CASH for all post-compulsory education and training could be channelled through new-style learning accounts giving people greater control over their studies, says a report commissioned by Government advisers.
Individual learning accounts are central to Government's plans to create a "return to learn" culture and improve the nation's skills.
The accounts, which would share the cost of study between employers, employees and the Government, were given a big boost in Chancellor Gordon Brown's budget this week with the announcement that they would be used to target skill shortages. Adults on basic skills courses who have ILAs will get an 80 per cent fees discount.
Adopting such a system for all post-16 studies - one of several examined in the report for the Further Education Development Agency - would mean "redistributing resources" without using the tax system, the report says.
The programme is due to start next month and a million accounts are to be created in the first three years. Individuals will be expected to put pound;25 of their own money into an account, while the Government will provide pound;150.
A report commissioned by the Further Education Development Agency says that abolishing the current system of supporting colleges and universities by government grants with individual learning accounts would eradicate unfairness in the system.
It says using ILAs to fund all post-compulsory education would create a "common funding language". It would remove funding anomalies such as the fact that entitlement to three years of university education is not age-related, while a right to the same amount of further education ends at 19.
Other anomalies identified in the report include the fact that part-time students are currently assumed to be able to contribute more to their learning costs than those studying full-time, and that undergraduates are privileged in being able to borrow to cover their living costs and not just course fees.
If the state allowed everyone to borrow money to fund their learning account, to be repaid when the individual passes a certain income threshold, this would also redistribute wealth through a form of deferred taxation, says the report.
"In effect, the state would be calling its own bluff with regard to predictions about increased learning and qualifications leading to increased productivity," it says.
If subsidies for more expensive courses went directly into ILAs, the report says, learners would become aware of which institutions provided the best value for money. FE colleges in general would prove cheaper than sixth forms or universities on average.
But the report warns that this could also mean prestigious institutions charging more and restricting entry to those who could afford to top-up their own accounts.
It says that if more affluent students were expected to pay into their own accounts while those on low incomes were subsidised, ILAs could also be a means of "tacitly redistributing resources from the haves to the have-nots, without apparently using the tax system."