Taxpayers face pound;1m bill for Bilston mess;FE Focus
The revelation is sure to put the Further Education Funding Council's handling of the Wolverhampton college under the spotlight. Bilston's financial affairs are being investigated by the police and the funding council is thought to be coming under pressure from ministers to recoup some cash through the courts.
The Government is keen to demonstrate that it is cracking down on failing colleges and trying to recover public money.
Bilston was forced to close last April after the worst inspection report in FE history. Its heavy reliance on franchising deals and subsidiary companies led to it accumulating debts of more than pound;10m. A large proportion of the bill was incurred as accountants tried to untangle the complex financial web surrounding Bilston's companies.
Nearby Wulfren College has now taken over Bilston in a move which will create a super-college for Wolverhampton. The new college will open in October.
Alan Birks, principal of South Birmingham College, was drafted in to try to save Bilston after principal Keith Wymer resigned. Mr Birks has now left Bilston and he estimates that so far between pound;250,000-pound;300,000 has been spent on outside consultants. As the work is not yet finished total costs could top pound;1m.
But the spending sparked anger in Wolverhampton. Conservative councillor John Mellor said: "I would query whether this spending is necessary. In my view the management of the colleges and the FEFC should have the relevant experience."
An FEFC spokesman said: "At this stage it is not appropriate for us to comment on the final costs arising from the various audits. The FEFC is taking advice on steps we can take to recover some of our costs."
Legal action is likely. However, the time and expense involved are believed to be causing second thoughts. Until last year Deloitte and Touche were Bilston's internal auditors.
The FEFC's own auditors, Bentley Jennison have been asked to sort out the mess left by the collapse of the college and its companies.
The firm was initially brought in to work on Bilston's recovery plan last autumn. However, as problems deepened they took over the college's internal financial arrangements, management information systems and the task of winding down the companies. The work is believed to be worth pound;50,000 a month and is expected to continue until December.
In February this year, the FEFC asked them to investigate whether public funds had been misused by the college or its
companies. Although the total value of the work is not known, charges are believed to be in the region of pound;800-pound;1,000 a day. The firm also acts as Bilston's internal auditors.
Deloitte and Touche were commissioned by Bilston to examine the allegations raised in whistleblowers' letters. The charges included governor cronyism, abuse of foreign travel and unjustifiable pay rises.
Before the merger, Wulfren College paid pound;111,000 to accountants KPMG and management firm Martineau Johnson to report on the finances and management of both colleges.
Neil Hulme, assistant principal of Wolverhampton defended the college's spending. "All colleges use a variety of professional organisations to supply a range of services. Contracts are arranged in accordance with public sector guidelines," he said.
Bilston fell from being one of the most far-sighted and effective colleges five years ago to one of the least effective.
An FEFC inspection earlier this year gave it the lowest grades for management, governance, quality assurance and student support. The college had claimed money for courses not eligible for funding - such as line dancing and judo training.
The special inquiry established by the FEFC found that "propaganda, rhetoric, and wishful thinking rather than hard facts, quantitative and qualitative performance indicators, analysis and common sense appeared to have underpinned crucial management decisions."