The inflexible funding formula which had driven colleges towards the same low spending average had been counter-productive and had stopped them exploring important experimental education to meet the needs of a wider range of students, he said.
He promised that under a Labour government there would be expansion, with cash targeted at priorities identified in reports such as the Further Education Funding Council committee of inquiry into widening participation in FE.
This meant giving staff in colleges a freer hand. "Our plans for a General Teaching Council and an FE teaching qualification for all lecturers will help strengthen the professional role of staff," he said.
He criticised the Tories for imposing rigid management structures which impeded drives for more flexibility.
Mr Davies agreed with the list of concerns identified in The TES telephone poll and London University Institute of Education research which showed that excessive bureaucratic demands were hampering efforts to improve college stay-on rates (The TES April 11, 1997).
His comments are likely to be among his last as FHE spokesman. His Oldham seat disappeared in boundary changes and Mr Davies failed to get selected for a new seat by the deadline of Wednesday this week.
He remains shadow spokesman until the election and has vowed to continue fighting for the best possible deal for FE colleges.
"There are a swathe of very significant issues we are obliged to address as a priority if Labour comes to power," he said. With the Dearing HE review imminent, he cautioned against seeing a way out for FE as a merger into the HE sector.
"Such reforms are a long way off yet," he said. He did not expect them to come in the lifetime of the next Parliament. "I am not sure it is wise anyway to impose such reforms nationally. It may be best to let things work out to suit the needs of different regions of the country."
The priority for the Government and for FE was to see a significant increase in adults, not traditionally involved in education, participating in learning, he said. "I think the FE sector is most able to meet this task."