Halton College has clinched a deal to expand into a modest two-storey building in the heart of Runcorn New Town shopping centre.

Compared with the towering world vision of the college’s former principal Martin Jenkins - apound;15 million steel-and-glass headquarters by the busy Manchester ship canal - the annual rent of pound;180,000 is small beer.

But no one at the college is complaining at the new focus on local education and training. Still reeling from the loss of 170 jobs and pound;6.4m, which had been wrongly claimed from the Further Education Funding Council, staff want to see realistic expansion.

A year-long inquiry into financial irregularities at Halton by the FEFC and the National Audit Office found that the combination of a strong principal (Jenkins) and inappropriate checks on auditors and governors, who were not on top of things, created a crisis.

The inquiry report highlighted fears over the use of public cash for expensive foreign travel and “away days” for senior staff and governors.

Jenkins and his deputy Jenny Dolphin were suspended in May 1998 and resigned earlier this year. Senior manager Peter Cavanagh was made acting principal and John Bolton, former principal of Blackburn College, came out of retirement to oversee reforms.

The first stage of the reforms were launched this week with the signing of the new lease. While the community vision was never entirely lost under Jenkins, eyes were taken off the main game as senior staff were diverted to “dispersed business activities” across the country.

Local student recruitment and provision of much-needed courses plummeted to 60 per cent of their peak under his stewardship. In contrast, the growth of franchised courses, providing cheap assessment and training to industries nationwide, spiralled to giddy heights.

This is starkly illustrated by comparing the targets for growth under the former and current principals. At his most ambitious, Jenkins expected Peter Cavanagh, then the business manager, to hit an annual target of 2m funding units - the basic FEFC measure of all revenue spending such as recruitment, staff and course costs.

Yet the commitment to local education and training was around one-tenth, at 280,000 units.

While outreach and franchising centres spread nationwide - reaching big businesses such as Tesco’s - the college did not have a single building anywhere in economically depressed Runcorn.

All that is changing and the two-storey building signals the start of a huge partnership programme to tackle problems of social exclusion - trying to help people at risk such as the unemployed.

Such efforts will be concentrated in the new building, as part of the struggle to recover the college’s good name. A two to three-year programme will build on the local community ventures. Some are well-established, some are yet to start, others are being piloted.

The franchising programme will not be abandoned, but brought into proportion. The jury is still out on its future as the FEFC is set to prescribe new rules.

Acting principal Peter Cavanagh said: “If franchising has a future, we want to be part of it because we have the expertise.” He admits, however, to being overly cautious “because we’ve had our fingers burned”.

Again, the balance of funding targets over the next two years reflects the shift in priorities. Currently, 470,000 units are spent on franchising and 280,000 on the local community. By 2001, it is expected that 250,000 will go on dispersed business and 300,000 on the community.

John Bolton takes a hard line on franchising and the numerous overseas trips. “We are moving the college away from the pull of the FE21 group of colleges (the big franchisers) and from the American Community Colleges, back to local concerns. Why keep going off to Phoenix, Arizona, when most of the staff haven’t visited colleges in Blackburn or Skelmersdale?” The new business plan for the college also calls for rapid rebuilding of links with the local sixth-form college, voluntary and community groups, the education authority and training providers.

“There were absurd peaks of expansion in targets for franchising and yet half the time Martin Jenkins was invisible locally. He never went to the local heads’ association and had no dialogue with the sixth-form college. His relationship with the training and enterprise council was: ‘We’ll take you on or wipe you out’.”

Mr Bolton’s anxiety over the job cuts constantly resurfaces. It is a frustration shared by Runcorn MP Derek Twigg.

“I am not satisfied with the job losses - it’s a large part of the tragedy in this case. Why should the staff have to take the pain for mismanagement?” He sees Halton’s future as being “a centre of excellence” at the heart of a local post-16 federation. “This Government wants partnerships and the FEFC must ensure that Halton gets the support it needs.”

There is a new air of optimism around the college, though the union representatives say it has taken a long time to re-emerge. Only one member of staff was made compulsorily redundant. The other 169 preferred to get out, taking advantage of generous cash settlements.

This inevitably upset staff who failed to win redundancy, said Cliff Porter, the NATFHE branch secretary. “Staff morale is low, but considering how much we have been through, there is still a positive outlook for the future.”

Everything rests on John Bolton selling the new package to 300 staff who remain - and three consultation meetings were scheduled for this week.

Anger over job losses is subsiding and a joint letter from NATFHE and Unison, the public-sector union, this week ended any threat of hostilities. Union officers publicly thanked John Bolton for the way he had worked with them.

And with a new board of governors agreed, only the selection of a new principal stands between the old regime and a new era.