Despite the inevitable financial challenges which come with operating in the new post-16 education market place, it would be hard to paint incorporation as a disaster.

Student numbers in Wales have increased from 92,851 in 1993, the year of incorporation, to 157,000 in 1999. These figures include a doubling of the number of part-time students, in line with the drive for wider access. There has also been an increase in the number of over-19s in FE.

This has happened despite funding being reduced by more than 21 per cent per student in real terms since 1993-94.

With such trophies of success held aloft, college principals and their governors could well believe the sector is heading in the right direction. The feeling among them has been that it may need some small refinements, but a change of course would be foolish.

Then came this month’s National Assembly report into the pound;6.8 million loss experienced by Coleg Gwent in Usk in 1996-97. Among the committee’s recommendations was a call for a review of the post-1993 structure of FE which, it suggested, had been “inadequate to deal with the sort of events that happened at Coleg Gwent”.

There is a feeling among principals that some assembly members, who have local authority backgrounds, are hoping the Coleg Gwent saga will prove to be the iceberg which finally sinks the Titanic of incorporation, and that colleges’ expansionist aspirations will once again be tempered by local authority control.

Brian Robinson, principal of Carmarthenshire College, Llanelli, said: “A lot of changes have already taken place in the sector to improve and enhane governance, and there have been the recent changes in the structure and membership of governing bodies.

“A number of the National Assembly people come from local authority backgrounds and I think some of them would like a return to the ‘good old days’, as they see it, of local authority control. I wouldn’t agree with that. If the success we have had in this sector had been repeated in the NHS, people would probably be jumping up and down in glee, especially if they achieved an equivalent increase in patient numbers as reduced cost.”

Dr Haydn Edwards, principal of Coleg Menai in Bangor, Gwynedd, who is on the board of Fforwm, the Welsh colleges’ assocation, said: “You would not disband local authorities just because there are scandals in a few of them. But if improvements have to be made I would welcome a discussion on these issues.”

John Stephenson, chairman of Fforwm, said: “If you look at efficiency, responsiveness and infrastructure, there are plenty of achievements which you can place on the credit side of the balance sheet.

“Of course there have been institutions where perhaps errors of judgment have been made, or there has been a lack of control. But I don’t think any sector is immune from that, whether public or private.”

Ian Rees, principal of Coleg Meirion-Dwyfor, Gwynedd, said: “I think incorporation is a good thing because of the way it has allowed the sector to develop over the years.

“There have been some problems, as there are in any system, but the sector has developed a great deal in that time.

“Since Coleg Gwent we have put systems in place - including governor and management development - to make sure the same things do not happen here. Colleges are perfectly capable of implementing measures without outside guidance.”