There is a saying that friendships are the roses of life: pick them carefully and avoid the thorns. It's an adage that could well apply to relations between today's higher education and further education sectors. Once close partners working together to deliver qualifications, they have suddenly been drawn into direct competition.

Controversial legislation passed last year has now come into force, allowing further education colleges across England to award their own foundation degrees. Until now, colleges have had to work in partnership with universities to design and approve these two-year vocational degrees. But the Further Education and Training Act, which contained the new foundation degree-awarding powers, has changed all that.

The qualification itself has not yet had a chance to establish its reputation, but the new powers available to further education colleges are bringing fundamental - and potentially destructive - change to the relationship between the two education sectors.

Critics argue that, in a single move, higher education has had its role reduced and a new and potentially dangerous competitor introduced. Universities that focus on widening participation could be hit particularly badly and their relationships with partner colleges severed. They face the potential loss of new students to further education colleges where, perhaps, they may feel more comfortable.

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And all this comes at a time of demographic change, when "non-traditional" student recruitment is becoming increasingly important to universities.

As the new Further Education and Training Bill made its way through Parliament last year, Universities UK, the umbrella group representing university vice-chancellors, was outspoken about its fears, lamenting the lack of consultation with the higher education sector.

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In particular, the politicians and civil servants who drew up the proposals stand accused of failing to understand the unique relationship between universities and their partner further education colleges, or to appreciate how easily this relationship could be damaged.

Although early concerns about maintaining quality were allayed by minor redrafts of the Bill, fears remain that further education institutions' unlimited ability to franchise foundation degrees - allowing other institutions to deliver them on their behalf while assuring their quality, as universities have done for colleges for many years - could pose a substantial risk to quality and potentially render the qualification useless.

UUK has confirmed that many of its initial concerns remain. Foundation degrees are still new qualifications with a fragile reputation, and vice-chancellors worry that the change risks destabilising progress towards embedding the degrees with potential students and employers.

Further education colleges do not currently have the power to grant any other major further education qualification, such as GCSEs or NVQs - they must be awarded by another institution or awarding body such as City & Guilds or AQA. The powers granted to further education colleges by the legislation are therefore regarded as an unnecessary anomaly that could undermine the higher education status of foundation degrees.

In short, the subtext of what universities are saying is that they are the only institutions with the credibility to award the degrees.

In a worst-case scenario, UUK told the Government, this may lead to a decline in demand from students and employers, leading in turn to a reluctance by universities and colleges to offer the foundation degrees.

UUK's concerns are echoed in institutions working at the coalface delivering and awarding foundation degrees. At London South Bank University, Phil Cardew, pro vice-chancellor for students and quality, says the legislative change could devalue the degree.

"If the foundation degree became seen as something that was just delivered by further education colleges it would have a far lower status, and there's a problem there in the relationship between the academic community and the degree," he says.

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"At the moment, foundation degrees are designed by academics who are out there at the front of their subjects and putting the same level of engagement into these as other degrees. Further education is a different world. (College tutors) don't have the ability to engage in their academic communities to the same extent."

Once teachers in further education have control of foundation degrees, the design of the qualification could also be radically changed. As Cardew explains: "Once you have applied (for awarding powers), you can do what you like with them."

Foundation degrees were always designed to serve as a stepping stone to a full degree, even when delivered in colleges; students would begin with a two-year vocational course and then step upwards to complete a third year at a university and leave higher education with an honours degree.

The qualification is so young that the progression of students has still to be fully tested. "Most of the students who take foundation degrees are part time, so we haven't yet been able to test how many of them are keen on doing the higher degree," Cardew confirms.

But with colleges able to deliver their own degrees, this fundamental link between foundation and honours degrees could be severed. For a college with degree-awarding powers there is no natural link to a university and hence no natural link to the third year of study.

"At the end of the day it will be up to students," says Pam Tatlow, chief executive of the Million+ group of universities, many of which focus closely on widening participation.

Tatlow believes the introduction of the new degree-awarding powers has driven a wedge between universities and their former partners. She calls it a uniquely new Labour contradiction.

"It is a classic case of government policy facing two ways - incentivising competition while also applauding collaboration. The proposal never fitted easily with the partnerships in which higher education and further education are engaged."

Tatlow warns that colleges choosing to confer their own degrees should not expect sympathy from universities.

"Universities will not throw the baby out with the bathwater and will continue to build on very good collaborative arrangements with colleges that have fostered student progression and participation. If some colleges choose to move into competition, universities will inevitably review their support for the quality assurance and other resources that have benefited colleges, students and employers."

Universities are beginning to feel that their hard work in encouraging new students into higher education and collaborating with colleges and schools has been rewarded by a slap in the face.

