The government has urged further education heads to suggest how colleges can help widen participation in higher education, after awarding the sector its "most generous funding settlement in living memory".
Education secretary Charles Clarke told delegates at the Association of Colleges annual conference in Birmingham that the major role they had to play in hitting the 50 per cent participation target for higher education would be spelt out in the strategy to be announced in January.
He invited them to submit proposals on what colleges could do to attract more higher education students and deliver more courses.
Mr Clarke told The THES : "The 50 per cent target is an ambitious target, and there are a lot of issues around how to achieve it. I hope that individuals and organisations in FE will tell us how they think the sector can help meet the challenge."
Delegates applauded Mr Clarke as he announced a £1.2 billion boost in college funding over the next three years and an overhaul of the sector's bureaucracy-laden funding system.
The package, which includes a 1 per cent real-terms increase that had already been announced, adds up to a total 19 per cent real-terms rise by 2005-06. Further education heads have calculated that it should give colleges an average £700 more per student.
Capital funding across the post-16 sector will rise by more than 60 per cent in real terms to more than £400 million by 2005-06.
Mr Clarke said resources would be allocated to colleges based on performance. In years two and three of the settlement, colleges that hit their targets would receive an extra 2.5 per cent real-terms increase, while those that failed would get only an inflation rise and those that excelled would receive 3.5 per cent.
The government hopes to cut the proportion of failing colleges to a maximum of 10 per cent. The most recent inspections found that 63 per cent of colleges were either inadequate or required a partial reinspection.
"This is obviously not an acceptable state of affairs and explains why a major part of our proposals is designed to raise standards across the sector," Mr Clarke said.
The government plans to make the task of raising standards easier by consolidating more resources into core funding and drastically cutting the burden of audit and bureaucracy. Funding will be planned on a three-year rather than an annual cycle to increase stability.
A highly popular first step will be to reallocate into core funding £100 million currently locked up in a teaching pay initiative and standards fund.
Lecturers' union leaders and colleges said that the move, along with the overall funding boost, should end the pay dispute. Union leaders immediately called off plans for strike action and reopened talks with employers.
John Harwood, chief executive of the Learning and Skills Council, said that he thought the changes would mean "a move away from a hyper data-driven system to a more strategic trust-based relationship with colleges".
He said he thought that the trend towards more higher education being delivered in further education would "continue and grow", with possibly more mergers between higher and further education institutions. But he said: "We need to work out how these joint institutions will meet the needs of lower level learners as well as the higher level ones."
Mr Clarke was adamant that the extra money allocated to further education did not mean funding would be taken away from higher education.
John Brennan, the AoC's director of further education development, said that the extra money would help colleges take steps to increase demand for higher education. "The kind of expansion the government has in mind can only be done by encouraging more people to progress through vocational routes, which is where colleges are extremely well placed to deliver," he said.