Hanging on by a thread

The future of Matthew Boulton College hangs in the balance following Whistleblowers' revelations last year of a collapse of governance at the Birmingham college.

According to sources close to the college, the impending inspectors' report from the Further Education Funding Council, due at the end of this month, will be one of the worst the sector has seen. Combined with financial trouble, it could mean closure.

In September 1998 the college was understood to be facing a Pounds 3.7 million debt and 59 redundancies. The governors breached rules under the college's instruments and articles of governance to secure a salary increase and pension enhancement for former principal Tony Colton.

Mr Colton's golden handshake has since been blocked, it emerged this week. New principal Christine Braddock said: "Mr Colton's contract was terminated. Any enhancements we agreed were rescinded."

But Ms Braddock herself fell foul of the rules. She set up a recovery committee, giving herself and a select group of governors unorthodox powers to veto the governing body on financial matters. Ms Braddock's recovery plans have already seen the disputed suspension of two senior post-holders and the resignation of the former chair of governors, Barry Seager.

This week the FEFC said that it does not discuss any reports prior to publication. Ms Braddock said: "The inspection results remain confidential until they are published. Obviously there are significant issues the college has to address following the inspection."

In August last year the FEFC said it was "assessing" the college's financial position, following "difficulty in relation to data returns, which quantify student activity". Problems with the management information systems had led to incorrect payments from the FEFC.

It is understood that closure is one option for the college. Its 7,000 students could be absorbed by eight neighbouring institutions.

Ms Braddock, who warned last summer that "other colleges are on our doorstep waiting to pick up the pieces", said this week that the college was "keeping its options open".

She said that she was working closely with other colleges on "joint strategies", but insisted that the recovery plan at this stage was designed to ensure the survival of the college in its own right.

"Matthew Boulton has been here for 100 years," she said. "With the commitment of staff and governors, it will be here for another 100."