Doncaster College is predicted to have a deficit of about pound;1.3 million at the end of this academic year, on a budget of pound;38 million, because it has not recruited enough students.

Two new governors will now be appointed by the Learning and Skills Council to oversee the college, which has been leading the pound;90 million Doncaster Education City development. The project will build a new college campus and university on the city’s waterfront, and five vocational centres around the borough.

The decision comes as the college also plans to make 95 staff redundant and faces criticism over perks received by the outgoing principal, George Holmes.

Dr Holmes was given a pound;45,000 BMW X5 with the personalised number plate “CEO 4 DEC”, although FE Focus understands that the principal contributed pound;20,000 to the cost.

The LSC admits that governors approved his pay package through the proper systems. But Fiona Blacke, executive director of South Yorkshire LSC, said it had had “growing concerns”, particularly about recruitment.

She said that the new appointments to the board would “strengthen the college’s capacity to make appropriate decisions”. “We wanted to bolster the FE understanding and governance base of the governors,” she said.

Dr Holmes, who is to become vice-chancellor at Bolton University, has said that it is “completely untrue” that the LSC had lost confidence in his leadership. Ms Blacke also denied they had put pressure on him to leave.

The college blames cuts to adult education, rather than the deficit, for the planned 95 redundancies.

Stephen Clough, Doncaster’s provost and deputy chief executive, said that the college could have absorbed the deficit, if the cuts had not occurred at the same time. He said: “The college will not be able to sustain repeated losses of that scale.”

Doncaster College is set to transfer leadership of the Education City development to a company owned by all partners in the project, including the borough council and the LSC.