Scotland’s colleges face major reforms and financial challenges

An Audit Scotland report, Scotland’s colleges: current finances, future challenges, assesses the financial standing of the college sector before structural reforms and public spending reductions take effect.

The report says that while the overall financial standing of Scotland’s colleges is sound, the sector works to tight margins and faces considerable financial challenges and major reforms.

In 2010/11, there were 37 independent colleges with 306,000 students. Scottish Ministers have announced structural reforms of the sector, including the creation of 13 college regions. In addition, mergers are expected to reduce the number of independent colleges by a third.

The sector spent £771 million in 2010/11 and reported an overall operating deficit of £29 million, or 4.0 per cent. However, exceptional circumstances at the City of Glasgow College accounted for much of this, and 24 of the 37 colleges reported operating surpluses for the year.

Auditor General for Scotland, Caroline Gardner, said:

“The overall financial standing of Scotland’s colleges was sound in 2010/11. But most colleges operate to tight margins and there are major challenges ahead. The Scottish Government contributes around three-quarters of colleges’ combined incomes but this funding is set to reduce by around a quarter over the next three years.

“The planned reforms have the potential to bring a more strategic and coordinated approach to the management of Scotland’s colleges at a national level, and more robust planning of college provision within regions. However, the Scottish Government needs to clarify the costs and benefits of regionalisation, including structural reform, how these benefits contribute to its reform objectives, and how the costs will be funded.”

The report also says colleges and the new regions should develop coherent strategies that better link local needs and national priorities, inform regional spending decisions, and secure better value for money.