An inspection report criticising management controls over franchising at St Austell College follows tough new rules on such collaborative ventures. The council has also questioned whether sports courses in the grey area of vocational training and leisure should be Government-funded.

The college was praised for its quality of teaching and learning, but taken to task over the franchising of courses from Scuba diving to yacht master qualifications. “Senior managers do not currently have sufficient information about the franchise operation to manage it effectively,” the inspectors said.

There was inadequate information on student enrolments and destinations. Better safeguards were needed against “inadvertently making claims for funding” for students who failed to complete the courses.

St Austell had devised a payment by results scheme where money was given only for those students who successfully completed the course. But, the inspectors said, it was difficult to monitor students on courses.

Bill Hill, the principal, said he had in place new checks and balances, including regular inspection visits to more than 30 franchise providers round the country and a close scrutiny of enrolments.

He has joined a growing chorus of principals who say the new FEFC guidelines are making off-site collaboration “more costly and bureaucratic”. He said: “If what they are trying to do is persuade employers to put NVQs with proper training in the workplace then this is a disincentive. If it means more collaborative arrangements will be allowed then this is to the good.”

But principals say it looks as if these courses will be trickier to fund under council rules. It singled out the funding of diving courses - of which St Austell is one of the biggest providers - for criticism, saying it was unclear whether such courses were appropriate for government funding.