The Government has become too focused on the role that universities can play in improving the skills of the UK workforce, at the expense of further education colleges, which are often better placed to deliver.
That is the view of the Council for Industry and Higher Education policy forum, which met last week to discuss the Government's strategy to promote high-level skills.
Members of the forum said that the Government had failed to acknowledge the role of other institutions such as further education colleges and private providers.
"There is a view that FE has a really big role to play," said CIHE deputy chief executive Keith Herrmann. "There is a consensus from our members that there is a need for a stronger focus on the role of FE."
The concerns were raised as the CIHE published a report comparing the function of UK and US colleges, which criticised the British Government for being "ambivalent" about the role that colleges can play.
The report said that, unlike most universities, colleges can help meet local employers' skills needs and reach out to non-traditional learners by offering more flexible, shorter courses to employees.
"Some universities even see colleges as threats to their provision of higher level learning rather than as complementary players and partners," the report says. "The current fragmented approach is not fit for purpose in an age of lifelong learning."
Sa'ad Medhat, chief executive of the New Engineering Foundation and a member of the policy forum, said that the boundaries between universities, colleges and employers should be broken down.
"The distinction between students and employees is dissolving. Business is ready to invest and adapt to this reality. Now, higher education institutions must follow."
Professor Medhat lamented the fact that although £4 billion a year is spent by employers on high-level skills development and training, universities take away less than 0.5 per cent of this income.