Chris Ripper, personnel and trading director for drinks giant Scottish and Newcastle Retail, told MPs his firm’s national vocational qualifications programme would probably end if cash support from the Further Education Funding Council was cut.

The FEFC decided to ban colleges from paying subsidies direct to employers earlier this year.

Mr Ripper told members of the House of Commons education select committee:

“If there were no other sources of funding available we would stop running accredited programmes.”

He told MPs the company had lost fewer experienced staff since the NVQ programmes started, but the NVQ programme cost an extra Pounds 1 million to deliver over an internal company scheme.

If subsidies were not available “I would have to convince my board that they should have a nationally recognised qualification rather than a Scottish and Newcastle qualification. I would not win.”

He was speaking as MPs questioned the controversial practice of college franchising as part of their inquiry into further education.

Barnsley College principal David Eade insisted that franchising had allowed colleges to gain a foothold in workplaces across the country. He said: “We are starting to build an education and training culture within industry. We have a long tradition of not persuading companies that education and training is relevant to their needs. I believe franchising has helped us do that.”

But other principals told the committee franchising had distorted the complex college funding formula, leaving colleges which concentrated on traditional courses worse off.

City of Bristol College principal Brian Styles said: “There’s a lot of good work going on in franchising and I’m not going to gainsay that. The problem that bedevils franchising is funding.”

He said colleges used cheap franchised courses to subsidise their more expensive college-based courses, leaving them in a healthier financial state than their traditional counterparts.