Further education needs an overhaul of funding as radical as the introduction of university tuition fees, the chief executive of the UK Commission for Employment and Skills has claimed.
Chris Humphries said UK colleges lag far behind their international counterparts in amount of revenue collected in fees and they should focus on improving this rather than protesting at the Government's cut in funding rates.
As Lord Mandelson announced a review of the fees policy for FE, Mr Humphries said boosting fee income could profoundly change the way colleges were regarded and give them the kind of political influence that universities enjoy.
Colleges should focus on increasing that income, rather than protesting about budget savings of pound;340 million in their funding next year, he said.
"My chairman always says any organisation can absorb a 10 per cent cut and still maintain services at the same level," he said.
Mr Humphries said the public sector could never afford the full cost of lifelong learning in any case. It had once been calculated at 11 per cent of gross domestic product, implying public spending on education would have to double to meet the needs.
"There isn't a country in the world that can afford the cost of lifelong learning," he said. "But we have a system that fundamentally undermines company investment.
"I believe employers and trade unions would sign up to a fees policy. I believe they understand why it's necessary. If you had that in place, that pound;340 million cut could become a pound;350 million increase. We are doing it in higher education."
In Canada, Australia and the US, the equivalents of UK colleges boast income from employers that is between 20 and 40 per cent of their turnover, Mr Humphries said. In the UK, he estimated it was more like 2 or 3 per cent.
One of the criteria of the commission's proposed traffic-light system of college ratings for consumers would be the amount of private sector investment they attract.
The fees review, under Learning and Skills Council (LSC) chairman Chris Banks, is likely to consider how business can be encouraged to invest more of its training money in colleges.
Lord Mandelson told the Association of Colleges (AoC) conference last week: "We expect businesses to invest, and keep investing, in skills. And often the most effective way of doing this is going to be to build strong collaborative ties with colleges. And because they are the key beneficiaries of these new skilled people, we are going to expect business to bear more of the cost."
Colleges said that the expansion of free courses had worked against their efforts to charge fees in more instances. Mr Humphries gave one example where an institution had lined up a contract to train thousands of workers at one company, only to see the deal fall through when another offered to carry out the same training for free, using government subsidies.
Julian Gravatt, assistant chief executive at the AoC, said: "Government policy since 2003 has been that colleges should raise more income from fees and colleges have taken this seriously. But sometimes it has proved difficult to persuade employers to pay for training when the Government has increased the number of free courses."
Ian Pryce, principal of Bedford College, agreed that generating more income commercially was the key to colleges wielding more political power.
"I agree that we need to increase our fee income, because the less we are dependent on government funding, the more pressure we can bring to bear in our dealings with them," he said.
His college has worked hard to raise its fee income from individual adult learners and found they were surprisingly willing to cough up.
For instance, the college ran 30-week GCSE language courses for adults with a pound;100 fee contribution that suffered a high drop-out rate. When it converted them to six-week courses for the same price, but with no government subsidy, their popularity rose. Students were happy to pay the same for less and, in fact, preferred the lower commitment of a short course with a curriculum tailored to them, not the Government.
The result is that the total fee income for the college this year is expected to reach pound;6 million, possibly even eclipsing the amount received from Government for adult education aimed at individuals.
"We don't get a lot of people saying, `This college down the road is only charging X amount'," Mr Pryce said. "If anything, the resistance is internal, from teacher-managers who are keen to keep up the numbers in their courses."
But he questioned whether expecting colleges to raise their fee income to 20 per cent or more of their total turnover was realistic, because of the dominant role of 16-19 education in FE.
About 60 per cent of teenagers who stay in education are in college, representing about pound;4 billion of funding. But colleges are prevented by law from charging for these places.
That means at least half of the entire funding of FE is insulated from any attempts at raising fee income. Hitting a fee income target even of 20 per cent of turnover would mean a much higher percentage of post-19 education and training needed to be paid for.
The LSC already assumes that half of the cost of provision chosen by individual adults rather than employers - its adult learner responsive budget - is paid for in fees and discounts its funding accordingly.
But research for the LSC earlier this year suggested no one knows how much is really being generated by work with employers. It said there was little evidence that colleges systematically sought fees from business, however, and if this situation continues there is a significant risk that the total funding will fall and quality will suffer.
Many of the employer contributions are in providing premises or equipment rather than cash, the research suggested. College staff told the researchers that they supported greater charging of fees to employers, suggesting that business only values what it has to pay for. One said: "If you pay nothing, you expect nothing. If you pay, there is more commitment."