Bilston Community College and Matthew Boulton College, both in the Midlands, are understood to have received two of the worst Further Education Funding Council inspection reports, condemning management and governance of previous regimes at both colleges.

And the long-awaited report on Dewsbury College was published this week, revealing deep-seated problems of weak governance and lack of overall financial control.

At Bilston, in Wolverhampton, 120 managers have taken voluntarily redundancy, and as many as nine loss-making offshoot companies are to be wound up as Alan Birks, the seconded principal of South Birmingham College, attempts to repair an operating deficit of pound;5.7 million on a turnover of pound;25m.

Three layers of management have been stripped out and several managers are believed to be negotiating severance packages.

The college’s inspection report, due in March, is likely to include more than one grade 5, the lowest mark possible.

Mr Birks said he did not think the college’s existence was threatened. “It’s very bad but it’s not fatal,” he said.

The report on Birmingham’s Matthew Boulton college - where ex-principal Tony Colton sat on the committee which decided his pension - will be the worst ever seen in the sector when it is published in two weeks’ time.

New principal Christine Braddock is implementing redundancies. The college which is in financial difficulties and may have to close if it is unable to find a merger partner.

Meanwhile, the inspection report on Dewsbury College, Yorkshire, finally published today, targets weak governance, a failure of financial control, late accounts, ineffective use of targets and poor managerial expertise.

Publication had been delayed for 13 months while the college disputed many of its findings.

Both governance and management are awarded a grade 4, raised from 5s after the college appeal. Science is also awarded a 4 but student support is said to be “outstanding” and gets a grade 1.

The report says the major weaknesses in management and governance need to be urgently addressed and that the college had failed to recognise the seriousness of its financial position.

“The corporation does not substantially conduct its business in accordance with the instrument and articles of government. It also does not substantially fulfil its responsibilities under the financial memorandum with the FEFC.”

But principal Vince Hall said the inspection was carried out during a major restructuring exercise, and considerable strides forward have been made since then.

The college had been operating in surplus for the last 18 months, and in terms of A-levels it was top of the table for local FE colleges. An independent review by consultants found that the college was “tightly managed and well-resourced in comparison with a large sample of similar colleges.”

Mr Hall said: “The future of the college is secure. It offers quality provision, and supports the Government’s agenda of raising achievement and widening participation.”