Scotland’s further education colleges need to do more “hustling for business” and improve their image or face losing more lucrative contracts to private training agencies, according to a report to be published later this year.

The findings made depressing news for FE principals and senior board members gathered in Crieff for the Association of Scottish Colleges’ first annual conference since the merger of the three FE organisations in Scotland last year.

Alex Neil, one of the consultants hired by Scottish Enterprise to carry out the research, found significant challenges facing the “image and perception” of further education.

About 63 per cent of the 200 companies who took part in the study used FE colleges, but 74 per cent went to private trainers.

It was the nature of that business, however, which revealed the weaknesses of the college sector. “Companies did not see FE colleges as the places to go for the higher-quality, added-value, more profitable, customised activity,” Mr Neil said.

Private agencies were therefore picking up research and development work, management development, training needs analysis and consultancy business. But Mr Neil said 36 per cent of companies opted for the private sector to train their staff in basic technical skills, which he described as one of the most depressing findings.

The result, according to the report, is that individual contracts placed by employers with the private trainers was on average three times the value of the business won by the colleges - Pounds 2,602 against Pounds 7,726.

The report says: “Companies perceive that the private providers offer a better service than FE colleges in terms of the range of services they offer, the quality of their services and the relevance of their training to company needs. They also believe the private providers have better consultancy services, better communications with their corporate clientele and market themselves better.”

Mr Neil told the ASC: “The business perception is that the private organisations go hustling for business and you don’t. The FE image therefore needs to change from a bums-on-seats, high volume, qualifications-driven enterprise, and colleges must move more into business and company development. ”

Roger Mullin, Mr Neil’s research colleague, said colleges were also failing to offer courses in many of the 12 key economic sectors defined by Scottish Enterprise. Only 14 per cent of colleges ran programmes in biotechnology, 17 per cent in chemicals, 21 per cent in energy and 14 per cent in forest products.

The report adds that colleges say they are hamstrung by lack of staff with the necessary research and consultancy expertise. Another reason, according to the researchers is that the colleges have failed to band together to fight off private competition because they regard the real competition as other colleges.

Rae Angus, the Aberdeen College principal, defended the FE sector. “Two-thirds of what we do in our college, which is a large business with a turnover of Pounds 25 million, is in publicly funded education - from which the private sector is entirely absent. So if there’s been any market failure, it’s been on their part. But then you wouldn’t expect Colman’s Mustard to run courses in motor vehicle maintenance.”