Holyrood told of debt fear

MSPs were warned this week not to expect any improvement in college finances unless there are "more realistic levels of funding". Planned cutbacks over the next couple of years means students will have to be turned away and more staff will have to be laid off, the Association of Scottish Colleges told the Scottish Parliament's audit committee.

The association stated: "The effect of year on year cuts in the unit of resource is cumulative, and a standstill in funding (a cutback in real terms) in the baseline planning figures for the next two years."

The committee is taking evidence following the Auditor-General's report on the financial health of the colleges. Although their operating deficit for 2000-01 was down from pound;16 million the previous year to pound;13.8 million, the number of colleges in deficit rose from 31 to 34.

This confirmed that the 50 per cent cash increase colleges had received since 1998, welcome though it was, was not enough. The Scottish Executive has implicitly acknowledged the crisis by providing pound;7 million to help eight colleges turn their fortunes round this year and another pound;5 million to cope with "unplanned change".

MSPs were told on Tuesday that these problems would be exacerbated by cost increases of 1 per cent to 2 per cent as a result of higher national insurance and pension contributions, pay demands from lecturers and new legislative requirements such as the Disability Discrimination Act.

The association's "firm view" is that colleges need more realistic levels of funding so that they can deliver national priorities for lifelong learning without putting their own financial health in jeopardy.

"Financial recovery is not just a matter of improving financial management and forecasting in individual colleges. It is a major issue of resourcing and planning for the whole FE sector."

The ASC points to what it sees as inconsistency at the heart of the Executive's lifelong learning policies. "Colleges have delivered many more places in response to student demand, social need and Government requirements. Overall enrolments in 2001-02 were up by a further 12 per cent compared with the previous year. Colleges are also delivering more courses for the disadvantaged which are more costly and staff intensive.

"The Executive's demand for continuing cuts in unit costs - efficiency 'gains' of 1 per cent per annum - puts pressure on college finances which is at odds with the responsiveness and inclusiveness they have been asked to deliver."

The association welcomes moves to give colleges more information about the way their financial health is appraised by the Scottish Further Education Funding Council.

But it says this will not be enough on its own. "Colleges are front-line services for lifelong learning and social inclusion and not simply supply businesses intent only on good finances," the association states.

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