVQs is a factor. We had hoped to get significantly larger numbers. Add to this competition from schools and the picture becomes clear."