As so often happens in politics, the Government’s latest skills training strategy has suffered unintended consequences.

Allowing adults to do complete level 2 (GCSE-equivalent) training courses for nothing seemed like a good idea - but what about colleges that were already successfully raising fees from such work?

Funding up to 2008 is tightly prescribed. Colleges must focus on students aiming for a full level 2 qualification and support the national Employer Training Programme and Skills for Life. They are also committed to meeting demand from 16 to 19-year-olds.

But these priorities have caused serious problems for many colleges - as an independent inquiry into adult learning this week revealed. While the Learning and Skills Council has compensated for lost fees, this drained cash from other adult learning.

Colleges were exhorted to stop waiving fees for other “non-skills” courses.

Unfortunately, many of these aimed to widen the appeal of FE. Students on such courses could ill-afford to pay.

The report by the inquiry committee - set up by the National Institute of Adult Continuing Education - highlights the unintended consequences of current policy.

Part-time “first-steps” courses to prepare people for level 2 study are being cut. One in six colleges is closing or slashing courses for students with learning difficulties.

Eight out of 10 students are adults over 19 - a total of 3.4 million people - but education for many of these is being pushed to the margins. Civic education for a better society, once at the heart of Labour FE policy, is vulnerable. So too are courses for adults not in employment, education or training.

Nevertheless, the inquiry backed the Government’s skills agenda and the principle of charging fees for those who could afford them.

Indeed the report Eight in Ten: Adult learners in further education, is far from a whinge list. It recommends radical reforms and a new role for colleges to meet the skills and wider social needs of the next 15 years. It calls for all adults to have a statutory right to a level 2 (and, where possible, level 3, or A-level equivalent) course if they lack qualifications.

Students should be allowed to progress at their own pace - full- or part-time - with a modular qualifications system that gives credit for those who only partially complete their studies.

Clearer guidance on fees is needed, with a “regional minimum” to prevent damaging competition among colleges and other providers. Career development loans should also be introduced for full-time FE students, it says.

Colleges should have discretion over 20 per cent of their core budget so they can meet local needs swiftly, and be freer to shape qualifications to suit the needs of individuals and employers.

The recommendations amount to a new “mission” for colleges, which the team wants led by a new minister for FE.

Evidence for the inquiry, chaired by Chris Hughes, former head of the Learning and Skills Development Agency, included witness statements, 140 written submissions, a survey of colleges, literature survey and a huge data search. The committee hopes to stir the Government to act.

Its report confirms some of the worst fears about cuts to courses for disadvantaged adults - which can only be reversed with extra cash. It says there is an “urgent need” to find more funding for 2006-7 to resolve this and other unexpected problems.

Following a meeting to discuss the report with Bill Rammell, the further and higher education minister, Mr Hughes was confident the Government would heed its recommendations. “The committee was significant because it included people from every organisation in the business,” he said. “No one, despite the problems revealed, was looking to go backwards. Nor were they defensive about problems on the ground.

“Two clear issues emerged. First, if priority-setting is to become a permanent way of life, we need a sharper instrument than the notion of adult learning. We identified three themes colleges should focus on: access to employability, workforce development and the creation of cultural values.”

The second big issue was entitlement. “If we are serious about lifelong learning,” he said, “we need to support an incremental approach. The system must support people taking steps to level 2. Indeed, level 2 itself is an unreliable definition and a blunt instrument for funding.”

The report attacks the way funding is linked to qualifications. “The funding system and achievement of targets and inspection gradings have all been assessed on... a false premise: that the only way to measure educational success is by counting completed qualifications.”

Mr Hughes said none of the solutions could come overnight, especially as options for fees had to be explored further: “As we have seen, there are too many risks in rushed changes.”

College must be able to respond to local demands, he insists. “They are seen too often as mere delivery units. There is no substitute for having colleges determine local need.”

Key points from the inquiry

Action is needed to:

* ensure more strategic collaboration between colleges, businesses, community organisations, local authorities and LSCs

* help college staff reclaim control of the curriculum and design of qualifications

* create performance indicators which measure value to the public better

* encourage awareness of cultural diversity

* overcome unhelpful divisions, whether between vocational and academic programmes, institutions, or students of different ages

* ensure integration between adult learning grants and other benefits which curb adults who wish to study

* cut the bureaucracy around work-related training which hinders participation

* avoid damage to adult learning infrastructure

* stop reforms being rushed without time for sufficient social and cultural adjustment