As a whistleblower's allegations about Leeds College of Building are investigated, Neil Merrick asks if FE institutions have cleaned up their act

A couple of weeks ago on 21 June, fraud investigators from the national Learning and Skills Council (LSC) travelled to Bradford for a two-hour interview with former lecturer Graham Corney.

A couple of weeks ago on 21 June, fraud investigators from the national Learning and Skills Council (LSC) travelled to Bradford for a two-hour interview with former lecturer Graham Corney.

Up until two years ago, Corney worked in the building services department at Leeds College of Building where, he claims, staff were put under pressure to improve results by passing as many students as possible - regardless of whether they reached the required standard.

Among other allegations made by Corney is that welding examiners earned extra money by assessing students from outside companies when they were meant to be taking classes, and that staff turned a blind eye to students selling portfolios of coursework. Leeds College of Building seems unfazed by the fact that the LSC is looking into its affairs. The principal, Ian Billyard, says the LSC has confirmed to the college that there is no substance to the allegations made by Corney. He declined to comment further.

In August 2002, Corney decided to go public by invoking the college's whistleblowing procedures. But his claims were dismissed by the college and later by West Yorkshire LSC.

In the meantime, Corney, an official for the lecturers' union NATFHE, was suspended and subsequently dismissed following a public row with another teacher. Aged 55, he decided to take early retirement.

According to Corney, the national LSC has taken an interest in his claims only after constant pressure from him and other lecturers, some of whom still work at the college.

The problem, he claims, is that FE colleges have an incentive to cheat because part of their funding is based on students' results. "This is about standards and public money," he says. "It's vital that the LSC doesn't sweep it under the carpet."

Allegations of fraud in further education are not new, although the sector has greatly improved its image since the mid-1990s, when cases of mismanagement seemed to crop up with alarming regularity.

Under the Further Education Funding Council, which allocated money prior to the LSC, colleges had an even greater financial incentive to ensure that students gained qualifications. Many franchised courses to private training providers and the FEFC quickly ran out of money.

The dash for cash ended in 1997 when ministers pulled the plug on such schemes - but at first more financial disasters emerged. Bilston College, near Wolverhampton, lost £3.5m after being forced to scrap franchised courses and spent two years fighting the FEFC for the money.

Meanwhile, at Halton College, Widnes, the principal, Martin Jenkins, and other staff ran up enormous bills on foreign trips. When a lecturer tried to publicise what was going on in the days before whistleblowing, she lost her job.

Since the turn of the century, there have been fewer instances of fraud at individual colleges, although the Department for Education and Skills managed to lose nearly £100m on its ill-fated individual learning accounts scheme.

Most of the money was lost because of fraudulent claims made by private training companies, although only a small number of prosecutions have been brought and, by the end of 2003, just £1.5m has been recovered. Colleges, meanwhile, feel they have cleaned up their act and that, under the LSC, the system for claiming public money is more transparent and audit procedures have improved.

Peter Pendle, chief executive of the Association for College Management, says that, while some colleges may have "sailed pretty close to the wind" in the past, cases of fraud are now almost non-existent. "It's much more difficult for colleges to get themselves into these sorts of problems."

The greatest problem nowadays is making sure that outside providers running courses in partnership with colleges have as sound an accounting system as the colleges themselves, says Pendle.

"Even though there is no intention to defraud, it's not always possible to have paperwork to back up claims," he adds. "Normally colleges don't put in claims until they've seen the paperwork from their partners."

Although the sorts of claims made by Corney appear isolated, they are not unique. Last year, a former lecturer from Grimsby College won substantial compensation after being sacked when he publicised the fact that the LSC was investigating possible financial irregularities. More recently, former staff at Manchester College of Arts and Technology (Mancat) claimed they were put under pressure to claim extra funding for additional learning support (ALS) provided for students.

The college was forced to return £300,000 out of £3.7m received from the LSC. But an inquiry carried out by Terry Melia, former chairman of the Learning and Skills Development Agency, into what constituted ALS found no evidence of malpractice.

Barbara Forshaw, the deputy principal at Mancat, says the inquiry was carried out at the request of auditors who decided they could not adjudicate on an educational matter. "The argument was never about whether we had made fraudulent claims," she says. "It's a nightmare auditing FE because it is so complicated."

The LSC will not comment on investigations that are ongoing, but says it investigates fraud allegations whenever there is sufficient cause. At any time, it can have between five and 15 investigations up and running. These can last up to 18 months.

"A single anonymous tip-off will rarely, if ever, be sufficient unless there is sufficient corroborating evidence of possible misuse of funds," says a spokesman.

Barry Lovejoy, head of colleges at NATFHE, says it is rare for staff to make claims of internal fraud - but such allegations must be taken seriously by college managers and the LSC.

"Lecturers don't make these sort of claims frivolously. They do so having carefully thought through the pressure on them as well as the possible consequences," he says.

"We have to engender a culture where people feel their concerns can be raised without fear of reprisal."

John Brennan, the Chief Executive of the Association of Colleges, says bad practice can never be excused, but recent government decisions to reduce the burden of audit and inspection by putting more trust in colleges shows that problems are rare.

"Both can be read as a vote of confidence in colleges' integrity and capacity to manage what are often very complex institutions," he says.