Plans to overhaul the FE funding system to be unveiled this autumn will need to include a crack-down on up to pound;1 billion of fees that go uncollected by colleges and training providers each year, the chair of an independent review has warned.
Chris Banks, former chairman of the Learning and Skills Council, conducted a review of employer and individual contributions to FE and concluded that vast sums may have gone unpaid.
"We identified that there may be up to pound;1 billion a year of fees that should have been collected under the current rules but were simply never charged," he said.
His proposals to tighten up on fee collection are expected to influence the Government's plans to simplify the FE funding system, due to be published this autumn.
Mr Banks said the system was complex, with weak controls, which meant much of the money was not being collected. Although some of those who were expected to pay the fees could not afford them, and had them waived, others were able to pay, but were not asked, he said.
Also, because the fee contributions were marginal for many providers, which relied on Government funding for much of their income, they did not feel under pressure to ensure all the money due was collected.
Mr Banks' review, commissioned under the previous government, recommended that providers set and publicise the total cost of courses, along with the employers' and individuals' required contributions.
"To make this work, providers should be very precise about establishing the value of the courses they offer," he said. "This, and not the pursuit of public funding, should be the starting point."
The review said that Government funding should follow these contributions, matching them up to a defined maximum contribution set for each course by the funding body.
While the current system assumes that 50 per cent of the cost of courses is contributed from private funds, Mr Banks proposed that this could be reduced for some courses where necessary to incentivise take-up. In other cases, the public contribution could be less than 50 per cent.
Mr Banks said: "While the Government has changed, the case for reform has not.
"Far from being lost in the new political landscape, the need for a new approach has become more apparent than it was even before the work was started."
The system of financial support for FE students also needed to be overhauled, he said.
Students have access to professional and career development loans, but repayments start a month after the course finishes regardless of whether the student has found work.
Mr Banks said the loans should be revised and relaunched, with additional funding that would unlock a large amount of investment. The review said that a pound;50 million investment by Government in subsidised loans for students could release a total investment in FE estimated at pound;800 million.
"Excitingly, our proposals for reform concern a sector of education that is often able to provide a return on investment - for the individual, the employer and the state - in a much shorter time span than the traditional three- or four-year route from university entry to a degree," Mr Banks said.
"Further education in the widest sense can make a difference to the economy - not just in the long term but in the short term as well."