Nearly 50 further education colleges are in the red although reserves held across the 457-college sector amount to Pounds 238 million.

The Public Accounts Committee heard this week that the Further Education Funding Council had asked 22 of the colleges in deficit to produce recovery plans.

The committee was also told that college principals had received pay rises of up to 20 per cent since incorporation. The average increase was 11.6 per cent.

FEFC chief executive Sir William Stubbs was asked by MP Alan Milburn whether he was concerned about "the stark contrast between the pretty big increase at the top and what is happening with lecturers' wages at the bottom".

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Sir William replied: "It is not a cause of concern to the council if the colleges are being run and managed properly and effectively delivering education."

Since incorporation, lecturers on Silver Book contracts have only had one pay rise, of 1.5 per cent. They were excluded from last year's increase for new-style contract-holders of 2.9 per cent.

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Principals at 15 colleges earn Pounds 70,000 or more and the highest salary is Pounds 83,500. The best-paid 10 per cent of principals had received a 19.1 per cent pay rise since incorporation in 1993.

The total debt of the 48 deficit colleges is Pounds 20 million, although colleges have reserves of Pounds 238 million. Sir William said the FEFC had no remit to "rob the rich to pay the poor". He said 11 colleges had their accounts qualified last year, although for some it was for technical reasons.

Sir Tim Lankester, Department for Education permanent secretary, added: "There was one college where there was a complete disclaimer because the auditors felt the figures were not sufficiently reliable." The FEFC also said it had advised five colleges, which paid fees to governors, to claim back the money, totalling Pounds 60,000.

The committee asked about reports of "ghost" franchise courses at Bournville College, Birmingham, and was told that Handsworth College, also in Birmingham, had also found some community courses were not "properly convened". Sir William said the colleges had acted promptly to avoid wasting public money.

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Asked about severence payments and gagging clauses, Sir William said: "The council would not support any agreement which did not bring the sums of money out into the public gaze."