It was built in 1866 as a workhouse to accommodate “paupers” who, in exchange for one night’s stay and a meal of bread and gruel, spent three hours breaking stones or washing and scrubbing.

Today, the Victorian St Mary Street Institution building is the cornerstone of Southampton City college. Rooms where the poor once slept four to a bed have been used as classrooms in further education since 1948.

Lindsey Noble, Southampton City’s principal, is desperate to move out of the 140-year-old building into modern accommodation “to provide the right sort of working environment for our staff and the right sort of learning environment for our students.”

The students expressed their dissatisfaction with the accommodation to inspectors from the Office for Standards in Education and the Adult Learning Inspectorate.

She hopes that the extra cash for college buildings, announced in the Budget, will enable her to improve the college’s estate.

Gordon Brown, the Chancellor, has promised a pound;1.5 billion capital renewal programme for colleges, pound;350 million of which is new money.

The workhouse buildings, part of which are listed, are used to teach hairdressing and beauty, general education and languages.

In their report, inspectors rated hair and beauty satisfactory, praising high retention and pass rates, but said that “resources are poor and the salons are outdated and overcrowded”.

The three workhouse blocks are heated by a 50-year-old steam boiler. “We think it’s the only one of its type still working,” Ms Noble said.

She wants hairdressing and beauty to be taught in a modern building which is part of phase three of a redevelopment programme for the campus.

Last September, a new building was opened to house care and childcare. “It is open-plan with lots of glass partitions and high visibility,” she said.

“It completely changed the way we were delivering those subjects.”

New construction workshops are due to be completed this summer under phase two. Plans have already been submitted for phase three, which involves demolishing one of the three workhouse blocks.

“We need another pound;9m to complete our redevelopment programmes,” she said. “It is good news that more money is available, but we must wait and see how they prioritise that expenditure.

“There is no doubt that investing in the college environment benefits both staff and learners, and enables us to use our space more effectively in planning programmes.”

She said adult learners working in modern high-tech offices do not want to take courses in buildings with drab corridors where roofs leak and in which windows cannot be opened and ventilation is difficult.

Last year, the college’s maintenance bill was pound;500,000. “That is a lot of money for a college in financial recovery,” she said.

She believes the renewal of the college’s buildings is a crucial part of the recovery from its difficulties three years ago when it was beset by strikes. She said: “It was in a mess, in particular our financial problems and poor learner success rates. Had we had an inspection at this time we would have been identified as a failing college.

“Student success rates have risen for three consecutive years, and we are making headway in teaching an innovative curriculum which will enable us to support the development of a professional and skilled workforce for the region.

“The further investment in our physical resources as part of an extensive campus redevelopment programme is also helping us to improve the learning experience for our students.”

In the recent inspection, Ofsted and the ALI rated provision good in three curriculum areas and satisfactory in six. Leadership and management were satisfactory.

The College of North West London is facing a similar crisis over its rebuilding programme. It needs to find pound;18.5m, but is struggling to raise the cash.

Principal Vicki Fagg said her funding bid has the support of the Learning and Skills Council locally, who offered to provide pound;6m. But when it went to national level the amount was reduced to pound;3.5m.

She said: “We are in category A financial status at the moment, having scrimped and saved to get there. If we were to get just pound;3.5m from the LSC, that would put us in Category C.

“That would mean we would have a very tight financial regime and it would be more difficult to attract good senior staff. Taking on a senior role in a college with a precarious financial state is a high-risk move.”

But she said the rebuilding programme must go ahead. “We had some visitors from Estonia recently and we showed them our CoVE (Centre of Vocational Excellence) provision in construction, which is housed in 1920s-built single-storey sheds.

“They said, ‘My God, we thought you were a rich country’. They were staggered by the poor quality of the accommodation.”

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