Hansard

Thank you, convener. As the committee will know, Scotland’s colleges are the main providers of further education and they have an important role to play in helping to achieve sustainable economic growth. Colleges have gone through significant reforms in the past few years, and my report comments on those various reforms and how well they have been managed and delivered. It also provides an update on the financial position of the college sector. Our overall message is that colleges have coped well with the significant demands that have been placed on them as they have managed the complex programme of reform. However, many of the changes are still taking place, and colleges will need to continue to manage them carefully. We identified gaps in the way in which the Scottish Government and the Scottish Further and Higher Education Funding Council are monitoring and reporting on progress with the reforms. The reform programme has reduced the number of incorporated colleges from 37 to 20 since 2011-12. Planning for college mergers was generally good and all the merged colleges were established on time. The mergers have contributed to efficiency savings, but the Scottish Government and the Scottish funding council have not specified how they will measure some of the expected wider benefits of the reforms, and they have not gathered reliable information on the overall costs of mergers. The Office for National Statistics reclassified colleges as public bodies in 2010. That took effect from 1 April 2014, and it has led to greater accountability for the use of public money. Colleges are now required to submit more regular reports to the Scottish funding council on their finances and to seek approval for some items of expenditure. Reclassification has also led to the formation of arm’s-length foundations that are intended to protect colleges’ financial reserves. Colleges transferred £99 million to those independent foundations in 2013-14. We found that changes to the college sector so far have had minimal negative impact on students in those colleges. The colleges continue to meet their targets for learning, and they delivered around 76 million hours of learning in 2013-14. Education Scotland has not identified any significant issues with the quality of learning and teaching in the merged colleges that it has reviewed to date. However, because aspects of the changes are still under way, it will be important for colleges, the Government and the funding council to continue to monitor learning and teaching quality, together with learning provision and student satisfaction. The number of individual students attending college decreased by around 7 per cent between 2011-12 and 2013-14. The Government continues to prioritise younger students, and it has reduced funding for short courses and for courses that do not lead to a recognised qualification. As a result, there has been a reduction of 48 per cent in the number of part-time students and a reduction of 41 per cent in the number of students aged 25 or older since 2008-09. Colleges’ finances continue to be generally sound. Adjusting for the transfers to arm’s-length foundations, colleges reported a small overall surplus of £3.8 million in 2013-14. Scottish Government funding fell by 12.3 per cent in real terms between 2011-12 and 2013-14, and college spending reduced over the same period, mainly through reductions in recurring staff costs. Most of the staff reductions were delivered through voluntary severance. Although most severance was managed in line with good practice, auditors found significant weaknesses in the way in which two colleges managed and approved senior staff severance arrangements, and they found shortcomings in a further four colleges. My report also draws attention to colleges’ relatively short-term financial planning. Although recent changes have made it more challenging for colleges to prepare longer-term plans, it is increasingly important that they now do so to ensure that they effectively consider, plan for and meet the needs of their regions. We make a number of recommendations in the report for the Scottish Government and the funding council, and for regional bodies and colleges and their boards. In particular, we recommend that the Scottish Government and the funding council should specify how they will measure and publicly report progress in delivering all the benefits that are expected from the reform programme. It is also important that the Scottish Government and the funding council work with colleges to implement planned improvements in the way in which severance is managed in future. Given the scale of change in the further education sector and the complexity of the new arrangements, we will continue to monitor colleges through the annual audit process and to report back to the committee on the regular cycle. As always, my colleagues and I are happy to answer questions from the committee.