The chair of governors at Britain’s fastest-growing college - ordered to repay Pounds 8 million of a Pounds 29m budget and lay off 200 staff - is having difficulty answering questions.

Kevin Farrell’s problem is understandable - he is chair of the corporation of beleaguered Stoke-on-Trent College, the institution revealed this week to be claiming it had more students than it really does.

The college hit the headlines recently after it was alleged that its director and assistant were running a pub while on sick leave.

When asked: “Aren’t you in this situation because the director (principal) of the college is not actually running it, but is on sick leave and , allegedly running a pub?”, Mr Farrell says: “Pass.”

Mr Farrell, also chief executive of the British Cermanic Federation, really has to pass on that one. Neil Preston, director of the college, and his assistant Helen Chandler, have been on sick leave since the end of September. They are under investigation by the college for reportedly running a pub during that period. The pub, the Dymock Arms in Penley, Clwyd, has been owned by Pub Doctor Ltd since August this year. Mr Preston and Mrs Chandler were founder directors of the company, set up in 1995.

A special committee is investigating these matters, as part of the procedure necessary if the college considers taking action to dismiss senior staff.

But this is not just a story about individuals. Stoke College, with 21, 000 students (allegedly) was an ambitious college committed to growth. Its annual turnover is Pounds 29m. It had plans for a third Pounds 20m campus which initially had to be dropped because of planning objections. It was intending to expand at a time when government and further education funding councils were exhorting all colleges to go out and multiply.

But the students weren’t there, and the growth was not deliverable. What is completely lamentable is that the college failed to have a sufficiently robust management system to tell them the students were not there. And some students who dropped out of courses, were still registered as being on the roll. They definitely weren’t there, but they were in the figures.

The college had a student shortfall of nearly 20 per cent and now has to draw up a recovery plan. One commentator said: “They are so under-target, you would have thought that people would have noticed it just by looking round the college.”

But the staff knew something was seriously wrong. In July the lecturers’ union NATFHE published a survey of the views of college academic staff. It said that no other survey had “presented such a picture of arbitrary, bullying and tyrannical behaviour”.

Indeed, it would be hard to find another snapshot of staff disillusionment and even despair as this survey presented. And there were specific complaints. “As a manager I constantly amend student learning agreements when they withdraw - many of these amendments which I send in seem to have no effect, ie students still appear on data.” said one.

“Registering is appalling - students marked absent are marked present and vice versa. Programme managers and above are frightened of senior management, ” said another. And “Why a third campus? There are never any students on the two we already have!” Kevin Farrell says the first they knew of any problems was in September when the FEFC said it did not have full or complete returns on student numbers for 9596 and 9697. “Having bid for growth, provided a range of courses, employed the staff, the growth did not occur. So the budget and the college as an organisation were unbalanced.”

But why did not the governing body know well before September that something was wrong? Was it told, did it ask, for what is the most basic planning and management information?

Mr Farrell says: “I would not be answering these questions now if there had been any knowledge by the governors of this state of affairs. I was previously chairman of the audit committee. There have been no doubts expressed by any internal or external audit reports or any inspections of previous ISR (student number) returns, no queries or anything to suggest there was going to be a serious shortfall.

“Even in September, immediately prior to current events, the college was actively considering a third campus. It was quite clear that we would broadly meet our bids for this year and next year. That was the information available to the governors.”

The FEFC is putting the onus on the college. It said there were danger signals in March which the college should have picked up. “Fundamentally the reason this has happened is that the management information system has proved to be grossly inadequate, so the projections of student numbers and the financial forecasts are based on inaccurate information,” an FEFC spokeswoman said.

The college is a self-governing body and must be responsible for its action, though the council will advise and help. The case, it says, is unusual, but it will not be treated differently from any other college with a financial weakness.

Mr Farrell said he hoped students would not be affected. “There may be extreme cases where we cannot offer a particular course because there are only a few students, but we would consolidate this with another. We hope we would not have to discontinue courses without being able to offer courses with a parallel qualification, ” he said.

This is the case of a college which apparently did not know where its principal was, didn’t know how many students it had, didn’t keep its governors properly informed and didn’t listen to its staff in time. The staff blew the whistle in July. Now they are being sent off the pitch.