Committee
Audit Committee, 30 Apr 2008
30 Apr 2008 · S3 · Audit Committee
Item of business
“Financial overview of Scotland's colleges 2006/07”
This is an excellent report that shows the value of the whole process. The colleges' financial performance has improved under pressure from the committee and, above all, from the Auditor General and his staff. That is extremely encouraging.I have two questions. Page 27 deals with corporate governance, which I have some worries about, and mentions that some colleges have boards that do not have members with recent, relevant financial experience. As Robert Black said, we know from our investigation into Western Isles NHS Board that it is extremely important to have board members who hold the executive to account. When we consider our approach to the report later in the meeting, we ought to take that issue into account.My first question is about appointments to boards. I get the impression that there is a bit of a self-perpetuating situation in colleges, to the extent that the principal has some responsibility for suggesting who should be appointed as governor. That creates problems, given that the governors must hold the principal to account. Perhaps the Auditor General or one of his staff could comment on the independence of governors.My second question relates to page 21, which mentions the potential loss of charitable status for colleges that is under consideration. The law of unintended consequences has come into effect in the context of charity law. The fact that the Office of the Scottish Charity Regulator questioned the charitable status of John Wheatley College but gave a private school—I think it was Dundee high school—a clean bill of health seems to go totally against the spirit of the legislation that was considered by the Scottish Parliament, as I understand its purpose; I took part in the debate on the reform of charity law elsewhere.Paragraph 109 states that the Scottish Government has made a commitment to introduce legislation to resolve the situation. Does the Auditor General or one of his staff know where we are on that? It would be outrageous if public colleges that provide educational opportunities for some of the poorest people in the land did not continue to have charitable status while private schools that provide privileged education for some of the richest people in the country did. I invite comments on those issues.
In the same item of business
The Convener:
Lab
The second item on the agenda is the Auditor General for Scotland's report "Financial overview of Scotland's colleges 2006/07". The issue has significance th...
Mr Robert Black (Auditor General for Scotland):
Thank you, convener. I will be assisted in this briefing by Barbara Hurst, who will be master—I am not sure if one says mistress these days; I will say maste...
Barbara Hurst (Audit Scotland):
Set against that relatively positive picture of college finances, four colleges—Edinburgh's Telford College, Elmwood College, James Watt College and North Gl...
The Convener:
Lab
I want to ask about the issue of governance, which you touched on, and about leadership. From my local experience, I am struck by how, in the wider Renfrewsh...
Mr Black:
I will attempt to reply to the convener's questions and thoughts on those extremely important general issues before inviting Barbara Hurst to respond.I absol...
Jim Hume (South of Scotland) (LD):
LD
Overall, the position is improving, which page 4 of the report says has been achieved "by increases in funding". However, in paragraph 95 on page 20 concern ...
Barbara Hurst:
It is still too soon to say. In our report, we say that there is a risk of colleges being affected, but we do not know what will happen. As a result of the r...
George Foulkes (Lothians) (Lab):
Lab
This is an excellent report that shows the value of the whole process. The colleges' financial performance has improved under pressure from the committee and...
Mr Black:
I acknowledge Lord Foulkes's concerns about the performance of the governance function. It is not really possible for us to give members a strong evidence ba...
The Convener:
Lab
George Foulkes and I have raised issues of governance with you. I described boards as a fig-leaf for many principals. They appoint their board, so they can a...
Murdo Fraser (Mid Scotland and Fife) (Con):
Con
I want to ask about the points that are mentioned in paragraphs 23 to 27 of the report. I am rather concerned to see from the report—if I am reading it corre...
Mr Black:
The approach is not terribly satisfactory. Our difficulty is that the accounting standards allow different treatments, although we have encouraged the sector...
Barbara Hurst:
Mark MacPherson could give us an update and explain in a bit more detail.
Mark MacPherson (Audit Scotland):
Members will appreciate that accounting treatment is quite a technical issue. We appoint auditors to provide an independent opinion, so it is perfectly reaso...
Murdo Fraser:
Con
When is the situation likely to be resolved?
Mark MacPherson:
We cannot say with certainty when it will be resolved. There are still issues to be discussed and opinions to be resolved by different people. However, we ca...
Murdo Fraser:
Con
Yes. Thank you.
The Convener:
Lab
What would be required to ensure consistency? You mentioned that a degree of flexibility is open to people, but it seems rather absurd that different people ...
Mr Black:
We have suggested to the funding council that it would be helpful if it introduced a clear sector-wide policy to which the auditors could respond, but that i...
Stuart McMillan (West of Scotland) (SNP):
SNP
Barbara Hurst mentioned two reports—on James Watt College and Kilmarnock College—that have been laid before the Parliament. What are they about? Are they sec...
Barbara Hurst:
They are. They have been laid with the accounts of the two colleges and highlight for the committee issues that arose from the accounts. It is unfortunate th...
Stuart McMillan:
SNP
Do they relate to 2006-07 or 2007-08?
Barbara Hurst:
They relate to the 2006-07 accounts. We mentioned them in the report. They will come to the committee.
Stuart McMillan:
SNP
I was not sure whether they were in addition to what is mentioned in the report.
Barbara Hurst:
No. There is a more formal process to ensure that we bring matters to your attention.
Stuart McMillan:
SNP
I agree with what the convener said about James Watt College. Around a year and a half ago, I spoke at a rally in Greenock in support of the lecturers, staff...
Mark MacPherson:
I do not think that we can add anything to what is described in the report; the position has not changed. It is up to the college to move on and work accordi...
Sandra White (Glasgow) (SNP):
SNP
Overall, the report is very good. The deficit has moved to a surplus, which is excellent.I have a couple of questions, one of which follows on from the quest...
Mr Black:
One benefit of amalgamation is that the new body will have the critical mass to ensure that it has strong finance and leadership skills and stronger boards. ...
Mark MacPherson:
Our understanding is that the option is a shared campus and not an amalgamation of the colleges. What happens when the colleges share a campus is a matter fo...