MPs have warned that the loss of more than 1,000 jobs at FE's funding body may not mean a reduction in red tape.
In its latest report on leadership in FE, the House of Commons public accounts committee said the Learning and Skills Council had not shown exactly what benefits colleges would see from the pound;40m cut in its running costs, and when.
The MPs also criticised the "wasted effort" of dozens of FE organisations with overlapping roles. They called for simplification of the four inspections and audits colleges face each year.
Rob Wye, strategic director of the LSC, said that the committee had been told that it would simplify the funding system and cut demands on colleges for information, as well as cutting administration costs.
Colleges that do well will also enjoy a new "lighter touch" relationship with the LSC, he said.
Despite criticising the bureaucracy of FE, MPs doubt that colleges are ready to regulate themselves. They said that nearly a third of colleges were judged unsatisfactory in their procedures to ensure the quality and standards of education in 2003-4.
The Association of Colleges is consulting members about launching a campaign for self-regulation. It said the committee was relying on out-of-date information. Latest Ofsted reports say self-assessment has improved and only a "small minority" are over-estimating performance.
Julian Gravatt, director of funding and development at the AoC, said colleges are overseen by 22 external organisations, at a total cost estimated at Pounds 500 million a year. "We believe that colleges have shown repeatedly that they are able to serve their communities well with the minimum of external interference, while meeting the many targets set for them by government," he said.
FE insiders were similarly critical of MPs' claims that 35 colleges were failing. That figure is from 2004: just nine colleges are now judged inadequate by inspectors, just over 2 per cent of the total.
The LSC did admit, however, that it was considering merging failing colleges with other institutions, as the MPs recommended.
But lecturers warned against rash action against the re-maining failing colleges. Barry Lovejoy, head of colleges at lecturers' union Natfhe, said:
"Given inspectors found colleges could improve dramatically within the short space of a year, it seems shortsighted to remove funding from underperforming colleges or merge them. With the right support, colleges can improve quickly."
The MPs also criticised colleges for failing to consult local firms over their training needs. They will need to be more commercially astute, the report says, as the Government wants students and employers to pay more of the cost of training.