Imagine a seaside hotel with 450 rooms. Built seven years ago on the site of a row of rundown bed and breakfasts, it has had many successes. Occupancy has been high and business good. A change of owner in 1997 has brought new demands, but these have been handled with great efficiency.

There have been problems - the odd rowdy party, a few police visits, occasional boiler trouble - but the hotel is well-established. A new management takes over on April 1, 2001. All the signs are that they will improve rather than replace, reform rather than overturn.

Given this, you might imagine that those in charge today would be resting on their laurels. Keeping up appearances but little more. You’d be wrong.

Seven months before they leave - in September 2000 - they are planning a fundamental piece of engineering to make things more comfortable for the guests. It will deal with some serious complaints, but it’s a brave course of action. Will the new heating system really be ready in time for winter, let alone for April 1, 2001 And, when the takeover happens, will things really stay as they are or are we in for another rebuild? It may be worth checking before booking your next stay.

The pace of change in this imaginary resort has echoes in college funding. For several years, the Further Education Funding Council has preserved the inner core of its funding system, while changing some visible features.

The council’s staff have tinkered relentlessly with the tariff. They have invented and extended widening participation units. They have tried different allocation systems and they have tightened the audit rules. They have not changed the underlying information technology systems that they set up in 1994 to make the whole thing work.

In September 2000, they will. In the name of simplification and Curriculum 2000, the FEFC will make changes to the funding method, which allows a fundamental rewrite of those systems.

The changes to the tariff have been well rehearsed but are complicated. The number of units claimed for A-levels, GNVQs and other qualifications falls so that units can be claimed for free-standing key skills. At the same time, additional funding units can be claimed for 16 to 18-year-olds taking a full menu of curriculum units.

The change to the technology is less frequently discussed but no less important. Described as simplification, it will set standard prices in units for every course which will make calculations more predictable and help implement policy changes: the more qualifications or hours that a student studies, the more funding he or she will attract.

The system - where an arbitrary 450 hours a year represented the maximum amount of funding that most students would be worth - will end. If students can study more, their colleges will be able to claim more. Many colleges and students will be unable to take advantage of this new incentive because lack of money, lack of time and the 21-hour rule - the rule that limits the time the unemployed can study without losing benefits - but it is welcome for all that.

But, like everything else in the council’s 2000 package, it could all very quickly become yesterday’s news.

Longer-term planning on funding rests with the Department for Education and Employment ad its learning and skills transition teams. One of these covers funding and, in January, they published a technical funding prospectus. This reads like the first draft of the department’s funding guidance to the new Learning and Skills Council and it signals yet more change.

The writers of the Funding Prospectus expect the new council to fund a vast sector, covering both schools and small companies, yet to do so with simpler systems. They expect the funding system to deliver growth in participation and achievement, to be responsive to individuals and employers and to implement equal opportunities. They expect a national tariff to be drawn up with four types of unit, covering entry, retention, achievement and disadvantage - this last covering both social and educational disadvantage. They expect the system to be locally responsive while able to accommodate national initiatives from national training organisations and the University for Industry. Finally, they expect the system to offer predictability to providers while reducing the barriers to new entrants.

These are all laudable goals and will be shared by the almost everyone. Taken together, they are a tough job description for the chief executive of the new Learning and Skills Council.

The multiple objectives and many interest groups will make the new funding system a target for lobbying. There are too many people aware of the details for the new system to be set up in a vacuum. This pressure creates its own risks because a responsive system is often a complicated one. And, if there is one lesson to be drawn from recent FEFC and training and enterprise councils experience, it is that complexity is often the enemy of good management.

Complexity made it difficult for the FEFC to prevent abuses of its funding system until it was very late. Complexity makes it possible for middle men and women to make a good living at the expense of learning. Complexity results in the same rules being interpreted differently - guaranteeing complaints and loss of confidence in the system.

The one thing the designers should aim for is simplification. Not just of the IT systems, important as they are, but simplification of the rules, where possible. This implies one set of national rates and entitlements rather than 47 varieties. It implies calibrating funding according to the 24 hours of the clock rather than the 16,000 approved qualifications.

It also implies the bigger question about whether funding is necessary to achieve all results. Are entry units really needed to ensure proper guidance? If colleges didn’t have achievement units, would they really ignore standards? Does every last transaction in the college need an audit certificate? Simplification will have its limits and there will always be special cases but, perhaps, in funding system architecture as in buildings, “less is more”.

Julian Gravatt is registrar of LewishamCollege, south-east London

JARGONBUSTERS: FUNDING TERMS.

Allocation mechanism Divides up the money between colleges Audit systems amp; funding claim Confirms the college’s final claim Approved courses list (Schedule 2 of 1992 Act) Defines the courses that the FEFC will fund.

Funding agreement Confirms the contract between the FEFC and each College IT systems (Funding, ISR amp; Qualaims programs). Calculates the units earned by a college for its students Tariff Lists the prices (in units) for courses