A code of conduct published this summer by the Further Education Funding Council advised governors to declare immediately any personal conflict of interest which might arise out of discussions at their college.

They should also, it added, resist any temptation to use their position to benefit either themselves or other individuals. Unfortunately the code - in the FEFC’s Guide for College Governors - appeared too late to assist Derby College, Wilmorton, or St Philip’s RC VIth Form College, Birmingham. The recent inquiries into the two colleges have been well documented and Education Secretary Gillian Shephard will shortly decide whether their governing bodies should be dismissed.

But what lessons do events at Wilmorton and Birmingham hold for other governing bodies and is it time to take a fresh look at who is in charge of further education institutions?

FEFC chief executive Sir William Stubbs and Roger Ward, chief executive of the Colleges Employers Forum (CEF), both insist these were isolated cases and that most colleges are well run. But others believe that what happened at Wilmorton and Birmingham could also occur elsewhere. Stuart Webb, former chair of governors at Wilmorton, was heavily criticised for not declaring an interest in a computer firm which sold equipment to the college.

Margaret Riddell of the Institute of School and College Governors says that it is “quite likely” that other governors have used their own companies or interests to do business with their college. “It’s inevitable in that sort of situation.”

Colleges can buy items from a company which is owned by one of its governors, providing that governor takes no part in the decision to purchase. The college must also ensure that it gets value for money by looking at alternative quotes.

“You have got to be whiter than white when you are in a public position, ” says John Ault, immediate past chairman of the Association for Colleges (AfC). Since becoming corporations, colleges have been encouraged to adopt a more business-like philosophy. But they should never forget they are spending public money.

“They are still publicly accountable. Whereas a private company can ring up an old pal, ask a favour and make it worth their while, that’s not legitimate when public money is involved,” he says.

The Derby College inquiry also revealed the importance of employing an effective clerk. Governors there held inquorate meetings and claimed improper expenses. “If there had been a competent clerk in place I don’t think a situation like that would have arisen,” says Margaret Riddell.

Many of the clerks employed by FE colleges had been in place for years and were not used to coping with the pressures created by incorporation. “They were loyal local authority people. If they ran into any difficulties they rang the LEA. They didn’t carry such a burden.”

The FEFC is about to set up an independent group to draw up guidance on effective clerking services. Mike Wardle, secretary to the FEFC, says the guidance was planned before the inquiries at Wilmorton and Birmingham and followed consultations with college principals.

The guidance will outline the separate responsibilities held by the clerk to governors and the college secretary. In many colleges the same person acts as both secretary and clerk - which also happens in many private companies.

The FEFC guidance, to be published next spring, is unlikely to recommend different people to fill the two posts. But it will consider whether there are lessons to be learnt from the two inquiries and it is expected to call for the clerk to be a top-level post with legal responsibilities.

“There are issues which need to be explored - whether greater clarification involving the clerk might have helped in those kind of circumstances,” says Mr Wardle.

The CEF is also drawing up guidance for governors, but has been forced to consult its lawyers following the two inquiries. Roger Ward says the forum wanted to produce an extensive code of conduct which went further than the FEFC’s document.

“Members across the sector are concerned about precisely what their role is. The intention of the code is to seek to codify and clarify their decision-making processes and procedures.” Mr Ward says the CEF code of conduct, which should be published this month, was being keenly awaited by both the National Audit Office and the Nolan Committee which was set up by the Prime Minister to look into standards of conduct in public life.

The National Audit Office wants colleges to establish registers of interests for their governors and rules for the disclosure of interests. “It will be an advance on the rules which apply to Members of Parliament,” says Roger Ward. CEF lawyers are also reviewing whether staff and student governors should be allowed to see documents relating to items which were discussed after they have been excluded from meetings.

The traditional view is that such governors should not be allowed to see relevant documents, says Mr Ward, but this has been challenged by the FEFC. The inquiry at St Philip’s centred around the role of the Oratory Fathers who, as owners of the site and trustees, tried to close the college following a drop in the number of Catholic students. The governing body was accused of treating college employees autocratically.

John Ault, chair of governors at Yeovil College, says governing bodies should not exclude people of differing views and interests. “It’s important to have people with outside interests and not to exclude people who might give an independent view,” he says. “You should not have a corral of people who are influenced by the chairman and the principal.”

He denies suggestions made by Wilmorton governors that governing bodies had not been prepared for incorporation. However, the AfC is considering whether a short introduction to college governance might he helpful. “It could set out on three or four sides of paper the potential pitfalls and hazards before people take on the job,” says Dr Ault.

Further moves by the AfC include establishing a governors’ forum, which will look into the future provision of training programmes, and setting up a working group of senior managers and governors to make sure that the events at Wilmorton and Birmingham are not repeated. Chief executive Ruth Gee says most colleges had coped with independence calmly and efficiently. “It would be surprising if there were not some pretty serious problems somewhere.”

Margaret Riddell recently raised the issue of training with Mrs Shephard who, she says, is concerned about the low number of governors who had had training. “Some people take it on without realising the implications of the responsibilities or how much time and energy it will cost them.”

John Graystone, senior staff tutor at the Staff College, says more than 400 FE governors had attended courses run by the college during the past two years, and tutors had gone into about 100 colleges to provide training on a consultancy basis. But, he says, more colleges should set aside money for training and development.

“As a result of these reports, there is a resurgence in governor development. The feeling is that governors have recognised their responsibilities and the trouble which they can get themselves into.”