The thing about budgets, other than when they stick an extra 10p duty on a bottle of wine, is that it is never immediately obvious what they really mean.

A 25 per cent cut in public spending is certainly bad (page 1). But how bad?

It’s a 25 per cent real-terms reduction, so it won’t mean that a quarter of the Department for Business, Innovation and Skills’ (BIS) current expenditure limit of around pound;22 billion is cut. Strip out the various inflators, and a 25 per cent real-terms cut might amount to a cash-terms cut of 10-12 per cent. So BIS could be looking at a cut of between pound;2bn and pound;2.5bn in its departmental expenditure limit by 2014-15.

It’s a lot - equivalent to more than half of the Skills Funding Agency’s current budget for adult education and skills.

We must wait for the October spending review to know FE’s share of the pain, but a three-year pay freeze must be a possibility.

Unions are preparing for battle over pay, but they are over a barrel. Employers have little room for manouevre and higher pay will surely mean more job losses.

But employers will not ride out this storm just by cutting jobs andor freezing wages. Senior managers must seize the opportunity to secure a more sustainable economic future for further education and those who depend on it. Providers failing the challenge are unlikely to survive.

Questions must also be asked of politicians and officials in BIS and the Department for Education about their willingness to help mitigate cuts to the FE front line.

While BIS provides adult funding, the DfE controls some pound;4bn of 16-19 funding for colleges which it currently channels through the Young People’s Learning Agency and local authorities.

Talks about rationalising all FE funding in a single funding agency - a Tory manifesto commitment - have gone quiet. Yet how many tens of millions could be saved by such rationalisation?

Then, as Mick Fletcher argues (opposite), there is the billion pounds that could be saved by abolishing small and inefficient sixth forms. Such generous funding is surely a tempting target for DfE cost-cutters.

While the DfE is as exposed to cuts as BIS, Chancellor George Osborne acknowledged the pressures on education, indicating special consideration in the spending review.

But does this special consideration extend to 16-19 in FE or does it stop with school sixth forms and academies?

Alan Thomson, Editor, FE Focus

alan.thomson@tsleducation.com.