16 colleges now reporting a deficit

Total is double the number predicted last year
28th April 2017, 12:00am
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16 colleges now reporting a deficit


All but four colleges in Scotland reported a deficit in 2015-16, underlining the severe financial squeeze on the sector.

A Tes Scotland analysis of financial accounts laid before Parliament reveals that 16 of Scotland’s 20 colleges reported a combined deficit in 2015-16 totalling £17 million. The number of colleges in deficit is double that predicted in an Audit Scotland report in August.

While it was later reported that three-quarters of colleges were expected to be in deficit by 2016-17, the most recent figures show that this position has been reached a year early.

Edinburgh College reported the largest individual college deficit at £7m, followed by Dundee and Angus College with £2.4m. The colleges, which have merged, had a total income of £63m and £39m respectively. The four colleges that reported a surplus for 2015-16 were City of Glasgow, Glasgow Kelvin, South Lanarkshire and North East Scotland.

According to college accounts, the sector brought in an overall income of £671.2m, while its total expenditure was £688.3m.

Meanwhile, staff numbers rose slightly from 10,765 to 10,899. Staffing costs are the largest expenditure item on colleges’ balance sheets and last year Audit Scotland estimated that the cost would rise further, as national bargaining - and with it a Scotland-wide pay deal - was introduced.

Last month, Tes Scotland revealed that the Colleges Scotland Employers’ Association had estimated that the planned pay deal for teaching staff alone could cost the sector £27m, although the association’s calculations were disputed by unions.

A spokeswoman for Colleges Scotland said the figures from the college accounts this week showed that the EIS union’s proposal to increase annual leave and reduce teaching hours for lecturers on top of a pay rise negotiated last year “simply isn’t viable and would be a bad deal for colleges and the taxpayer”.

The organisation appreciated the increase in funding that colleges will receive from the Scottish government in 2017-18, up to £551.3m from £536.6m the previous year, she added.

The spokeswoman said: “Most colleges are operating at a near break-even position, with colleges continuing to be well managed and remaining resilient in difficult financial situations.”

But EIS general secretary Larry Flanagan said the figures highlighted that the March 2016 pay agreement was “affordable and deliverable”.

He added that “college management should deliver what they have already agreed to. The EIS demand for adequate preparation time is about delivering high-quality education experiences for students. It is based on best practice in the sector, from financially viable colleges, and should be delivered across the country.”

In August, Audit Scotland said that “after adjustments”, the sector had a deficit of £3m. This, it added, represented less than 1 per cent of total income but was a deterioration from an underlying surplus of £15m in 2013-14, which represented 3 per cent of total income. This deficit was, the auditor stressed, lower than originally reported in the respective accounts.

A spokeswoman for the Scottish Funding Council said that there had been significant changes to how colleges needed to report their financial statements, which in turn had had an effect on the numbers in the accounts.

“Against this background, the vast majority of colleges reported a near break-even underlying operating position,” she said.

The spokeswoman added: “The new accounting standard for this round of college annual reports means our analysts have had to adjust the way they understand the overall financial health of the sector.

“This still shows there are some parts of the sector we need to support and work with to improve the overall position, and we’ll monitor the effects of this work.”

A spokeswoman for Dundee and Angus said: “The deficit of £2.4m includes a number of non-cash items, such as net depreciation and pension adjustment. If these items are stripped out, the college achieved a break-even position.”


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