Principals were invited to give evidence to the House of Commons education select committee as it examined funding and the recent report by former head of the Audit Commission Sir Andrew Foster on the future role of colleges.

Pauline Waterhouse, principal of Blackpool and the Fylde college in Lancashire, told the committee she ran courses for one of the biggest employers in the seaside town, involved in the hospitality industry.

The course in improving customer service skills had been a success but, she said, the employer cancelled when the pound;80 fee was introduced. “The employer has refused to pay that amount,” she added. “That is the kind of attitude we are facing.”

Labour MP Gordon Marsden attacked businesses for refusing to invest in training workers: “That is a pretty demeaning and disgraceful indictment of business,” he said. “If you can’t get a major employer to pay that sort of money up-front for the benefit of their employees, I don’t know how we are going to move in that direction.”

Colleges have been told they must rely on bigger contributions from employers and students for courses that fall outside the priority areas, such as 16-19 education and basic skills.

The Association of Colleges had predicted colleges would need more time to make the adjustment because the market was not ready for sudden fee increases in the timescale anticipated in Whitehall - a claim disputed by ministers.

It argues ministers have over-estimated the percentage of course costs that can be recovered in fees - but ministers have defended their corner, emphasising that FE has seen unprecedented increases in spending under Labour.

John Brennan, chief executive of the Association of Colleges, told the Commons committee that there needed to be a shift in cultural attitudes to investment in learning among individuals and employers “We are going to struggle to achieve that kind of shift,” he added.