The Teacher Training Agency this week launched a major consultation exercise on how to link Government cash for teacher training to judgments about quality. One result could be the re-introduction of a probationary year for new teachers.

The TTA has also published a 90-page report by consultants Coopers and Lybrand which suggests that universities and colleges should be paid only if their students succeed - if, for example, they finish the course or get teaching jobs.

“It’s inevitable that some courses will lose out heavily and that others will be driven out of business because the game’s not worth the candle,” said Ian Kane, chair of the Universities Council for the Education of Teachers.

“The whole thing is potentially very destabilising. It also sets up a competitive ethic in higher education when we need collaboration.”

“The consultation exercise seems to lose sight of the real issue - which is that school-based training is more expensive,” said Mr Kane, who is also director of the school of education at Manchester Metropolitan University. “So how are the resources to be targeted where they’re needed? In comparison this attempt to link price to quality is very arcane.”

The TTA’s chief executive Anthea Millett said this week that the TTA’s consultation exercise aims to find a way of tracking expenditure through the “maze” of university finance. The TTA is concerned because it says the costs of teacher-training departments appear to range from Pounds 810 to Pounds 3,721 per student per year.

The universities reject this, however, arguing that costs are broadly comparable. “The ‘expensive’ courses don’t actually cost vastly more - as the report acknowledges. Universities, for their own internal purposes, have massaged the figures. I don’t think there’s anybody in the system who doesn’t know that,” said Mr Kane.

The Coopers and Lybrand document suggests that ways be found to reward successful training courses and call failing institutions to account.

It suggests that the best institutions be allowed to bid for extra “special project” money, that efficiency savings be rewarded, and that they be offered longer, more advantageous contracts to provide training places.

Those performing less well could be given stricter contracts and may be asked to provide strategies for improvement.

There are currently 60,000 students in initial teacher training, of whom 30 000 start each year. Some 20,000 go on to teach annually. The total grant funding amounts to Pounds 170 million.

The consultation period ends on January 31 next year and the plans will be ready in time to fund the 199798 courses.