Scotland’s colleges could lose the ability to keep delivering on their government targets, according to the auditor-general for Scotland.

As this year’s annual review of the college sector, published today, reported concerns about colleges’ financial health, Caroline Gardner said there was “a growing risk to colleges’ ability to keep delivering what the Scottish government requires from the sector, as a result of major financial challenges and a declining student population”.

Overall income is down

The report states that the financial health of Scottish colleges is relatively stable, but that overall income to colleges has reduced and the underlying deficit increased to £8 million in 2015-16.   

While it acknowledges that government funding to the sector is due to increase in 2017-18, the report goes on to state that the harmonisation of pay and conditions as part of the national bargaining, recently reintroduced into the sector, could cost an estimated £80 million over three years, according to Colleges Scotland.

This comes only days after the Colleges Scotland employers’ association announced that it had agreed to pay the first 25 per cent of the pay migration to the new national pay scale for lecturing staff. In April, lecturers took strike action over what they said was management reneging on last year’s pay agreement, while college leaders said the deal was unaffordable without changes to terms and conditions.

Delivery targets exceeded

According to Audit Scotland, student numbers decreased slightly in 2015-16, reaching their lowest level since 2006-07 in terms of full-time equivalent numbers. Most of the reduction was down to the 16-24 age group. However, the report stresses that the sector has exceeded its delivery target every year and continued to do so in 2015-16, although its performance has declined since 2013-14. Student attainment improved in 2015-16.

Shona Struthers, chief executive of Colleges Scotland, said: “We acknowledge that the report highlights some of the challenges facing the sector. We agree with the report that national bargaining is a significant financial challenge for colleges. Without additional resource year on year, the ongoing costs are not affordable for the sector, without impacting severely on the student experience.”

However, she added that colleges continued to manage their finances well, and said that the pressures highlighted in the report reflected tighter public finances, changes in accounting rules and increased cost pressures outwith the control of colleges. “Most colleges are operating at a near break-even position, with all our colleges continuing to be well managed and remaining resilient in difficult financial circumstances,” she said. 

Drop in student numbers

EIS general secretary Larry Flanagan said the teaching union was concerned with the continuing drop in student numbers and the fact that funding across the sector for the year 2017-18 will only increase by 1 per cent.

Mr Flanagan added: “The EIS has noted Colleges Scotland’s claim that the agreed return to national bargaining will cost £79 million over three years. We have not seen any evidence to support this claim at the National Joint Negotiating Committee, despite repeatedly asking colleges to supply it. The EIS believes that this quoted figure is an exaggeration on the part of colleges’ managers, who have consistently made unsubstantiated claims about the costs of a return to national bargaining and the introduction of equal national pay scales for all lecturers.”

A Scottish government spokesperson said: “This report highlights that Scotland’s college sector is financially stable overall and that colleges continue to exceed their targets for student learning opportunities. It also identifies areas where improvements can be made. We will work closely with the Scottish Funding Council and colleges to consider its findings, as we continue to deliver job-focused learning that enables everyone to get the qualifications they need to get on in life.”

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