Scottish Office warned that 'tough settlement' may put more colleges in danger of bankruptcy.
The spectre of too many colleges chasing limited funds is likely to lead to more mergers, it emerged this week as Brian Wilson, the Education Minister, confirmed spending plans and responded to the Garrick committee's report on higher education.
Although Mr Wilson pledged to inject pound;8 million into the FE sector, taking the total to pound;237 million for 1998-99, pound;5 million will come from tuition fees for higher education courses. But the current financial squeeze could see some follow Clydebank College deep into debt (FE Focus, page 34).
The Association of Scottish Colleges immediately condemned the announcement and said most colleges would receive less in grant, despite an 11 per cent increase in activity. Fifteen colleges will have cuts of 5 per cent or more. Bob Kay, the association's chairman, said: "This is a very tough settlement."
Provisional figures suggest the total sum allocated will actually be pound;229.68 million, or pound;1.5 million less than the current year.
Mr Wilson said he was allocating pound;2 million from within the Strategic Fund to promote collaboration and merger planning. The money has been cut from college budgets. This year, pound;1.3 million was spent on the same target. "I am still anxious to see further rationalisation in Scotland and greater collaboration and links between colleges. We are prepared to encourage that financially," he said.
But responding to the Garrick report, he rejected "inappropriate mergers" of universities and colleges and deplored "mission drift".
Launching a package of further and higher education measures, Mr Wilson said he was anxious to raise the status of further education by agreeing to set up an FE funding council and remove decisions from New St Andrew's House. It will belong to the same organisation as the higher education funding council, share a chief executive and some board members but retain a separate chairman. It will open its doors in April next year.
Mr Wilson said: "I accept Garrick's recommendation that the time is right to put in place a funding mechanism for further education in Scotland that puts it on a par with higher education, which already has a funding council. But we are not in the business of setting up new quangos and therefore there will be two councils and one organisation and executive."
He has also accepted changes in funding methodology proposed by an earlier review group which will see colleges rewarded for excellence. As a first step, pound;2.35 million will be handed out.
"It is a signal that we will increasingly look to connect funding to the quality of what colleges produce. We have to ensure there are mechanisms available to reward success at all levels," Mr Wilson said.
Comment, page 21