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Despite an 11 per cent efficiency gain and 5 per cent growth over the last year, standards of teaching in further education colleges have been judged satisfactory by their chief inspector whose annual report is published today.

The findings of the most comprehensive programme of inspections ever experienced by the sector indicate that further education is in good health overall and continues to innovate in a tough financial climate.

However the report warns that some colleges view their own performance "through rose-tinted spectacles". Colleges needed to improve their quality assurance arrangements and management information systems to identify weaknesses and ensure they are addressed. There was also room for improvement in the management of franchising arrangements and student destination records.

Governors are urged to become more involved in setting targets for their institutions. Issues to be addressed at some colleges include student attendance; retention and examination results on some programmes; the need to replace science and engineering equipment and improve library facilities and student communal areas. Many colleges needed to improve opportunities for extra curricular activities.

The inspectors also found what teacher unions have been saying for some time - that the continuing prolonged dispute over staff contracts is having an adverse effect on teacher morale. Overall less than 10 per cent of provision inspected was judged to have weaknesses which outweighed strengths.