The threat comes from the Learning and Skills Council which takes over the pound;1 billion-plus budget allocated to 1,830 sixth forms in England in two years' time.
Its remit also includes the 430 FE colleges - with a budget of pound;3.5bn - lifelong learning, adult education and work-based training programmes. In total, the council will have an annual budget of pound;6.2bn and will be responsible for around four million students and 225,000 trainees.
The LSC, which replaces the Further Education Funding Council and the Training and Enterprise Council, has the power to change the structure of schools and colleges and it will be keen to end the anomalies in post-16 funding.
John Harwood, chief executive of the LSC, told the Society of Education Officers meeting in Leeds for their winter conference: "There are smallsixth forms that don't give quality. Many institutions that we will work with are extremely good, some are average and some unacceptable."
He told the officers that the LSC, with its 47 arms or regional organisations, was keen to work with local education authorities. But he warned: "If local authorities won't collaborate we will not ignore the problem. We want to encourage young people to achieve at least a level 2 qualification."
Labour promised but failed to address the problem of under-performing school sixth forms and their over-generous funding, recognising that their closure could spell political suicide in middle England.
Britain is at the bottom of a league table of nations for the percentage of 17-year-olds enrolled in either full or part-time education with only Greece, Mexico and Turkey doing worse. Top of the table is Sweden, where almost all 17-year-olds are still studying, followed by Belgium and Japan.