Peter Hain: "Time to look forward"

The audit office says the running of Gwent Tertiary College fell "well short" of the standard expected, leading to an overspend of almost �7m between 1996-97.

The report, presented to Parliament on Friday, makes 11 recommendations, including bringing Wales into line with England in the monitoring of all colleges' finances once each term.

Mr Hain said further education should now build on the lessons learned. The Welsh Office and the Further Education Funding Council for Wales would be monitoring all its institutions from now on.

"The time for recriminations is over and this must not become a witch-hunt or be used as a stick with which to beat the sector," he said.

"Further education colleges are central to our plans for lifelong learning. Without a strong and confident FE sector, we will be unable to realise our education and training goals for Wales."

Restructuring

Gwent Tertiary College's new chief executive and governing body were now well on the way to reviving its finances, he added.

At the root of the decline in its finances was a plan to restructure the management team, supposedly to save money and be more efficient.

The biggest criticism in the report is of the then principal, senior management team and governing body - all of whom have since left.

Every college should be regularly scrutinised by external auditors, it says. The report also calls on the Welsh Office to set out a framework for assuring the quality of the governing bodies at further education institutions.

European projects

The college has about 30,000 students and 1,000 staff in six centres at Abergavenny, Crosskeys, Ebbw Vale, Newport, Pontypool and Usk, and a Business Services department in Newport.

With an income of �36.5m, it went from a surplus of �2m to an operating deficit of nearly �7m in 1996/7, largely because it failed to manage staff costs and European-funded projects. That led to about 100 staff redundancies.

There was a decline of several thousands in the number of students. A training centre set up with EU grants had to be disbanded.

Last summer Mr Hain announced a fraud investigation into the way European Social Fund money had been used. That is still going on.

'Misleading'

The National Audit Office report - instigated by local MPs - found that the scale of the college's financial problems had been obscured for eight months and that data produced by the college management had been of "poor quality".

Llew Smith: Sorry for staff who lost jobs

The governing body was not informed of the projected operating loss and the financial information that was provided was "inadequate and misleading", it says.

The then governors are also criticised for not having adequate monitoring procedures.

Llew Smith, Labour MP for Blaenau Gwent, also welcomed the report. He said it vindicated the MPs who had demanded an early investigation.