A college has overcome serious financial difficulties to get an outstanding rating by inspectors.

Nelson and Colne college in Lancashire is believed to be the first college in the country to win the top accolade from inspectors while in financial recovery.

It is in category C financial health, the lowest bracket, after it ran up debts of pound;1.4 million last year - about one-third of it due to clawback of funding by the Learning and Skills Council because of previous under-performance.

Alison Birkinshaw, its principal since April last year, said: “We knew we were a good college because our results were good.

“But the fact that we have come out with one of the best inspection reports in the country is wonderful - it’s not one that we were expecting. We have done this with no money and it proves what can be done with a very tight budget. We didn’t have the funds to throw around to gloss things over.”

It is the third college in Lancashire in recent months to be rated outstanding in a joint report by the Office for Standards in Education and the Adult Learning Inspectorate.

In June, Liverpool community college and Runshaw college in Leyland were awarded top marks by Ofsted and the Ali. In addition, its neighbour, Burnley college, was rated “highly successful”.

“We are good at doing things with nowt,” Dr Birkinshaw said. “I don’t know if there is something in the air up here.

“Maybe it’s the northern spirit, the grit and determination we possess to succeed in the face of adversity. Or maybe it is just because it rains so much there is nothing else to do but study.”

Six colleges with inspection reports published in the last academic year have been rated outstanding, compared with four the year before. Tower Hamlets and City and Islington in London, and South Downs college in Hampshire join the three Lancashire high-achievers.

Inspectors judged provision to be outstanding in five curriculum areas and good in two.

Their report said: “Pass and retention rates are very high for both adults and young people and, in many cases, represent very good ‘value added’.

“The college has successfully implemented its recovery plan to address financial difficulties experienced a year ago, and has turned a pound;1.4m deficit into a modest surplus.”

Nelson and Colne is officially a tertiary college because no schools in the borough of Pendle, where it is situated, have sixth forms. But Dr Birkinshaw said it is a general FE college in terms of the courses it offers.

She added: “This is an area of high deprivation where the GCSE pass rate is about 10 per cent below the national average, but our A-level pass rate, at 98 per cent, is above the national average.”

As well as turning its finances around, the college is expected to spend Pounds 15.4m on building work, to be completed in 2007, to improve its facilities.

Dr Birkinshaw said it has also recruited some “top class” teaching staff, although she acknowledged that it still needs to find ways to improve salaries.