DERBY University's ambitious scheme to transform itself into Britain's first "colliversity" by merging with nearby colleges was in tatters this week as the key player pulled out without warning.

Mackworth College's decision to remain independent, scrapping two years of negotiations, is an acute embarrassment. The merger plans had the backing of the Further Education Funding Council.

Derby vice chancellor Roger Waterhouse refused to elaborate on the reasons for the collapse, saying that the two institutions needed to continue to work closely and he did not want a public falling out.

A question mark hangs over the final remaining merger with High Peak College in Buxton. Professor Waterhouse said he hoped it would still go ahead. But this is a far cry from the original vision in 1995 when five further education colleges were in merger talks with the university to form a unique post-16 system for 50,000 Derby students.

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Professor Waterhouse said the merger would provide the critical progression from further to higher education which was being hampered for full-timers because of restricted student numbers. The merged institution was to have a turnover approaching Pounds 65 million.

Mackworth principal Alan Harrison, working at the university as pro vice chancellor designate for several months, said the pullout decision had not been taken lightly.

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The FEFC had backed the proposal after at first being lukewarm. Only the secretary of state's approval was pending last week.