In a highly critical report from the members of the Public Accounts Committee, Halton College, in Widnes, was said to have spiralled out of control.

The college claimed pound;14 million more in grant from the Further Education Funding Council than was justified. Six other colleges are still being investigated by the council.

David Davis, chairman of the committee, said: “The consequences for the college and for the taxpayer are dire: 114 staff will lose their jobs at a cost to the taxpayer of some pound;1.8m. This is the latest in a succession of horror stories from the further and higher education sectors that have cast serious doubt on the management ability of these sectors and their arrangements for governance. ”

MPs were deeply concerned at the extravagant spending on overseas trips by the principal and his deputy - amounting to a total cost of more than pound;210,000 and their absence from the college for almost 12 months over five years.

The principal and deputy were suspended in May 1998, but it took a year before any further disciplinary action was taken. During that period they received full pay totalling pound;200,000.

The MPs said it was difficult to understand how unjustified financial claims of such scale could have evaded financial controls, why it had taken so long to finalise the Halton figure, and why other cases had not been solved.

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