The Association of Colleges, which was consulted as part of the report, agreed that the current system needs to be changed in order to allow colleges and other providers to maximise fee income.

It calls for improvements within the current funding system by a 'redefined and extended career development loan'.

Julian Gravatt, AoC assistant chief executive, said: "The current arrangements have been developed incrementally and have resulted in a flawed mechanism.

"There has been a longstanding conflict between ambitions to collect fees and the expectations of individuals and employers that training will be fully funded by Government and therefore be free. Government will need to work with colleges to explain that courses will no longer be subsidised in the way they have been up to now."

Students in various colleges across England are the ones who will be most impacted by the report's findings.

Shane Chowen, NUS Vice President (Further Education) said its main findings, that support for those who cannot afford to pay for FE is inadequate, were welcomed.

The organisation agreed with the need to keep fee remission for vulnerable groups and to review student support for FE students.

However, it felt such changes must be put in context else learners may be prevented from progressing.

Mr Chowen said: "If a fairer funding framework is to be secured, we must look beyond the cost of particular courses and capture the wider value of further skills to individuals, communities and the economy to ensure its structure is both balanced and sustainable."

"Tackling disadvantage and inequality must also remain a priority for the adult skills system, and whilst loans and additional financial support for learners could open access and improve participation, it is crucial to ensure that no learner is placed at greater financial disadvantage or priced out of further education by upfront costs or punitive repayment conditions."

The business world agreed with the report and largely echoed the comments made by the NUS

Frances O'Grady, union TUC's deputy general secretary, said: "This report's proposals to boost employer investment in workplace skills are a vital first step towards creating a fairer funding framework. Combating disadvantage must also remain a priority for the adult skills system and commitments to retain full fee remission for vulnerable groups and review student support for FE students are welcome."

But adults are also likely to be affected by its findings as, in recent years, more have updated their skills as the economy becomes increasingly competitive.

The National Institute of Adult Continuing Education (NIACE) aims to get adults involved in various kinds of learning.

Mark Ravenhall, director of operations at NIACE, said: "The organisation has been pleased to be part of a review that has stressed an equitable balance in funding between state, employer and individual.

"Its recommendations are a reminder to government of the need for transparency, equity and flexibility in the design of any future funding system."
The Department of Business, Innovation and Skills now plans to conduct further consultations in the FE sector to determine how to implement the recommendations put forward in the review.

John Hughes