Sir Geoffrey Holland, vice-chancellor of Exeter University and a former permanent secretary at the departments of education and employment, said colleges must do more to treat students as customers.

Speaking at a conference in Perth organised by The TES Scotland and Perth College, Sir Geoffrey laid out a vision for the next century in which students would be guaranteed teaching quality and success in qualifications.

The trend towards a contract had already been set by North Tyneside College, which now pledges to repay exam fees to any student attending for at least 90 per cent of a course who fails to achieve the qualification they are aiming for.

He told 100 delegates at the fourth annual Perth Conference at Scone Palace: “I do not see why the world of education alone, in our modern world, should be absolved from giving a guarantee of satisfaction to its customers, the students.

“We expect it in the high street. We expect certain standards, and that if things don’t work out, something will be done.”

The sector needed to listen more closely to students. “Many of us make sterling efforts, but I do not believe that we sufficiently ask the customers what they are looking for and what they think of what is happening to them. ”

Delegates at the conference, from both sides of the border, acknowledged quality guarantees were a likely future development. John Sellars, company secretary of the Association of Scottish colleges, said: “We already have FE and HE charters, so this would be a logical next step.”

North Tyneside College has operated its fees repayment policy for full-time 16 to 19-year-olds for two years, and has now extended it to part-timers.

Principal Lawrence Toye said: “What we are actually providing is a safeguard for the odd person who just messes up on the day of the exam, but has been a good student all along and completed all our requirements. It is part of our offer of quality.” The college actually had to repay fees only rarely, he added.

Speakers at the Perth Conference, on the theme of the global college and the role of communications technologies in education, predicted a growing shift in focus from institutions to individuals.

New technology would make the home, rather than college, the most important learning environment for the 21st century, according to Sir Geoffrey. But such a future placed a priority on inclusion in education to counter the “emerging nightmare” of a jobless and disaffected underclass unable to reap the benefits of new developments.

A shift towards empowering students was at risk of being blocked by restrictions such as the 16-hour rule, which limits the amount of time students can study without sacrificing benefits. Sir Geoffrey proposed an allowance to fund jobless people to study, along the lines of the enterprise allowance for the unemployed to set up in business.

Denise Hall, education marketing manager for British Telecom, highlighted opportunities for individuals to take control of their own learning with the help of technology, without being confined to any one institution.

Technology would help break down barriers between European Union countries, opening up access to a Europe-wide training market, according to Steven Bainbridge of the European Commission task force on education and training.

But he warned that the unemployed and unskilled must not be excluded from learning opportunities.