A SPECIALLY-APPOINTED team of senior educationists will decide the future of debt-ridden Bilston Community College.

The four-strong panel, established by the Further Education Funding Council and headed by Further Education Development Agency chair and former FEFC chief inspector Terry Melia, will make recommendations on the Wolverhampton college’s future before Easter.

The other members of the team are Anne Sofer, previously chief education officer of Tower Hamlets, Rama Nand Lal, chair of governors at Swindon College, and Joe Stanyer, from the Department for Education and Employment’s FE support unit.

They are understood to be considering four options - rescue, merger, amalgamation into a more comprehensive post-16 plan for Wolverhampton or closure.

Sources close to the inquiry suggest that the most likely scenario is that the college will be closed, then reopened with a new governing body and management team. The FEFC signalled its intention to claw back money paid out to courses which were not eligible for funding - including line dancing and judo training. This would leave Bilston with a cumulative deficit of more than pound;9 million which would take at least 18 years to pay off. Closing and reopening the college - “like a phoenix from the ashes” - would effectively wipe the slate clean.

Acting principal Alan Birks said the decision to appoint an inquiry team had been taken because the situation at the college was worse “by a considerable margin” than that at other troubled colleges like Wirral or Matthew Boulton.

Mr Birks, who was vice-principal of Bilston during the 1980s, is on a 12-month secondment to the college from his job as principal of South Birmingham College.

Bilston’s financial problems stem from the withdrawal of FEFC cash for growth (known as the demand-led element) two years ago. The college had seen enrolments grow from 11,000 in 1993-94 to 55,000 in 1996-97, but when DLE funding stopped in 1997, its income fell by more than pound;3 million. It began a legal challenge to the FEFC which it said had prevented a potential 150,000 students enrolling at the college. But its bid for judicial review of the FEFC’s funding formula, and a claim for pound;30 million, fell by the wayside as the college’s current difficulties began to emerge.

Mr Birks was drafted in as trouble-shooter after advertisements to find a replacement for retiring principal Keith Wymer failed to attract any suitable candidates. He was singled out for praise by FEFC chief executive David Melville in his speech at last week’s annual conference for “sorting out Bilston”.

He has already trimmed pound;5m from the pound;17m wage bill by laying off more than a hundred managers. Six of the college’s most senior staff - including vice principal Frank Reeves, finance director Paul Patel and clerk to the corporation Sim Wignall - have all taken voluntary redundancy.

The college had an unusually top heavy management structure with nearly three times as many managers as full-time lecturers. “There were serious structural problems in terms of excessive management and a heavy reliance on part-timers,” Mr Birks said.

Some of the 200 part-time lecturers, most of whom were employed through the college’s in-house employment agencies RETA and Diamond, are being offered part-time contracts. “The college may have to lay off more support staff,” Mr Birks said. “But because there were so few people involved in teaching, relatively speaking, it is conceivable that, once the dust settles, we will have to employ more teachers.”

The diverse business interests built up by the previous administration - and which Mr Wymer hoped would create 200 jobs within two years - are in the process of being dissolved and up to nine offshoot businesses are being wound up. But the process has been delayed because they are joint venture or foundation companies rather than wholly-owned subsidiaries and thus require the consent of third-party shareholders.

The network of companies, many of which included college staff on their boards of directors, will be the subject of an audit due to be completed next month. Mr Birks said that there was no suggestion of fraud in the college’s business interests but the range of activities is sure to raise a few eyebrows.

One of them, a film-making company, produced only one feature, a science-fiction fantasy called The Ring and the Seal. Other commercial ventures included importing champagne from Russia, a mail-order company and a garden centre. The lease on Ryton Hall, a conference centre based in a manor house in the Staffordshire countryside, will not be renewed when it expires at the end of March.

Mr Birks described the companies as “an attempt to make good the shortfall of FEFC funding when the demand-led element was withdrawn. There were lots of good intentions that went badly wrong.”

Paul Mackney, general secretary of lecturers’ union NATFHE, who was regional officer for the West Midlands during Bilston’s expansionist era, said: “It was like the emperor’s new clothes - so many people believed the hype. But behind all the fantasy was the germ of some very good ideas. Bilston and that part of the Black Country deserve a very good college and we don’t want the provision for local people to be damaged by the mistakes of the past, however big they were.”