The enterprise and lifelong learning committee, which conducted the eight month investigation, said it planned to look again at the field of lifelong learning.
The committee's report said that training programmes funded by the local enterprise companies (LECs) were "constrained by frameworks that are too rigid, volume driven and focused on easily measurable outputs".
It adds: "There is scope for more flexibility in locally delivered training, including that mnaged by the LECs, based on local labour market circumstances and information."
In what it believes is a hard-
hitting report, the committee suggests that public bodies which fail to improve their performance, eliminate duplication or deliver value for money should lose some of their Government funding.
John Swinney, the SNP's deputy leader who is the committee's convener, commented: "The Executive must be prepared to impose financial penalties on any agency which fails to participate effectively in this process."
A key proposal is for each LEC area to set up an economic forum which should include colleges and universities. The LECs themselves should become public bodies instead of private companies.
Full details next week