FURTHER education colleges remain deeply in debt and the Government's extra 3millions are unlikely to bring an end to essential cost-cutting, writes Neil Munro.
That is the conclusion of a report on managing costs in Scottish FE colleges published yesterday by the National Audit Office, Parliament's public spending watchdog.
But the Association of Scottish Colleges says the report is largely an historic account and the long-term future is much healthier.
The NAO says the extra pound;214 million allocated for the next three years is for new and increased levels of activity. There will therefore be "a continuing need for colleges to reduce unit costs, and they will still be expected to continue to achieve efficiency savings."
Ministers have restricted "efficiency gains" for next year to one per cent, which Tom Kelly, ASC chief officer, says is "manageable."
The audit report found that 40 of the 43 incorporated colleges were forecasting deficits of pound;15m in 1998-99, compared with 12 who were in the red by pound;3m in 1993-94.
The report acknowledges that colleges have faced "exceptional restructuring costs" including pension payments to staff forced to take early retirement. But pressure to cut staffing costs must remain a priority, the NAO says. If the highest-spending colleges could reduce costs to the average, they would wipe pound;13m off the overall debt.
Mr Kelly acknowledges that "lessons have to be learned from past experience." But he points out that 1998-99 represented the toughest financial settlement for colleges, the culmination of three stringent years.
"Despite that, colleges had to maintain increased activity or they would have lost ground. So we had to square the circle of adding growth while reducing costs.
"The deficits were an inevitable consequence of inadequate resources and an aggressive funding methodology which forced colleges to compete for growth."
FE Focus, page 31