Adult skills minister Ivan Lewis is in crisis talks with funding chiefs over the failure of a "flagship" training programme for the most disadvantaged young adults.
Entry to Employment (E2E) was hailed by ministers as a model scheme to reach disaffected and excluded people when it was launched nationally last year after successful pilots.
But this year, following new guidance from the Learning and Skills Council - and what training providers claim is "woefully inadequate" funding - at least 9,000 would-be students have been turned away empty-handed.
The extent of the crisis emerged in the first annual national survey of training groups carried out by The TES and Association of Learning Providers. The survey shows that nine out of 10 independent providers have the capacity for a huge expansion in apprenticeship and basic skills training.
But lack of cash, funding regulations, red-tape and ring-fencing of cash are hampering their growth. The survey also reveals deep frustration over a "broken government pledge" to slash bureaucracy.
Some of the greatest concerns, reported this week in the 16-page TES special report, Learning Reforms, are around the shortage of cash for initiatives such as E2E.
Mr Lewis, in an interview for the special report, agreed there were concerns and promised action. "I am in intensive discussions with the Learning and Skills Council. A lot of companies have complained. We have a duty to engage the most disadvantaged and that is my responsibility."
Young people were entitled to education and training, but there was more to it, he said. "It is right from the social justice point of view. No young person should be left behind."
E2E provides training for up to two years in subjects such as motor mechanics, engineering, childcare, basic skills and citizenship. A budget of pound;240 million last year provided places for 30,000 of the most vulnerable young adults who had fallen through the net.
Training providers were expecting to double the number of places this year but funds had only increased by pound;60m. Revised LSC criteria also cut the recommended maximum time to 22 weeks - too little for the most vulnerable, say the learning providers.
Mr Lewis said: "I am concerned about the issue of the 22 weeks and am addressing this. But, if E2E is inappropriate for the most disadvantaged, we have to find an alternative suitable programme."
However, Graham Hoyle, chief executive of the ALP, said: "E2E was created for the most disadvantaged, so something has gone wrong."
The TES\ALP survey reveals high expectations among providers.
Three-quarters expect to train more apprentices in the next 12 months. A similar number want to offer the new Young Apprentices vocational programme for school pupils over the age of 14.
Training providers want to see their market opened up, with less of the cash ring-fenced for colleges. But there is concern that this could lead to competition rather than collaboration with colleges. An area where they say they have particular strengths is in the level 2 (GCSE-equivalent) adult entitlement programmes.
While eight out of 10 providers surveyed expected collaboration to increase, many said they would be better off bidding independently for cash from the LSC.
Mr Lewis predicted greater freedom for providers to be able to bid independently. "In future we will be less interested in the nature of the provider and more in their performance in responding to the market." But he added that he and the LSC would nevertheless expect to see greater collaboration.
Comment 4 Full survey in the Learning Reforms 16-page reporT