When he drives past Inverness College at night, John Spencer is relieved to see the car park is busy.

A couple of years ago, it would have been empty. Nearly every evening class at the college on the city’s Longman Road had stopped, a symptom of the crisis then engulfing the college.

It is almost one year since John Spencer, 55, was appointed principal and already there are promising signs of recovery. It is not just his view but that of the Auditor General for Scotland, whose report on the financial health of Scotland’s colleges for 2006-07, published in April, pronounced Inverness to be “on the road to financial recovery”. It had an operating surplus of pound;430,000 in July last year, breaking a six-year run of deficits (it still has an accumulated deficit of pound;2.9 million, although reduced from a high of pound;4 million).

But Mr Spencer is a veteran of similar struggles and knows it won’t be a quick fix. “It was organisational failure, it was systems and process failure and there was a real lack of leadership,” says Mr Spencer, previously vice-principal at Sutton Coldfield College in the West Midlands

An HMIE report in April last year found that, while teaching and learning were effective, management was unsatisfactory, as was the strategy for access and inclusion.

The Scottish Funding Council’s FE development directorate had drafted in Donald Leitch temporarily as acting principal six months before the visit towards the end of 2006, and a recovery plan was already underway by the time the critical report was published.

Inverness College is a key partner in the Highlands and Islands university project (UHI) and delivers 25 per cent of its activities, ranging from Skills for Work courses to PhD programmes. Nearest alternatives are miles away in Elgin, Perth or Thurso so, as Mr Spencer observed, “it is absolutely critical to the region, to the sub-region and to the city that Inverness College is successful”.

To this end, the senior management team has developed a 208-point recovery plan, incorporating the inspectors’ action points and including a review of curriculum management teams. The new principal appointed most of the restructured senior management team. By the time he was in post, the redundancies and cutbacks had been carried out by Donald Leitch and his team.

Recently, 20 senior lecturers went through reselection for new roles as curriculum managers; just over half were appointed, with the remaining new posts filled by internal and external applicants. There were no compulsory redundancies, and most of the remaining senior lecturers have opted for full-time lecturing posts.

Among other key new posts is head of research and development, a significant role, as UHI moves towards university status and the college employs a number of non-teaching research staff. Other new senior posts are head of quality and performance and head of business development, previously more junior management roles. A new management information system, to be introduced in the next academic year, should make their jobs easier.

A priority for the new regime will be to provide students with appropriate numbers of teachers for the subjects that are most in demand. Evidence of mismatching was apparent to Mr Spencer at an early stage.

Up to 7,000 migrant workers from Poland and other Eastern European countries have settled in and around Inverness in recent years. “In common with most other parts of Scotland, many of them are quite well qualified and some very highly qualified, but their English language skills mean they are currently largely locked into basic-level jobs,” says Mr Spencer.

“One of the first things I looked at when I arrived was the level of provision we had, and I discovered we actually had 20 students doing English for Speakers of Other Languages (ESOL).”

He also found out there were 120 people on a waiting list because of a shortage of teachers. There are now 280 students on ESOL courses. “Because the teachers we relied on were part-time, they had some capacity but we weren’t using it, “Mr Spencer says. “It’s work in progress, but we have made a start.”

Last summer, the college also reinstated a programme of part-time evening courses, after a break of more than two years when they had been virtually withdrawn to reduce the number of small classes. Hence Mr Spencer’s delight in his full car park in the evenings.

Restoring confidence in Inverness College in the community is an “ongoing task,” he says, after a difficult few years when the brand took some serious knocks.

The same challenge confronted Mr Spencer in restoring the rock-bottom morale among staff. “They had a very difficult time before and I think they welcome the opportunity for a fresh start, for things to go right for the organisation, for change to be positive, for new things to be happening,” he says.

Among these “new things” is the appearance of additional investment at the same time as the repaying of borrowings the college was forced to make as a result of its debts. The recovery plan, agreed with the funding council, should mean the deficit will be paid off by 2010-11.

The college will also be delivering a new UHI project, pioneering a BSc course in dental oral health, providing “para-dentists” who will be able to do fillings and basic dental checks and treatments.

EU funding is in place for 15 new higher education courses the college is developing as part of the UHI development; Inverness College is leading eight of the new courses.

“One of the first signs of development and improvement is that, for the first time this year, the college will actually achieve its student targets for both FE and HE programmes, which are higher than they were in the last few years,” Mr Spencer says. “It’s the first time there’s been an upwards trend in the numbers of both for over five years.”

If Inverness College is “on the road to financial recovery”, it will also be on the move in a different sense. In 2013, it will open on a new 210-acre campus off the A9 at Beechwood. Mr Spencer has every intention of being there for the celebrations. “If I am still on the planet, I will be,” he says.