A report on FE in the London borough of Hackney and Islington recommends the closure or radical restructuring of the area's six school sixth-forms.
Arguing that existing schools-based provision is expensive and provides insufficient subject breadth for pupils, the report puts forward three options:
That all the sixth forms be closed and the area's two colleges provide all post-16 education.
That one or two new sixth-form colleges should be opened, to supplement or replace the existing institutions.
That existing school sixth-forms co-ordinate their timetables to allow students to attend more than one institution.
Though observers will be cautious about reading too much into a single report, it is likely to have reverberations beyond the two troubled inner-city boroughs.
Led by OFSTED in partnership with the Further Education Funding Council and the Training Standards Council, the inspection is the forerunner of new arrangements to be launched under the Learning and Skills Bill next April.
Its recommendations will be passed on to local learning and skills councils, which are being established by the Bill and will take a strategic look at post-16 education across a local area.
Last week, FE Focus reported that thousands of sixth forms could be threatened by the inspection regime, which allows schools and colleges to be compared on cost and teaching quality. Schools on average spend pound;1,500 more than colleges per three-A-level student.
Ministers arethought to welcome giving substantial influence to OFSTED, which could provide independent justification for politically-sensitive closures.
However, last month Opposition peers forced a Lords amendment to the Bill stipulating that school sixth forms should not be closed simply because they cost more. The Government has not yet said how it will react.
The inspection report says sixth forms in Hackney and Islington are often forced to combine teaching for Years 12 and 13 to cut staffing costs, which some teachers found difficult. Modern languages were available in only two sixth forms.
It says schools and colleges need to work harder to stop 16-year-olds studying elsewhere - in Hackney, 43 per cent leave the area. It also points to "unacceptable" variations in achievement across schools, colleges and training providers, and serious weaknesses in careers advice.
However, the area's two colleges, City and Islington College and Hackney Community College, escape relatively unscathed. Inspectors found that neither A-level or GVNQ results were below the achievements of similar-ability students elsewhere.
The Government today appointed Simon Jenkin, who has just completed a term as acting chief education officer of Islington, to draw up an area-wide action plan for raising standards. It should be implemented by the summer.
There were protests this week that post-graduate FE teacher-trainees will not receive the same financial help as schools-based PGCE students.
Even though FE students could be sent on placement in school sixth forms, and teach shortage subjects, they will not be eligible for the wages announced by the Government.