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SIX YEARS ago to the month, a diverse array of some 460 colleges was wrenched from local authority control. The reasons for the making of the further education sector were not entirely clear. An optimistic interpretation is that the colleges were being given the freedom to take their rightful place in an education triumvirate alongside the schools and universities. But there have also been hints of darker motives. The Conservative government's considerable embarrassment over the poll tax comes to mind.

There is no doubt that the great majority of the colleges have used their freedom to very good effect. They are taking more students than before and provide, it can be claimed, for more A-level students than the schools, and more adults than the universities. Their physical state has improved considerably and all kinds of fruitful links have been fostered with local communities, employers, and other educational institutions.

But it is also true that, as the colleges' own inspectorate among others has revealed, some have gone off the rails. Halton College, Widnes, is having to repay millions of pounds claimed for ineligible students. The governors of Wirral Metropolitan College were allowed to resign in advance of a damning report. A special rescue team has had to be set up to try to rescue Bilston Community College. The House of Commons Select Committee referred to the unhealthy influence of the former principal and chairman of governors at Stoke-on-Trent College. Before that there were the inquiries into Derby, Wilmorton and St Philip's, Birmingham.

Undoubtedly, in some cases there has been weak governance. Almost overnight the colleges which had been largely run from council offices were expected to put in place the whole panoply of checks and balances - principal turned chief executive, governors, and clerks - essential to the healthy running of a large corporation. Is it surprising that in a climate of rampant competition some should have strayed beyond the legitimate?

But there was also the double whammy of a new funding system and a new qualifications structure. The key task for the new Funding Council when it was established in embryo in 1992 was to devise an equitable means of distributing money to the colleges. Faced with a great variety of methods favoured by the local authorities, it decided on a complete re-think.

It shifted the emphasis of funding away from courses to students. It devised a new common currency, the funding unit, which colleges clocked up according to tariffs for enrolment and on-programme costs. They were also rewarded for qualifying students. The fundable activity of a college was arrived at by adding up for the year all the units, each worth just a few pounds, generated by all of the students enrolled. It depended not only on extensive and honest record-keeping, but having a secure qualifications structure in place.

However, the new NVQs were also novel. Remarkably, they contained no specification of content nor requirement for external assessment. As they emerged, they became a bit like a driving test without a manual or highway code, with the instructors doing the assessing and only getting paid if they passed you.

The government was keen to stimulate growth and offered a standard payment to the colleges for every student recruited above an annual target agreed with the Funding Council. Energy was released on an unprecedented scale. But, as with nuclear fusion, it was difficult to contain.

Laxity in governance, funding and qualifications has led to the instances of misbehaviour, fraud and false claims. Halton's over-charging for qualifying Tesco shelf-stackers for doing essentially their own jobs is the tip of the franchising iceberg. While some colleges have been hoovering up soft units, others have struggled to provide the high quality training in construction and engineering, which had been their hallmark.

Some of the worst excesses of the funding and qualifications arrangements have now been corrected, but they are still not robust enough to give shape to the sector. The Funding Council has always eschewed a planning role, but allocating funds does imply a strategy, as we have seen with the weighting for widening access.

There is now talk of the Funding Council being superseded by a more prescriptive body. But given the diverse origins and missions of the colleges it is hard to see further education ever becoming more homogeneous, and indeed something important would be lost if it were to do so. There is, however, a strong case for addressing strategic planning directly, rather than through the back door of unit tariffs.

Alan Smithers is the Sydney Jones Professor of Education and Director of the Centre for Education and Employment Research at the University of Liverpool