"If one of my partner colleges were to turn around and say 'Thank you very much; now we're going to go into competition', I would not regard that as a particularly helpful development," says University of Central Lancashire vice-chancellor Malcolm McVicar. "The Government's approach has inadvertently raised question marks about whether widening participation work is rewarded.

"We don't have to work with further education colleges, do foundation degrees and work in partnership. Many universities don't, but we're committed to it. If you then find that your work is damaged because of changes in legislation, it does raise questions about whether the Government wants you to do it."

John Coyne, vice-chancellor of the University of Derby, agrees that partnership between further education and higher education is desirable.

"That to my mind is a better model than one where you encourage every college to go for awarding powers in their own right," he says. "My clear position was that you don't mess with degree-awarding powers. We have to absolutely ensure that people who are taking qualifications are confident in the qualities that the qualification represents."

The perceived rebuke to universities' widening-participation work was made worse by the fact that the sector was not consulted on the potential impact of the changes before the legislation was drawn up.

"Because they (ministers) haven't talked to universities they haven't had the benefit of our advice," McVicar says. "It was a wrong decision. I think higher education should come from a higher education institution. We are committed to research and teaching and knowledge transfer."

Meanwhile, further education funding is in a state of flux. If colleges are granted the power to award their own foundation degrees they will tap into a direct source of funding through the Higher Education Funding Council for England. As Tatlow at Million+ confirms, "the heads of further education colleges will see the higher education pot as a more secure form of funding".

The first further education college to apply for degree-awarding powers is New College Durham. Principal John Widdowson wants the college to be a pioneer in independent provision.

He chairs the Association of Colleges Mixed Economy Group, which comprises 29 large colleges that provide both further and higher education and are the most likely to apply for the new powers.

"We have been a provider of higher education for a long time - for decades. It's not something new for us," he says.

Widdowson believes that by awarding its own foundation degrees, New College will be able to respond quickly to employers' changing demands.

"Sometimes if you have to go through university approval mechanisms - they're designed for honours degree programmes, for a specific type of student and a specific type of market," he says. "When you're dealing with employers they want something that's quicker to turn around and a lot more flexible. We think we can do that better ourselves."

There is a growing further education curriculum aimed at serving students who want to progress to foundation degrees in new areas such as beauty therapy and childcare. Colleges in partnership with universities are not filling these gaps.

"We're offering something new," says Widdowson. "Universities shouldn't feel threatened by it; in many cases they don't have this provision anyway. These are new students. It's not about simply moving people around within the system."

New College Durham currently partners the universities of Sunderland, Durham and Leeds Metropolitan to deliver higher education - and would continue to do so even if it were able to award its own foundation degrees. It already works closely with employers; the construction industry and the Chartered Institute of Housing are closely involved in its housing foundation degree, and students can join the CIH upon graduation.

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Like Widdowson, the Government has been quick to reject claims that universities should feel threatened by the expansion of further education colleges. In May, Bill Rammell, who was then the Higher Education Minister, told universities that they were guilty of self-interest if they criticised the new legislative powers.

"I think some of the comments that have been made have been with a view to protecting their own organisational interests, which isn't necessarily the same thing as the consumer or business interest," Rammell observed. "I think it will provide a degree of competition - and I don't see that as a bad thing - but I also think there is plenty enough business to go around.

"If we were talking about a static market, I could understand universities defending their patch. We're not."

The Quality Assurance Agency for Higher Education also jumps to defend the new status of further education.

"We do not subscribe to the view that further education colleges with powers necessarily present a threat to the higher education sector. Further education colleges would not take business from higher education institutions but would contribute to a general growth in provision," a spokesman says.

It is also clear that business is on the side of Government. The Council for Industry and Higher Education welcomed the opening up of the market, comparing college-awarded foundation degrees to the successful and increasingly popular two-year associate degree offered by further education colleges in the US.

"Further education colleges have a long history of working with local employers and are well placed to meet their needs. They are vocationally focused, flexible and offer close support to learners," says CIHE chief executive Richard Brown.

"We have to think of high-level learning as a system with a range of providers. The key will be how credit systems can better link the various players, ensure progression and help learners acquire the learning they seek in bite-sized bits at times and places that suit their needs," says Brown.

In fact, Rammell may have been right to suggest that the threat to universities and their college partnerships is not as significant as some institutions had feared. So far, only one college has applied for foundation degree-awarding powers. And clearly not all colleges would be in a position to apply. The assessment criteria and quality-assurance process will, it seems, remain rigorous.

"The gaining of degree-awarding powers is a very demanding process and would not be a path that a further education college would take on lightly," says Alice Hynes, chief executive of GuildHE, a membership organisation that promotes higher education colleges that could arguably be put at risk by the move. "There are a number of further education colleges with higher education student populations larger than some GuildHE members. We do not see these developments, per se, undermining the value of the degree if the rigorous scrutiny that GuildHE members have experienced is continued.

