A struggling college has bounced back to be rated “good” by inspectors - but too late to stop it being merged.

People’s college in Nottingham is claiming the best-ever improvement of any institution in its health check by Ofsted. Next month, however, it will still merge with nearby Broxtowe college.

After a damning report in 2004, the college has now been graded “good” across the board. Its success rates - based on students’ performance and retention -have improved by 29 percentage points in two years.

In 2004, Ofsted said leadership and management were unsatisfactory.

Managers failed to ensure that all students received a satisfactory education and teaching standards were low. The college, said Ofsted, did not provide value-for-money.

Troubleshooting principal David Gibson said, while the performance had improved, People’s had no cash reserves left and the financial case for merger remained compelling.

He insisted that the merger was still justified despite the fact People’s performance had been turned around. The original thinking in favour of merger, he said, had been based on finances as well as performance.

He said the merger of People’s and Broxtowe had been discussed between all four of Nottingham’s colleges, looking at the overall effect on further education in the city.

Mr Gibson, formerly chief executive of the Association of Colleges, said:

“I still think that the financial pressure is so severe that it needs a merger to stand a chance of coping with that pressure.”

Unions say negotiations about lecturers’ contracts with the new institution are expected to continue after the merger takes place on June 1 - when People’s and Broxtowe become Castle college.

The merger is backed by the Department for Education and Skills.

Natfhe, the lecturers’ union, has always opposed the merger and has argued that it was motivated by the opportunity to make money by selling property and reduce administrative costs rather than by students’ interests.

Russ Escritt, regional official for Natfhe, said: “I think it is unlikely a new contract will be agreed by June 1, but we are looking at July. At the moment, managers have said there won’t be any compulsory redundancies before December, but we are concerned about what happens after that.

“They have been trawling for voluntary redundancies in the meantime.”

Between 1999 and 2003 People’s had to return pound;3.3 million to the Learning and Skills Council, because of under-performance, although there were no job losses during this period.

Thirty voluntary redundancies have been made recently and more are likely to follow.

Unions had intended to fight against merger but have now accepted it will go ahead.

Unison, the public-sector workers’ union, also insists the merger is financially motivated.

Mergers have been common in FE since colleges became independent of local authority control in 1993. Since then, 117 colleges have merged - and Northern Ireland is about to see its 16 colleges merging to form six.

Research has shown the majority of mergers are a success although a minority have produced only limited benefits.

Fewer than half of mergers have seen improvements in the quality of teaching.