COLLEGE principals across the region reacted with anger last night after learning that their annual budgets could be cut by up to £600,000, leading to a reduction in staff and the loss of thousands of student places.

The redistribution of funding from the Learning and Skills Council (LSC) will hit adult learning courses at colleges across the North-East and North Yorkshire.

Some courses will be cut, while tuition fees for others may be increased in an attempt to make up the financial shortfall.

The cuts will take effect from August 1, and many colleges have already been forced to revise their prospectuses for the 2005-2006 academic year.

The LSC said that while it had increased funding for further education colleges nationally by £170m for the next academic year, the cuts were the result of funds being switched to younger learners.

Darlington College of Technology yesterday confirmed it had suffered a "significant" decrease in its budget - thought to be about £600,000.

The college is planning to cut up to 40 jobs and 1,300 student places as a result.

Bishop Auckland College, in County Durham, is to have its budget cut by £500,000 at the expense of up to 3,000 student places.

Sarah Farley, principal and chief executive of Darlington College, said the news was "doubly hard" in the wake of an excellent rating by education watchdog Ofsted.

"These decisions are being forced upon us, and the outcome will be quite devastating for the local community," she said.

"People can come here and develop their skills and knowledge, and increase their aspirations. That supports not only the economic development of the town, but also the social infrastructure.

"The majority of our staff live within 20 miles of the college, so the job losses will have an impact locally, although we are hoping they will be on a voluntary basis."

The college also has a campus in Catterick, North Yorkshire. Ms Farley said it was not known if it would be affected by the cuts.

Bishop Auckland College principal Joanna Tait warned: "The people affected are likely to be coming back to education for the first time in years, I'm very concerned about the long-term implications.

"These are the courses that give people the confidence and skills to go on to get qualifications and more jobs become available to them."

Last night, the principals of colleges that have escaped the worst of the funding cuts also expressed concern.

Rick Wells, principal of Hartlepool Sixth Form College, said: "The Government has set targets, which we have exceeded, but we are not receiving the funding to pay for the extra students.

"It is going to prove difficult to run some of our adult services, mostly for students with learning difficulties.

"This year we haven't been affected too badly, but if the same thing happens next year, we could be facing similar problems."

Miriam Stanton, principal of Bede Sixth Form College, in Billingham, near Stockton, said: "We planned funding programmes for three years, but these cuts have changed all of that.

"The consequence of what is happening is we are achieving targets, but not the money.

"Until we find out who is responsible for getting the funding figures wrong for Tees-side, whether it's at national, regional or local level, we won't be able to sort it out."

Chris Roberts, North-East director of the LSC, said changes were made because of the rising numbers of students in colleges, and because funding had to be concentrated on young people and apprenticeships.

"Areas of education and training outside our priority areas, such as part-time courses for adults, will feel the funding pressure," he said.

He also suggested that colleges develop new sources of funding by increasing course fees for employers or people with higher level qualifications.

Dr John Brennan, chief executive of the Association of Colleges, said the Government had not put enough money in the system to meet all its priorities.

"This will leave too many of the 3.5 million adults we serve without means to access the education and training they need," he said.