"Operating with greater academic freedom in curriculum development and responsiveness may be beneficial in supporting employers and sector skills councils in the future," she adds.

Hynes draws attention to what may be an even bigger threat: changing attitudes towards the role of FE colleges. Many colleges now wish to become higher education institutions in their own right, eschewing the opportunity to offer their own foundation degrees in favour of something more profitable.

"Some are more inclined to take time to attempt to attain the full degree-awarding powers than go through this expensive process and have such restrictions on the awards they could then make," Hynes says.

Foundation Degree Forward, the organisation that promotes the new qualification, accepts that only a very small number of the larger colleges will be in a position to apply for the new degree-awarding powers. Of course, there is no reason why a large college with a long history of providing higher education should not be able to ensure the quality of its provision after going through a rigorous application process.

But Derek Longhurst, FDF chief executive, is not reading the last rites for the foundation degree at universities. In fact, he says, there is much that universities can do to compete with their new rivals. As the work-based learning is a significant feature of the qualification, universities can work more closely with local employers, forcing colleges to justify their claims that they are better at working responsively within the local economy.

Universities can also fight back by offering courses related to industries that their further education contemporaries are not geared up to resource, working directly with major employers in areas such as environmental technologies, energy and the nuclear industry.

"Universities may well develop foundation degree provision in niche markets," says Longhurst. "More universities will have the resource base and critical mass of staffing to develop such provision where colleges are mainly focused upon education, generic business and IT programmes. Universities may see themselves as developing strategies that are attractive to these (niche) markets rather than the development of multiple foundation degree programmes with relatively low recruitment levels."

In fact, for some the rolling out of foundation degree-awarding powers is an opportunity rather than a threat. The University of Wolverhampton, which works with several further education colleges, believes that if these colleges are awarded the new powers it will bring the institutions closer together, not force them into competition.

"We have a positive relationship with our further education college partners and we work really closely with them - we have actually supported the HE in FE agenda," says Wolverhampton's pro vice-chancellor for education partnerships, Geoff Hampton.

"For us it's about working more closely in partnership - building on our strength in widening participation. We think it will probably drive the partnership closer together."

If its partner colleges in the Black Country apply for, and obtain, the powers, the university will encourage joint appointments, joint staff training and the like in a bid to solidify the relationship. Instead of competing for new students, they will draw them into the higher education sector together.

"If we are building new markets together and engaging new learners, then that's a healthy position," Hampton says.

Bradford: in pursuit of the bigger prize

For the first time, Bradford College has the opportunity to apply to award its own foundation degrees. But it is an opportunity it has opted not to take. While other further education colleges work up new strategy documents and prepare for rigorous quality-assurance testing, the college is holding out for the bigger prize - full degree-awarding powers.

Applying for full awarding powers has always been an opportunity for any further education institution offering higher education to large numbers of students. But with further education colleges' awarding powers in the spotlight, more will now be considering taking the leap.

"Bradford College and Bradford are in a unique position," says Mike Harwood, executive director of the college. "It's a very peculiar position for the sector in that Bradford is a city with only one university. In most cities you will find a former polytechnic as well as a redbrick - or whatever other type - of university."

The college's history has prepared it for this new step. In the late 1960s it became clear that the University of Bradford was not offering the breadth of higher education demanded by individuals and industry, so a complementary curriculum emerged at the college. It has now been providing higher education for 30 years.

The college even shares common historical roots and traditions with many of the non-polytechnic higher education institutions of the 1970s and 1980s that are universities today, such as the universities of Derby, Bolton and Lincoln.

It is the largest provider of higher education outside the formal higher education sector. It already offers many vocational foundation courses, including adventure tourism and make-up artistry, and full honours degrees in contemporary surface design and textiles and ophthalmic dispensing with management, among others.

Harwood denies that applying for full degree-awarding powers could take prospective students away from the University of Bradford. "The college and the university have very different curricula. At the college we already have a full range of programmes right up to masters level," he says.

Both the University of Bradford and Leeds Metropolitan University, which currently certify the college's higher education awards, are said to be supportive of its aims. But Harwood admits that it is not a decision to be taken lightly. "It would require any institution to have to a significant track record of delivery because of the infrastructure that would be necessary to regulate its own degrees," he says.

Foundation degrees by numbers

1 - FE colleges that have so far applied for foundation degree-awarding powers

60,000 - students studying for a foundation degree, up from 4,200 in 2001 when it was first introduced

80 - universities that deliver or validate foundation degrees

46 - percentage of foundation students taught at a university; 54 per cent are taught in further education colleges

2,152 - foundation degree courses offered in the UK

54 - percentage of foundation degree graduates that went on to study for an honours degree in 2004-05

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Source: Universities UK.