Social exclusion is a term widely used by policy makers in both the UK and the European Union. As other chapters in this book illustrate it is a complex and multi-dimensional term embracing many socio-economic and cultural factors. Social inclusion for many policy makers has replaced the debate about economic equality and is seen as a means of bringing hitherto excluded groups into the mainstream. Its application to education has attracted a lot of attention, with the Government seeing education and teachers as central to forging an inclusive society and a key to the 'redistribution of possibilities' (Giddens, 1998: 109). This chapter will look at the implications of this approach and explore the relationship between social exclusion/inclusion and the issue of funding. We will focus on the further education (FE) sector, which is particularly relevant as it is considered of pivotal importance to the New Deal, Widening Participation (Kennedy, 1997) and the recent Government initiative on Lifelong Learning. As the Secretary of State noted 'by reaching out to the community further education can help reduce social exclusion, increase employability and raise the nation's economic strength and morale' (Education and Employment Committee, 1998: 5).