Mr Blunkett: "We must achieve a radical transformation in colleges"

In a speech at the Association of Colleges conference in Harrogate, Mr Blunkett promised better pay for college lecturers and an extra �759m over the next two years.

"We must achieve a radical transformation in colleges' capacity to provide the skills we need to prosper in the new economy," Mr Blunkett said.

"Just as specialisms have driven up standards in schools, so in further education, specialisation will sharpen the colleges' focus on meeting the skills needs of business."

Colleges needed to win the confidence of employers and have a reputation for excellence.

Teenagers

It was crucial that 16 to 19 year olds were educated to the highest standards.

One third of youngsters studying for A-levels or AS-levels and the majority of other 16 to 19 year olds were studying in colleges.

"I want to see a clearer focus on meeting their needs, following area-wide inspections," he said.

He wants closer links between sixth form colleges, sixth form centres in further education and school sixth forms.

"Instead of collaboration being seen as a threat, it can be the promise of a more rational use of expertise and facilities."

Sixth form co-operation

New sixth form colleges would have a part to play in raising standards.

Subject to consultation, there would be new sixth form colleges in Lambeth in London and - growing out of the existing colleges - in the London Boroughs of Islington and Hackney.

Good teachers in further education colleges would receive improved pay packages.

The government would make �50m available next year for salaries, with �100m to follow in 2002-03 and more in future.

The Association of Teachers and Lecturers was concerned by ministers' intention to link pay with results.

Deputy general secretary Gwen Evans said: "The government must make no mistake - cutting-edge training and world-class education come as a result of long-term investment not short-term rhetoric."

Training for rail industry

Mr Blunkett's announcement came as the Lifelong Learning Minister, Malcolm Wicks was calling for greater training for people working in the rail industry.

Mr Wicks: "Few rail employees gain nationally recognized qualifications"

In a letter to the chairman of the shadow Strategic Rail Authority, Sir Alastair Morton, Mr Wicks said he wanted to see clear training and skills targets built into the franchises of the train operating companies, as well as into the plans of Railtrack.

The minister said he was concerned that very few rail employees currently gain nationally recognised qualifications.

For example, in the four years to June 2000 only 24 National Vocational Qualifications were awarded to train drivers.

The new Learning and Skills Council could help the rail industry meet new targets, he said.