A raft of measures is being considered to eliminate the unfair distribution of cash to schools, colleges and universities, to encourage more students into college and to harmonise the inspection regimes in state-funded education and training.
But no big decisions on spending will be considered before the Comprehensive Spending Review, which all Government departments must complete by July.
Baroness Kennedy was deeply unhappy with the funding bias towards schools and universities, though her criticisms were muted in her final report. This is still to be tackled by ministers.
An outline of the Government's vision for FE - how to attract more of the excluded minorities and the unemployed back to learn - is sketched in its long-awaited response to the Kennedy Committee report, published last June, on widening participation in further education.
But decisions on all her most radical recommendations have been put on ice pending the review. The paper, launched alongside the Green Paper on Lifelong Learning (full details on pages 6-7) will therefore disappoint many in schools, colleges and the training and enterprise councils.
"Through its Comprehensive Spending Review, the Government is taking into account the need to widen participation in post-16 learning," the paper says. And it pledges a new policy framework from Government.
But the detail is still to be fleshed out and most of the Government's responses to Kennedy - and its recommendations in the Green Paper - restate initiatives already under way or in the pipeline.
Ministers wholly support calls for more effective local partnerships and want the Further Education Funding Council regional committees to ensure closer collaboration with schools, universities and training and enterprise councils.
Ministers are consulting the Local Government Association, the FEFC and voluntary bodies to stop the erosion of adult education and to draft plans for growth.
An adult and community education fund is to be established, in line with Baroness Kennedy's call for a Learning Nation Fund and a redirection of spending priorities under the Single Regeneration Fund.
But her call for National Lottery money released after the millennium to fund "a quantum leap in participation in post-16 learning" is all but rejected.
"It is too early to make firm decisions on the post-millennium Lottery funding stream," says Mr Blunkett in the report. "The Government will consider the proposal for a 'Learning Nation Fund' alongside other proposals, at the appropriate time."
Out too goes her call for a Charter for Learning, which was to spell out the rights, duties and entitlements of all people beyond school, particularly the seven million adults with no formal qualifications. Measures in the Green Paper, such as the University for Industry, individual learning accounts and a smart card registering student achievement make it unnecessary, the report suggests.
Firm guarantees are given on the reform of discretionary awards. As revealed in The TES on February 13, a national system of grants for all post-16 is likely by the summer.
l An adult and community learning fund.
l Partnership to replace competition post-16.
l 500,000 extra students for colleges and universities.
l Colleges to be commissioned for UFI work.
l Consultations to improve college accountabi lity
l Reform of Job-Seekers' Allowance so more
unemployed can study full-time.
l Radical reform of discretionary awards.
l Creation of common database of achievements
covering all14 to 21-year-olds