Local education authorities, community groups, staff and students will have an automatic right to seats on the board under the plans spelled out this week in the consultation paper, Accountability in Further Education.

Substantial reforms were on the cards, but the proposals go further than many in the sector expected. It gives the clearest suggestion yet from ministers that, with a right to at least half of the seats on the board, industry and commerce has had too great a say over the workings of further education.

“The Secretary of State considers that business members should continue to have an important role in the make-up of corporations but that no single category should be able to control proceedings,” the paper says.

Therefore, no more than one-third of places can be earmarked for people from the world of business under the proposals. “They will no longer be self-appointing and, like other members...will be appointed by the whole corporation.”

Mr Blunkett wants the reforms, once agreed, to be implemented as soon as possible. He proposes to charge the chief inspector for the Further Education Funding Council with reporting back in his annual report on the successes and failures of colleges to reform their corporations.

Failure to satisfy ministers could lead to the colleges being excluded from the right to “accredited status”, a new category of college which grants some colleges greater freedom than others from the bureaucratic arms of the FEFC and Department for Education and Employment.

The consultation paper suggests too that many colleges had lost sight of the prime purpose of education and training for the wider community. This, it says, has arisen because of unrepresentative governing bodies.

“If it is not constituted in a way that reflects the community that the college serves, the risk is that the college will become remote from it, become unresponsive to its needs, and lose sight of its mission.

“The Secretary of State does not therefore view accountability in the narrow financial sense, but in this broader sense of a dialogue between the college and those it serves.”

The report has been widely welcomed by leaders of schools and colleges. The FEFC, Association of Colleges and the Local Government Association all say that the proposals are close to recommendations they have made in joint papers from the sector in the nine months since Labour was elected.

The FEFC had wanted the measures on local authority representation on governing bodies to be reciprocated. The LEAs will have a right to at least one and up to three places on the board. Professor David Melville, FEFC chief executive, is expected to push for colleges to have representation on local authorities as of right.

However, he welcomed the proposals as a significant step in improving partnerships at local level. “If we are talking new partnerships, we need new structures to back them up.”

Graham Lane, LGA chair, said: “We will encourage LEAs to make sure that the right to seats on the board is reciprocated. We are building up partnerships with the FE world and we should set an example post-Nolan.”

The proposals also call for tighter regulations on the keeping of college Registers of Interest and codes of conduct for governors.

The paper is now out for consultation until July 24.