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Police to study college debt file

A Welsh further education college has amassed debts of Pounds 750,000 and a file has been sent to Dyfed Powys police in an investigation into possible financial irregularities.

And although the police inquiry is exceptional, many of the difficulties facing Coleg Ceredigion are not unique in Wales. The Further Education Funding Council for Wales has admitted that Deeside College is forecasting an accumulated deficit of Pounds 600,000 and that it is "closely monitoring the financial health of two other colleges".

Coleg Ceredigion, in west Wales, is the first widely publicised example of an FE college in Wales for which independence has proved a financial nightmare.

In a statement, the FEFCW says it is "aware of the financial position of Coleg Ceredigion and is working closely with the college . . . the council welcomes the intention of the governing body to develop a strategy for change".

The finance manager of the college, Peter Nicholls, resigned in May following a period of suspension on full pay. A week later the principal, Martin Lewis, announced that he was taking early retirement. College sources say that neither departure had anything to do with the cash crisis.

Keith Jones, a staff representative on the board of governors, confirmed there was a police inquiry. But he believes the underlying cause of the debt is the level of FEFCW funding.

"They are trying to bring down the unit costs, but we are a rural college on split sites. We do have higher costs. It was easier under LEA control because . . . they understood the local situation," he said.

With the FEFCW's approval, the governors called in Cyril Lewis, principal of Swansea College, to produce a cost-cutting package and a strategy for the future. Accountants Coopers and Lybrand were also called in to study the finances. The college currently has 700 full-time and 1,300 part-time students and a full-year budget of Pounds 2.4 million. Mr Lewis is aware that the post- independence competitive FE market "is not a comfortable idea" for some colleges.

He found a series of problems in Coleg Ceredigion. Split between four scattered sites - in Aberystwyth, Cardigan, Fellin Fach and Plas Tan Y Bllch - it recruits students from a wide rural area. The buildings are old and running costs are high.

After incorporation, the FEFCW allowed a honeymoon period before funding was regularised. Coleg Ceredigion ran up a deficit of Pounds 160,000 over 16 months. Extra courses were put on but student numbers never materialised. Some A-level courses were being run with only two or three students. Overheads became disproportionately high and the debt soared.

In order to compete with neighbouring colleges, Coleg Ceredigion provided free buses for students, a further drain on resources.

Mr Lewis has implemented a review of the curriculum. Courses have not been dropped, but staff have agreed to take a pay cut if the students are not there to fund them. The part-time teaching budget has been cut in half and 18 full-time teaching, administrative and management jobs have been lost.

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