At the annual meeting of the Further Education Funding Council, officials were coming under fire from governing bodies over new guidance urging clerks to inform the council where they believe corporations are acting unlawfully.

Clerks ensure that meetings are quorate, that governors stick to the rules and do not break the law. Many colleges argue the lack of a clear role makes their position unworkable.

The revised guidelines were revealed in evidence from leading FEFC representatives to the Nolan Committee on standards in public life. Hearings began this week for the committee’s second inquiry, examining the management of local public-spending bodies, including colleges.

Questioned over structures in place in the sector to ensure propriety, FEFC chairman Sir Robert Gunn told Lord Nolan clerks were to be recommended to raise serious concerns with the council “as a last resort”.

The move, which stems from the work of a council committee on the role of clerks, has been strongly criticised by the chief executives of the two organisations representing the sector, the Association for Colleges and the Colleges’ Employers’ Forum.

CEF chief executive Roger Ward described the decision as “quite unacceptable”, claiming it would “undermine the authority of the chief executive and remove power from governing bodies.”

His AFC counterpart Ruth Gee said it would be “extremely unfair” if the extension of the clerk’s powers became an additional funding condition for colleges.

Howard Phelps, corporation chairman at Cirencester College and a member of the FEFC clerkship working party, was questioning the FEFC today about the new guidelines.

He said the change would be a disaster, casting clerks in the role of “the spy in the camp” and making it impossible for governing bodies to work effectively as a team. He claimed members of the working party had called for the proposal to be dropped.

For the FEFC the move could be seen as an attempt to reassure the committee of a commitment to rigorous control, possibly pre-empting a recommendation from the working party.

The Nolan Committee’s probing of control mechanisms reflects concern over past instances of college mismanagement, notably problems at Derby Wilmorton College and St Philip’s RC Sixth-Form College in Birmingham.

Committee members quizzed the FEFC and the two college organisations on the structures in place to ensure probity and financial and academic performance.

Asked what the council’s ultimate sanction would be for a consistently underperforming college, FEFC finance director Roger McClure said the council could opt to recommend closure to the Education and Employment Secretary.

This statement marks an apparent toughening of attitude, since the council has previously spoken of mergers with other institutions.

The sink or swim approach echoed comments made by Sir Geoffrey Holland, former permanent secretary to both the former employment and education departments, questioned by Lord Nolan over the “remedy” for ailing training and enterprise councils.

Revoking the contract of a non-performing TEC might prove a “shock to the system” to other flagging TECs, he said, so galvanising them into improving. There was a case for clearer guidelines on the expectations for TEC performance, Sir Geoffrey added, since the collapse of South Thames TEC suggested others might also be under-performing.

The AFC and CEF put in a plea for greater clarification of the extent of governors’ liabilities in the event of a college’s collapse. Accounts from the FEFC, the AFC and CEF of the complex scrutiny systems in place for colleges led committee members to question whether the sector felt “over- audited”.

But representatives of the lecturers’ union NATFHE called for greater controls over college governance, raising strong concerns over the robustness of the existing system.