Research from the Further Education Development Agency found many colleges were heavily involved in economic regeneration projects - but there was great variation between one part of the country and another.

Colleges were improving their links with businesses, other public sector bodies and the community, but many felt excluded from the “top table”; the high-level boards and committees which drive and monitor development.

The report, by FEDA researchers Simon James and Greg Clark, argues that colleges should take a far more active role in measuring and promoting their work in economic development.

And it urges principals to renew efforts to forge partnerships both with businesses and with local economic and planning bodies.

The report also calls for greater unity between colleges, arguing that colleges need a regional structure to work with other organisations. It says: “There has been little policy guidance on how FE is supposed to work with such agencies and few real efforts to provide a cohesive framework.

“Colleges see local authorities and training and enterprise councils as the most active players. They see universities, chambers of commerce, business associations and the FE sector itself as second string players, with business links and Government offices as next in line.”

Colleges reported that they were seen as contractors, rather than equal partners in the planning process.

The report said: “Many colleges report problems in gaining a seat at the table at some of the larger partnerships and boards, especially those that disburse funds or generate longer term plans for a locality.”

But researchers found colleges had failed to recognise and act on their own potential as engines of economic development.

Only a handful of colleges had undertaken any serious study of their contribution to local business, hampering their ability to influence, or react to local economic plans.

The report said: “Only a very small number of colleges have undertaken any economic impact analysis. This contrasts sharply with higher education institutions, many of which have undertaken extensive economic analysis in recent years as part of their claims on resourcing.

“Community colleges in the United States and colleges in Australia have been subject to various economic impact studies.”

By contrast, a study of the economic impact of Scottish colleges found every Pounds 1 million spend of FE contributed Pounds 1.42m to total Scottish production, and helped create nearly 45 jobs.

A similar study, carried out by City College, Norwich, found the college brought Pounds 20m a year into the local economy - a figure, the report said, which was very useful in making the case for investment and FE’s role in economic planning.

The report says: “We conclude that FE colleges can be a major resource for business. They represent an exceptional basis from which to develop products and services for the business community.

“Clearly some colleges are well ahead of others in this respect and there is a need to build up a more comprehensive capacity to market and deliver services if such roles are to be recognised regionally and nationally.”