A BUSINESS lobby group has warned that planned funding cuts in further education could lead to graduates being poorly prepared for the world of work.

The Federation of Small Businesses claims that under cuts of £74 million, colleges could end up more concerned with generating income than preparing students for employment.

Responding to a Scottish Government consultation on post-16 education which closes today, the organisation called for colleges and lecturers to consult regularly with employers to ensure courses match the skills required in the workplace.

Andy Willox, OBE, FSB Scottish policy convener, said: "The FSB is worried the outcome of this review will only result in colleges scrambling for savings and new sources of income.

"We believe there is a job to do in many areas to align colleges with the needs of businesses. This is not only about making sure graduates have the skills for the modern business workplace, but also ensuring colleges use their facilities and their place in the community to help drive their local economy.

"There's also a genuine need to ensure college graduates have the literacy, numeracy and interpersonal skills so important to so many workplaces."

The lobby group also claims moves to encourage businesses to pay for some courses on a voluntary basis in light of the cuts may only work for specific industries and should not be considered a new core funding stream for Scotland's colleges.

The FSB said this scheme may also rule out collaboration with smaller businesses which cannot afford to contribute financially.

Mr Willox added: "Moves to generate more income for colleges need to be thoughtfully designed to ensure the relationship between colleges and small businesses doesn't disintegrate. A dash to cash can't result in more courses designed with only the needs of big business and the public sector in mind."

In September, the Scottish Government announced plans to restructure 38 colleges into 10 regional groupings, including Glasgow, Edinburgh and the Lothians, the Borders, Lanarkshire, Ayrshire, Tayside, Fife and the Highlands.

The consultation paper on the changes said the move would create opportunities for colleges to work more cost-efficiently "through the sharing of services, mergers or collaboration".

So far, three colleges have announced plans to merge as part of the radical strategy –James Watt College in Greenock, Reid Kerr College in Paisley, and Clydebank College on the outskirts of Glasgow.

Motherwell, South Lanarkshire and Cumbernauld Colleges rejected a merger but agreed to forge closer links through a federation.