Government plans to impose payment by results on school sixth-forms have provoked overwhelming hostility from educators and opposition parties.

The moves spelled out in the third Competitiveness White Paper, published this week as a cross-Government effort led by Deputy Prime Minister Michael Heseltine, are based on revised Whitehall costings.

These suggest that differences in costs between school sixth forms and further education colleges have been inflated.

Government figures suggest that it may only cost Pounds 150 a year more per student to run a three A-level programme at a school sixth-form than at an FE college.

The White Paper suggests that since there was a more level playing field on funding than previously thought, common efficiency measures could be extended across the entire post-16 sector.

Ministers therefore plan to use a funding method for sixth forms already used for FE colleges. The method splits the budget three ways. Student recruitment and exam results each attract 8 per cent. The rest, 84 per cent, goes on running the courses.

Consultations on a national system of training credits - taking the free-market funding model much further - will also start. The aim is to set out what every 16 to 19-year-old is entitled to by way of education, training and cash from next autumn.

Despite Education Secretary Gillian Shephard’s assertion to the contrary, the moves have revived the spectre of vouchers. Leaders of headteacher and college organisations described as “naive” or “disingenuous” suggestions that vouchers were not on the agenda.

Opposition parties insist the White Paper proposals are further evidence of Mrs Shephard’s policies being driven by the Conservative hard Right in a desperate attempt to put “clear blue water” between themselves and the Opposition before the general election.

Bryan Davies, Labour’s further and higher education spokesman, attacked the “market madness” of the White Paper. “We already have a fiercely competitive market for 16-19 students and its problems are readily apparent: fragmentation and limited strategic oversight, a lack of impartial guidance and subsequently high drop-out rates. Vouchers will exacerbate these problems and bring others.”

Pilot training credit schemes over the past two years have not had a particularly good press. And a voucher scheme based on them was rejected in a report by independent consultants from Coopers and Lybrand, who warned of overwhelming bureaucracy.

John Dunford, president of the Secondary Heads Association, warned that payment by results and training credits would only make things worse. “Payment by results was a disaster in the 19th century and it is unlikely to be much better in the 20th century.”

Schools and colleges have warned that any extension of payment by results, currently used by the Further Education Funding Council, is likely to affect low achievers, with institutions battling for the brightest and those easiest to “teach to the test”.

Plans to go national with training credits have been welcomed by the Confederation of British Industry, which has been pressing for them since 1989. But they have alarmed many colleges involved in the pilots who found that they had less money for training.

David Trueman, principal of North Devon College, said: “At the end of the day, the value of the vouchers did not meet the cost of training. ”