The chief inspector’s annual report on the state of adult education is as much a verdict on the performance of the Government as on colleges and training organisations under their gaze.

David Sherlock, head of the Adult Learning Inspectorate, published his report on Wednesday. It echoes the concerns of those, including the Association of Colleges, who have complained of the difficulties caused by the ever-changing demands of ministers.

He says: “To achieve a sense of excellence and well-being, further education colleges need greater stability and clarity in the expectations placed upon them, and to learn to say ‘no’.”

He also warns that the focus on basic skills and level 2 qualifications - equivalent to GCSE grades A to C - should not be allowed to distract attention from level 3 (equivalent to A-level).

The report accepts the urgency of helping the seven million adults said to lack functional literacy and numeracy, and expresses concern at the lack of qualified lecturers in adult basic skills.

“We need to take care not to exaggerate the problems we face with literacy and numeracy, however, lest investment in learning be skewed too far towards the lowest and the highest levels. There is a danger of neglecting level 3 in the middle, where Britain compares least well with our industrial competitors,” he adds.

The inspectorate wants a more sophisticated understanding of the benefits of adult and community education - largely provided by local education authorities.

“ALI inspectors found many serious adult and community learners take a positive decision to shun awards. They see a qualification as a distraction from learning and an award as irrelevant to the kind of personal, career or community development they seek. What is needed is a form of confirmation of progress that is also formative for the adult learner.”

He also says colleges are too distant from the needs of employers, echoing Charles Clarke, the Education Secretary, at the AoC conference last week.

Teaching standards were higher in adult work than for the 16-19 age group, with just 6 per cent of classes judged unsatisfactory.

Most of the best work seen by the inspectors took place outside FE colleges, says Mr Sherlock.

Just two colleges from the general FE and tertiary category make the list of top providers: Brockenhurst college in Hampshire, which serves more than 10,000 adults, and South Cheshire, a tertiary, which also happens to be Ofsted’s favourite college.

Of Brockenhurst, the report says: “Many study in 30 community outreach centres away from the main campus. The college’s achievement is the greater for that diversity.”

South Cheshire was praised for its “inspiring managers whose attention to educational and social inclusion is exemplary”.

But the report shows the best work-based learning had the largest number of highly rated government-funded providers (34). The JobCentre Plus programme, with 17 centres among the best, came next, followed by 11 sixth-form colleges.

Among work-based trainers, the report concludes, small is beautiful. Most of the best work-based courses are by providers which deal with fewer than 100 learners and specialise in a single subject area, it says.

Some of the worst courses were for people with learning difficulties or disabilities.

Workstep, funded by JobCentre Plus, caters for 28,000 people through 140 providers, most of which are local authorities. Most of these were judged unsatisfactory . Nearly half of them, despite the obvious risk of their clients being disadvantaged, failed to convince inspectors that they had a credible equal opportunities policy.

ALI expects re-inspections in this area will show improvements but, the report comments, “early signs were very worrying”.

The inspectors found residential colleges for people with learning difficulties or disabilities are below the standard of general FE colleges attended by the rest of the population.

Eight out of 18 were found to have inadequate leadership and management.

The harshest words were reserved for providers for this section of the learning population.

Mr Sherlock says: “I am particularly concerned by the standards of provision for people with learning difficulties or disabilities. It is now possible to find provision to which my inspectors regularly award grade 5s across the board.”

He is also concerned about services for those who have “failed, or been failed” at school, and training aimed at preventing criminals from re-offending.

While poor provision remains extensive, the report says, there have been improvements. The number of poor providers has halved from 200203 to 200304, it says, and the learning and skills sector has had its best year since the Learning and Skills Council began.

A significant development is that private training providers are “now a worthy part of publicly-funded provision”.