Ministers may adopt a system in which learning providers working in jails only receive full payment if prisoners get a job when they are released and do not reoffend.
The Government has announced plans to trial an outcome incentive payment scheme, in which a proportion of the funding received by learning providers for offenders is dependent on their success rates.
The move, announced this week by the Department for Business, Innovation and Skills and the Ministry of Justice, is part of the Government's "payment by results agenda", which also makes some college funding dependent on success rates.
"Payments will be more reliant on outcomes, and we will move progressively towards outcome incentive payments focused on job and reoffending outcomes," a new report on offender learning said.
Prisons minister Crispin Blunt said: "Previous investment in offender learning lacked adequate links with employment outcomes on release from prison and was commissioned too remotely from the prisons in which the training is delivered.
"This review will ensure that learning supports work in prison and employment on release, both of which are key elements of our efforts to rehabilitate offenders."
Joe Shamash, policy adviser at the City amp; Guilds Centre for Skills Development, a research and development organisation for vocational education, warned that the focus on results could encourage providers to concentrate resources on the highest achieving prisoners, at the expense of their less able peers.
"You have to be very careful you don't end up skewing provision towards those who have the best chance of doing well," he said.
In December, FE Focus revealed that the Skills Funding Agency had set aside pound;80 million for a pilot scheme in 201112, which would be shared between colleges that meet targets for helping students who are claiming benefits into employment. Also announced in the Making Prisons Work: skills for rehabilitation report, drawn up following a consultation with stakeholders, is the restructuring of learning delivery around regional clusters of prisons, so offenders are able to continue their chosen programme of study if they have to move to a different institution.
The report called for learning towards the end of prisoners' sentences to be more focused on identified needs in the labour market, in order to help offenders into employment on their release.
Prisoners should also be given support towards embarking on apprenticeships, and given the opportunity to develop relationships with employers before their release.
Skills minister John Hayes said: "Our goal is to make sure offenders understand there are viable alternatives to criminality. Rehabilitation through education works best when there is a strong link to meaningful work.
"I want to ensure that, for as many ex-offenders as possible, release is not followed by re-arrest, but by employment and reintegration into law- abiding society.
"We have ensured these reforms offer good value for the taxpayer: money will go where it is most needed and will do most good."
A wider package of reforms will be announced shortly in the Government's response to a green paper on the punishment, rehabilitation and sentencing of offenders.
Original headline: Prisons plan could be an unfair cop for providers