Tough new measures, an-nounced by the Learning and Skills Council last week, would see it remove more than a quarter of the income from colleges if too many of their courses are blighted by drop-outs and exam failures.
This would force their hand towards taking drastic measures - including the sacking of the principal, merger with another college, or closure.
The Scottish Funding Council has already served notice that it is to tighten its financial and accountability regime significantly for colleges and universities over the next three years, to ensure the institutions promote social inclusion, reduce their drop-out rates and improve student results.
The SFC has not yet spelled out what penalties might be imposed on transgressors, but it might be interested in what the LSC plans for England. Rob Wye, director of strategy at the LSC, says "notices of improvement" would be served on the colleges if more than 25 per cent of their courses saw less than 50 per cent of students going on to gain a qualification.
This standard of performance would put colleges in a new category of "outright failure". The performance of a small number of colleges in England is known to have fallen to this level, although LSC declined to identify them.
"This is the nuclear option where we're saying 'more than a quarter of what you're doing is not good enough and we're giving you notice to pull your socks up, or else'," said Mr Wye.
The notice would be served on the principal and the governors of the institution which, if it failed to improve its performance, would face funding being withdrawn from the sub-standard courses.
The English quango this week published its report, Identifying and Managing Under-performance, which fleshed out how it will go about raising FE's game in line with the Westminster Government white paper - Further Education: Raising Skills, Improving Life Chances.