The Commons Public Accounts Committee said fewer than half of students gained the qualifications they had studied towards in as many as 10 per cent of colleges. They called for ministers and the Further Education Funding Council to set "a searching challenge for colleges".
David Davis, the committee's chairman, said: "The variability in the levels of student achievement is very disturbing. At some colleges less than 50 per cent of students leave with the qualifications they expect to achieve when they enrolled. The funding council must assist the worst performing colleges by identifying strategies for success and by setting challenging targets for each college."
On average, 67 per cent of college students get the qualification at the end of their course. But the report pointed to "disturbing" variations between colleges. The so-called achievement rate in some colleges was 99 per cent, while in the worst, Hackney Community College, the average slumped as low as 24 per cent.
Further education colleges provide education and training for more than 4 million full and part-time students at an annual cost of pounds bn. They will provide the vast majority of the 500,000 extra places promised before the next election by Tony Blair. Colleges have been promised an extra pounds 255m the next three years as a result of the Government's Comprehensive Spending Review.
Mr Davis said: "I'm quite sure Mr Blair as much as myself wants to see performance out of this money. This raises a warning that colleges are going to have to focus very hard both on the targeting of the cash and the performance monitoring."
Colleges argue that there are many reasons why students fail to complete courses. They say many people get jobs, or move before a courses is complete. Others sign on for a course but do not regard getting a qualification at the end as important.
Targets will be set for all colleges from the autumn by funding council officials. Incentives to cut drop-out rates are already built into the complex college funding formula, under which part of the payment for each course is only released when a student completes their studies.
The committee warned of severe budget problems in many colleges. Official estimates suggest as many as one-fifth are in poor financial health after years of severe cuts.
But MPs said weak management lay behind financial problems at many colleges, and urged officials to intervene in colleges that were facing problems.Reuse content