Unions have voted to try to block merger plans for a college that received one of the most damning inspection reports of last year.

Inspectors have since praised the new management of People’s college in Nottingham, but management consultants are still carrying out a feasibility study to determine whether it should merge with the smaller Broxtowe college in the west of the city.

Natfhe, the lecturers’ union, and public-sector union Unison oppose the merger, arguing it is driven by the need to make money by selling off property rather than by any benefits to students.

Broxtowe’s principal, Nick Lewis, is likely to head the merged college, Natfhe said, adding that it would be “unprecedented” for a smaller college to take over a larger one.

The unions also fear they will lose collectively negotiated contracts and national pay scales under the Broxtowe regime, and have warned they will consider striking. A Natfhe branch spokesman said: “We think this is a quick fix to raise capital. It isn’t a serious, considered approach.”

People’s college is facing a deficit of up to pound;631,000 this year after its funding was cut following the critical inspection, which found that seven of its 11 curriculum areas were substandard.

In 2003, a three-way merger of People’s with Broxtowe and another local college, South Nottingham, was mooted but postponed last year. At the time, People’s and South Nottingham wanted to exclude Broxtowe from the merger.

David Hughes, the Learning and Skills Council’s regional director, said the decision over college mergers “is so significant for Nottingham that if we get this wrong we will have another 20 years of horror and terror”.

David Gibson, principal of People’s and former Association of Colleges chief executive, said the decision to look again at merging People’s with Broxtowe was made jointly by all four of Nottingham’s colleges.

He said: “There was a debate with all the colleges and this seemed to be the one that received most support. It is a genuine effort to see if this is a sensible way to proceed.”

Merger could improve the curriculum as well as finances, he said, and the merged colleges could benefit from new buildings.

A feasibility study by KPMG is due to be complete in the autumn. If the report backs merger, it could be done by April next year after a re-inspection of People’s college.

Colleges across the country are merging - but there has been debate about the benefits.

Since 1993, 117 colleges have merged to form 53 new institutions, while another 10 have merged into the higher education sector. A University of Warwick study in 1993, examining the progress of 17 mergers, said that the push towards amalgamation was likely to increase.

Hardline tactics against failing colleges are driving many mergers, researchers said. Increased centralised control and the difficulties facing smaller, specialist colleges were also a factor.

Of 17 mergers examined, 10 were successful, eight partially successful and one achieved only limited results. “Partial” success could include failing to achieve the main objective of the merger.

In all cases, merger plans underestimated the problems, including difficulties in construction, and less than half realised a financial benefit.

The curriculum improved in most cases, but the quality of teaching and learning improved in less than half of cases.

Every merger involved an institutional culture clash and in most cases it was substantial and protracted.

The mergers were all based on a genuine attempt to meet the needs of local areas better, but in many cases their aims were vague and poorly defined.