FUNDING chiefs failed to act over controversial severance payments to senior college staff because of the significant potential legal costs, documents have revealed.

And officials from the Scottish Funding Council (SFC) said they did not impose financial penalties on Coatbridge College because it would punish students.

The statements are included in written evidence to the Scottish Parliament's public audit committee, which is investigating £850,000 worth of payments made to managers from Coatbridge in 2013 when it merged with other institutions to form New College Lanarkshire.

Auditor General Caroline Gardner described the way the payments were made - which included £304,000 to former principal John Doyle - as one of the most serious failures in governance she has ever encountered.

One of the concerns raised in the wake of her report was why officials from the SFC did not act to prevent the payments being sanctioned by the college remuneration committee.

Laurence Howells, chief executive of the SFC, said: "Our legal advice was that it was not clear that simply breaching guidance was sufficient to lead to a successful civil case against the board members that had taken the decision and that testing this in the courts may lead to legal cost exceeding what could be recovered in the unlikely event it were successful.

"We could, of course, have recovered the money spent on the principal’s severance..... through clawing back grant to the college. We could also have refused to pay any portion of the severance.

"If we had taken either of these decisions the only consequence would have been to reduce the funding available to the college and its successor, New College Lanarkshire, and this would have damaged services to students without in any way reducing the payment to the principal."

Mr Howells said the SFC was "extremely frustrated" that a variety of "interventions" had not prevented the payments.

He said: "These interventions included writing to the principal and chair of the college making explicit our expectations, bringing the chair and principal of the college in to a meeting at SFC and my addressing the college board.

"Although the college eventually withdrew the offer of a 21 month deal to the senior team following discussion with SFC.... despite our actions – the letters, the meeting in the SFC and attendance at their board meeting – the chair and the remuneration committee did not withdraw the proposed deal to the principal.

"We were extremely frustrated that we were not able to take action to recover any unreasonable severance payments from those who had taken the decision."