Ministers have been attacked for "squandering" #163;35 million on developing courses and text books only to sell the enterprise for a song to a leading private-sector publisher.
The row over the sale of the Open College to Pearsons International took a political twist this week when leading figures in adult education made accusations of "backdoor privatisation". The resources should have been kept to help kick-start new programmes, they said.
Were Labour to come to power, shadow chancellor Gordon Brown should have had the materials and cash at his disposal to help start the University for Industry, Alan Tuckett, director of the National Institute of Adult Continuing Education, insisted.
The argument over the disposal of such assets is also set to trigger a bigger row about who has copyright over intellectual property. The Open College has 63 staff, a turnover of #163;4m a year, 2,000 workplace students and a publishing wing.
The Open College was launched 10 years ago under David (later Lord) Young,then Employment Secretary. It was the Tories' big idea - to do for vocational training what the Open University did for higher education.
There was to be a television channel dedicated to courses for the unemployed and services to train employees in the workplace and at college. But with Lord Young's departure, political enthusiasm died.
The plug was pulled on the broadcasting plans and, despite considerable success in reaching the further education market, the Open College was reduced to what many saw as little more than a publishing house for learning materials.
It was given four years' further subsidy in 1993, after the board of trustees was told to make the college profitable. With the lack of Government commitment, employer support was difficult to sustain and efforts to expand into certification showed little success.
The board was given the power to form a limited company. Last month, the Open College was split. A Lifelong Learning Foundation was formed, and the commercial side was sold to Pearsons for an estimated #163;2m.
Architects of Mr Brown's UFI plans say that if Labour wins next week, these mistakes must not be repeated. This week, he put the proposal centre stage in his blueprint for economic recovery, suggesting a willingness to commit huge resources. At Labour's electoral strategy meeting for economic development, he said: "Small firms and entrepreneurs face many problems because of the costs of training. Our new University for Industry will make management skills for small businesses a key priority. "
Josh Hillman, research fellow at the Institute of Public Policy Research, and author of Creating a Learning Network, which fleshed out Labour's UFI proposals (see box), said: "The big question is how will it succeed where the Open College failed? A lot of the objectives were the same as the UFI."
However, there would be fundamental differences. The UFI would commission work, not research or create its own. It would cut the cost of training through the cost-effective use of new technology. It would not be a provider in the way the Open College was. "The Open College materials should be in the public domain but it would be difficult to argue the case," he said.
The question of intellectual property rights should be tackled head on. Naomi Sargant, visiting professor at the OU and one of the architects of the Open College, said: "The UFI should be able to use all the resources provided through the public purse. "
Mr Tuckett said: "With what has happened to the Open College, there may be a logic to it becoming part of the publishing market now. The real story is that the UFI must not make the same mistakes. Just think what the squandered #163;35 million could achieve if invested in adult education. "