Peter Mandelson is planning a radical change for further education and training that would hand the power to set skills strategies and funding priorities to regional development agencies.
Under plans being considered by the skills secretary, the Skills Funding Agency that is to take over the commissioning and funding of post-18 education and training from the Learning and Skills Council would implement skills investment plans devised by the RDAs.
A letter sent by Lord Mandelson in July to Jim Brathwaite, chairman of the South East England Development Agency, said: "Under this scenario, RDAs would be assigned the lead role in identifying. demand-side needs for skills in their regions.
"Those needs will be expressed in a regional skills strategy, led by the RDA, which will constitute an investment plan which would become binding on the Skills Funding Agency."
The Department for Business, Innovation and Skills is consulting on the plans and intends to produce a memorandum of understanding detailing the relationship between the SFA and RDAs.
But with the Apprenticeship, Schools, Children and Learning Bill, which will create the SFA next year and dissolve the LSC, due to become law in November, LSC staff say there will be little time for a meaningful discussion. The department has said the transfer of responsibilities will not require any legislative changes to the bill.
A spokeswoman for BIS said the SFA would retain a separate identity and its role would be to contract and fund colleges and other providers in line with RDA's regional investment plans. The SFA will have a national role in managing contracts and funding.
There is no formalised mechanism for providers to contribute to RDA strategies. But the spokeswoman said that it would be down to providers and their representative bodies to engage fully at local and regional levels.
LSC staff to shift to RDAs and the SFA
About 60 of the LSC's 3,000 staff are expected to transfer to RDAs as a result of the proposed changes, according to the department. Around 1,800 LSC staff will shift to the SFA and the others will go to the Young People's Learning Agency and local authorities, which between them will run provision for under-19s. The department plans to introduce regulations after the bill becomes law to formalise the transfer of staff to the RDAs. But LSC staff have criticised the changes, through the Public and Commercial Services Union, as undemocratic and a blow to morale.
In a letter to Mr Mandelson, the union's LSC group president Ruth Serwotka said: "There will be little or no meaningful public consultation on the matter, increasing the risk of unintended consequences because of ill- thought out and rushed policy."
She said the skills system will be complicated by an additional nine public bodies in the RDAs, the late change will further drive down morale and that it undermines an assurance by the skills secretary that there will be no further "serious structural change" to the SFA.
A possible Conservative government is also likely to view RDAs less favourably as part of a general war on quangos, she said. "To throw important elements of skills delivery, staff expertise, strategy and planning into their direction at this stage will increase the likelihood of further restructuring of a wholly fragmented system under a future government."
A spokesman for the Association of Colleges said colleges could have an input into the planning process through AoC's regional directors, many of whom were on RDA planning boards. But the association did question whether all RDAs understood colleges well enough.
Graham Hoyle, chief executive of the Association of Learning Providers, said: "It would seem to make a lot of sense to stop the SFA having parallel regional roles and instead integrate them into regional strategies."
The Confederation of British Industry said it would be consulting members on the proposals.