Far-reaching plans to reform the funding of the training for work scheme are near completion. They include cash incentives for colleges and other providers who take on more under-achievers.
Training and enterprise councils are being asked to comment on plans drawn up by the TEC national council covering "the crucial 10 years" of 14 to 24. TEC chiefs will put the demands to ministers following last week's Competitiveness White Paper.
They include tougher and more regular inspections of schemes and less emphasis on payment by results - too high a burden is said to produce disincentives and encourage creaming off the most able trainees. Up to 75 per cent of each Youth Training budget is linked to payment by results.
TEC chiefs are also expected to demand that the burden of guaranteed education and training for 16 to 19-year-olds should be spread, with schools and colleges facing the same penalties as the TECs for dropping out and student under-achievement.
Other issues being considered include local education and training partnerships with local authorities with common standards for measuring performance.
Gillian Shephard, the Education and Employment Secretary, last week pledged a level playing field on all post-16 education and training funding. Payment by results, similar to that in FE colleges, is planned for school sixth forms, with the phased introduction of training credits for all. A consultation paper is due this autumn.
TEC chiefs support Mrs Shephard's call for more common funding arrangements. But they do not want it to destroy local discretion over how the cash is carved up.
They have long argued that the current funding regimes are skewed against TECs, that they fail to recognise efficiency in meeting the needs of lowest achieving school leavers on YT and that extra expenses for TECs - such as the Pounds 29.50 allowance they must pay trainees - are ignored when cost comparisons are made.
Colleges earn over Pounds 115 million a year directly from TEC contracts and more still from work they carry out for other TEC-funded training providers. John Brennan, policy director of the Association for Colleges, said: "There will inevitably be concern as TECs have incentives to drive prices down. "
The TEC national council is understood to be looking at a new funding regime which is closer to that of the Further Education Funding Council than at present and backed up by more rigorous quality monitoring.
New plans being drafted are said to include a three-part formula, like the FEFC's, with start-up cash, payments at certain milestones and some payment by results. The FEFC links just 8 to 11 per cent of cash to results.
The TECs are frustrated over what they see as a national failure to recognise that they are left with drop-outs and disaffected trainees after schools and colleges have had their pick.
Figures to be published in Mrs Shephard's White Paper consultation report will show that while colleges and schools can boast that around two-thirds of their students make the equivalent of national vocational qualification level 2 or 3, the TECs get only just over half to level 1 or 2.
A TEC source said: "This gives no indication of the distance those young people have travelled in reaching their level. It's impossible to have a policy-neutral funding regime. This system breeds the wrong sort of competition."