The stinging criticisms of Handsworth College, Birmingham, were instrumental in triggering a major inquiry by the Further Education Funding Council into how colleges ran franchises, the means by which they provide funds for others to run courses.
Handsworth's progress was spectacular, boosting student rolls by 80 per cent through schemes operated in other cities. But when inspectors visited the programmes, they were highly critical of "poorly planned teaching" on its franchise operation - the most expensive in the country.
New guidelines were issued by the FEFC nationally and an investigation launched wherever colleges offered courses which were run by others. Handsworth was one of 27 colleges in 1994-95 to be awarded a grade 4 for an area of provision and hence given 12 months to get its house in order.
Inspectors have approved measures at Handsworth which include reining in operations to the local community, closer vetting of franchise providers and better regulation of quality-assurance arrangements.
The FEFC always fought shy of pulling the plug on franchise operations, even though numerous colleges came in for criticism. But Sir William Stubbs, the then chief executive, expressed deep concern about possible misuse of public cash.
"At what point should the public purse stop paying and the private sector start paying - that has always been an issue for further education," said a council spokesperson.
Although criticisms were levelled at Handsworth, the implications were aimed wider. The rapid growth had taxed the college's ability to control the effective delivery and quality of the work it had undertaken through this franchised provision, said the council.
Handsworth was not alone in attracting criticism. Neighbouring Bourneville College saw its community network collapse when it discovered that 90 per cent of the scheduled classes in partnership with Muslim groups were not running.
Patricia Twyman, the principal, blocked Pounds 1m spending and called the police. The college launched its own official investigation.
Handsworth's provision on re-inspection was considered "satisfactory" and awarded a grade 3.All the colleges so far re-inspected by the FEFC have on this round lifted their grades from a 4 to a 3 or a 2 - the latter denoting "provision in which the strengths clearly outweigh the weaknesses".
Chris Webb, principal of Handsworth, welcomed the inspectors' final approval of a community network scheme which numerous other colleges have followed.
"We are proud to have pioneered a revolution which has given access to further education to thousands of students while giving excellent value for money to the taxpayer."