It presaged a new era of spending on further education. Labour pledged to put colleges at the forefront of change. More adults would be encouraged to learn since the improved health that came with it would cut NHS bills.

Joined-up government would make everything possible. Cash spent on learning would be saved on health and welfare. As international evidence shows, the economy and workforce benefit as adults failed by schools system gain the confidence to step back on the learning ladder. So what went wrong? How could education secretaries be so disparaging about the 70 per cent “other”

adult learning once lauded by Labour?

Part of the answer is that the cash ran out before FE got its share. When Treasury funds grew tight, a problem compounded by having to pay for a war in Iraq, some courses were deemed a luxury. The state could not afford them alongside the huge demand to improve work-skills training. Initiatives such as Train to Gain gave industry more than pound;750 million in subsidies to improve employees’ skills, while colleges were told to charge much higher fees for other adult education.

But a rigid approach to funding emerged, one that is likely to backfire, says Chris Humphries, director-general of City Guilds. He believes every means should be used to get adults back on the learning ladder. From 1998 to 2000, Mr Humphries headed the Government’s skills task force, which did much to shape current thinking. Yet he expressed concern at a recent seminar on the value of lifelong learning that the Government no longer looks to wider “social utility”. “How can public funding for all post-school education best be utilised to produce the most positive impact on economic competitiveness and social inclusion?” he asked.

He echoed the concerns voiced the previous week by MPs on the Commons education select committee who argued that cuts in so-called leisure studies were a false economy and excluded many from getting on the skills ladder.

“There is compelling evidence that certain types of adult learning are being inadvertently put at risk by current funding priorities,” MPs said.

They recognised the dilemma faced by Alan Johnson, the Education Secretary and called for “greater clarity on the dividing line between what is of value to individuals and the economy and what is less so”.

When Mr Humphries spoke at the seminar, the first of six on the public value of adult learning (see below) organised by the National Institute of Adult Continuing Education and the Learning and Skills Network, it was not just a call to restore funding, but for a re-think of targets setting and spending.

“There is a tension between interventionism and the market models that is seriously getting in the way of progress,” he said. The Treasury, with an iron grip on public service agreement (PSA) targets, has set departments on paths to goals that are off the mark. “When it comes to skills, the policy behind them is for simplicity to the point of stupidity. We have reached the point where it is possible to lose the plot,” he said.

“I have concern about the extent to which PSA targets have become a substitute for policy and are put into the hands of bean-counters to produce stats to show ministers.”

For Humphries, “social utility” involves greater access to learning than there is at present. ” Alan Tuckett, director of Niace, makes the plea to recongnise the contribution of education to health, motivation and sanity, creating meaning and inclusion.” Targets such as the 40 per cent reduction in low skills among workers and 50 per cent participation in higher education by 18- to 30-year-olds are too inflexible to meet adults’ wider learning needs, he suggests.

“We are putting a steel seal over the top of low-skilled adults,” he said.

“That steel ceiling looks like finding a solution through immigration. I am not anti-immigration, but it has to be managed, while encouraging adults to train.”

Government statistics speak for themselves. The decline in the number of school-leavers from now to 2010 means that UK firms must recruit 2.1 million employees from low-skilled, unemployed adults and managed migration.

One in five adults lacks the basic literacy and numeracy needed to start training, and another 4.1 million have few, if any, skills and need re-training for the increasingly high-skill economy.

Moreover, the improvement in skills among 19 to 21-year-olds has stagnated.

Mr Humphries said: “The Government talks up a 5.6 per cent improvement in 10 years. But almost all that improvement came between 1994 and 1998 (4.8 per cent), since when improvements have been negligible (0.8 per cent from 1998 to 2003).”

The Government was on the right path but is now misguided, he said, adding:

“Cash must be targeted at employment, and subsidies for lower priorities reduced as necessary. But learning priorities must be broadly defined and include basic skills, employability programmes, access and taster courses for the low-skilled and adult entitlements to level 2 (GCSE equivalent) and level 3 (A-level equivalent) and beyond.”

Mr Humphries concluded that all interested parties need to speak with one voice “to get better public value for the learner and an effective system through markets rather than intervention.”