A university principal has broken ranks with his colleagues to argue for the importance of injecting extra cash into further education rather than into the universities.

Professor Duncan Rice, principal of Aberdeen University, told the Perth conference he was not advocating any reduction in spending on higher education. But he believed in FE getting more of the cake because of the need to tackle skill shortages and because HE was “relatively more secure financially”.

The Aberdeen principal also departed from conventional HE wisdom in suggesting that young people might benefit more from taking a blue collar job, followed by education and training at a later stage, “rather than jumping into a university course which might end up in a dead-end white collar job”.

The conference was attended by leading figures from both sectors. The theme was “predators or partners?” and it centred on the future relationships between FE, HE and the world of work.

A central message, endorsed by Professor Rice in his keynote address, was the need for colleges and universities to look beyond Government for financial support. The former vice-chancellor of New York University, his chief claim to fame lies in his role in one of the most successful HE fund-raising campaigns in the United States, which accumulated more than $1 billion in 10 years.

Jim Donaldson, chief inspector for FE in England, stressed that more Government money had gone into FE in the past year. But Professor Rice said greater independence from Government purse strings was essential to maintain the distinctiveness and diversity of both FE and HE. “We should become more entrepreneurial by seeking partners who benefit from our work,” he said.

“Government funding will continue to decline and, while we need to slow down the trend, I believe we will lose if we resist it. The energy we put into complaining about lost entitlements would be better spent on seeking new partners and outside support.”

Evelyn McCann, director of skills development at Scottish Enterprise, said the agency’s review of business needs revealed employer acceptance that FE was a “critical factor in improving the success of Scotland plc”.

But businesses may not yet realise that, either individually or collectively, they will have to help pay for the FE expansion which helps them. “It cannot be entirely publicly funded,” she said.

A similar warning that Scottish education and training could face considerable challenges from international and private competitors came from Stephen Beere, chief executive of Scottish Knowledge. His company has been operating since last August as a partnership between the tertiary sector and industry to market and sell abroad distance learning packages devised in Scotland.

Mr Beere recalled his former life as head of a college in Perth, Western Australia, where there were only a couple of hundred private training organisations when he started. There are now 3,000 with an interest in “the cream of the market”.

Scottish Knowledge has been targeting the South-East Asian market. Mr Beere believes more business could be attracted to Scotland, where 4000 Asian students already represent an educational income of pound;30 million a year.

The strategy must be to concentrate on the emerging sectors such as information technology, health, finance and telecommunications using Scotland’s strong “brand name”.

The prospect of a rather different slice of the action for education was outlined by John Wils, operations and technical director of the UK Offshore Operators’ Association. The poor image of the oil industry, he said, was making it very difficult to attract young people to work in it. At the same time, employees were ageing and there was a looming crisis from a shortage of technicians.

Mr Wils revealed his association was planning a major UK offensive involving schools programmes, an industry-wide skills forum, and a drive to recruit both technicians and graduates.

Professor Rice called for a revival in apprenticeships to plug skills gaps more quickly. “Not all skills can be taught in a classroom and a great number of industrial skills are best transmitted by an experienced craftsman to a less experienced one on the shopfloor,” he said.

Mrs McCann stressed the importance for FE and HE to contribute to “home-grown” talent. The uncertainty over the major Hyundai plant in Fife, following the South Korean economic difficulties, had taught a lesson that Scotland could not rely just on internationally mobile projects.

This has led Scottish Enterprise to place a growing emphasis on research and development, commercial outlets for university research, and persuading people to start up their own businesses.

Joyce Johnston, the principal of Fife College, said FE colleges were willing to enter partnerships to realise these objectives. But at present they were more likely to be merely involved, rather than playing a full part in strategic decision-making with either HE or industry.

Mrs McCann said the experience of Scottish Enterprise was that, while the heads of institutions shared an enthusiasm for collaborative ventures, the commitment did not always extend to middle management and other levels.