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Scottish colleges' funding gap widening

The financial challenges facing Scotland's college sector have increased, according to the spending watchdog Audit Scotland.

An increase in Scottish Government funding to colleges will cover only the costs of making staff pay and conditions consistent across the sector.

Meanwhile, money allocated for buildings and infrastructure will fall short of the estimated costs of maintaining the college estate.

Most colleges are forecasting deficits in the next five years as the gap between their income and expenditure continues to widen, while only a small number of these colleges were found to have identified specific actions to deal with shortfalls.

Despite these challenges, student numbers have increased, and the sector continues to exceed its learning activity targets.

However, according to the report, there is wide sector variation in measures of student success, such as numbers completing their course or getting a job. And there is room for clearer Scottish Funding Council reporting on colleges' performance, including around student satisfaction figures.

Caroline Gardner, the Auditor General for Scotland, said: "Colleges are increasingly dependent on public funding to cover their costs, and it is likely that the gap between their income and spending will continue to widen without action.

"Tighter budgets make financial planning even more important. Colleges and the Scottish Funding Council need to do more to ensure they are as well-prepared as possible to deal with ongoing pressures."

Colleges received £606.5m in Scottish Government revenue funding in 2019/20, compared to £588.9m in 2018-19.

This one per cent real-terms increase is to fund the cost of harmonising staff pay and conditions, which is calculated at £50m per year from 2019-20.

Further Education Minister Richard Lochhead said: ”Audit Scotland finds that the college sector reported a small, but improved, underlying financial surplus in 2017-18.

“The Scottish Funding Council (SFC) assists colleges with their medium and long term financial planning and provides support as required.

“We are also working with the sector to diversify income streams. The SFC will produce a medium-term capital investment strategy for the college estate which will provide valuable evidence to determine future investment.

“Since 2007, the Scottish Government has invested more than £7 billion in colleges, with over £600 million this financial year.

“In real terms we’ve allocated over £810 million to capital projects including new campuses and buildings.

“More than 11,000 more full-time college students successfully completed their course last year compared to a decade ago, with improving attainment rates for students from the most deprived areas over the last six years.”

The Audit Scotland report recommends that the Scottish Funding Council and the Scottish Government agree and publish a medium-term capital investment strategy that sets out sector-wide priorities.

It also recommends they review whether targets for college provision and student outcomes, including for students from deprived areas, remain relevant and realistic, based on current performance trends and that they work with colleges to deliver the necessary improvements in performance to meet agreed outcome agreement targets.

Liz Smith, Scottish Conservative education spokeswoman, said: “This report makes very clear, yet again, the extent of the financial difficulties facing the college sector under the SNP.

“It tells us the gap between colleges’ income and expenditure is widening with the prospect of that worsening in the years ahead and that the college estate needs maintenance well beyond the current government spend.

“At a time when the attainment gap is also increasing, that places huge pressure on colleges to deliver the quality of education students and staff have a right to expect which is a major wake-up call for the SNP.”