Alan Johnson, the English Education Secretary, has decided to sidestep the universities in his effort to create high-quality foundation degrees as a vocational alternative to the traditional degree.

Scotland’s colleges already have a considerable involvement in degree-equivalent courses through the Higher National diploma and certificate. Higher education accounts for 24 per cent of student activity in FE colleges north of the border. Almost 300,000 Higher National units are awarded.

The move in England is seen as the most radical change in further and higher education for 15 years, since the old polytechnics gained university status - leaving a huge gap in vocational higher education.

Whitehall sources acknowledged there was concern over the slow development of the new degrees, which were being “hampered” by the stipulation that colleges offer them through the universities “which too often had their own agenda”. So far, just over 14,000 students had signed-up for them.

Legislation will follow swiftly if the measures survive the passage of the bill. Necessary funding reforms will be in place as well as new powers to enable the Privy Council, which controls degree-awarding powers, to open the door to the colleges by next September.

Colleges that seek degree-awarding powers will have to have strong partnerships with industry and commerce, and will be subject to new quality control arrangements.

Colleges and unions have welcomed the proposal, but with caveats. Paul Mackney, joint general secretary of the University and College Union, said:

“We would expect standards to be commensurate with the first two years of a university degree and to lead to a third year at a university for students who want it.”