Change needed to secure financial stability and success of colleges, report finds

Colleges in Scotland need change to ensure more students graduate and the sector is financially stable in the long term, Scotland’s Auditor General has said.

A new report by Audit Scotland found the sector responded well to the challenges of Covid-19, including the shift to online learning during the pandemic.

Coronavirus funding contributed to a better-than-expected end of year operating position for the sector in 2020-21, but the watchdog found colleges’ finances are forecast to deteriorate in the coming years.

College sector funding for the upcoming academic year has fallen, down 5% to £696 million compared to 2021-22.

In inflationary real terms, this is a fall of 9% to £654 million, the report found.

The proportion of students withdrawing from their courses has increased to 27.7% from 20.8% the previous year, with socially disadvantaged and vulnerable students more likely to withdraw than their peers.

The watchdog has now urged the Scottish Government to work with the Scottish Funding Council (SFC) to prepare for changes.

Stephen Boyle, Auditor General for Scotland, said: “The challenging financial situation facing colleges will make it difficult for the sector to balance the delivery of high-quality courses and Scottish Government priorities.

“Changes are needed to ensure the sector is financially sustainable in the long term and more students successfully complete their courses.

“Colleges need support to plan for those changes, and the Scottish Government needs to work with the SFC to put its plan into action at the earliest opportunity.”

In 2021, the SFC made wide-ranging recommendations to improve the college sector, including multi-year funding assumptions.

The proposals were broadly accepted by the Scottish Government, which is due to set out the future role of the college and university sectors in 2023.

Further recommendations being considered include developing a new national impact framework which is intended to clarify the outcomes expected from the sector, and how they will be assessed.

Jamie Hepburn, minister for higher education and further education, said: “We welcome Audit Scotland’s report and will consider its recommendations carefully.

“Providing people with opportunities to pursue further and higher education and to develop knowledge and skills throughout their lives is crucial and we are driving forward improvements to benefit Scotland’s economy and people.

“The Scottish Government is investing nearly £2 billion in Scotland’s colleges and universities in 2022/23.

“We will continue to work with the Scottish Funding Council, and our colleges, to ensure funding continues to enable them to deliver high-quality education and training.

“The Scottish Employer Skills Survey 2020 points to an improving picture in relation to skills shortages in line with our expectation that college teaching and skills are aligned with wider economic and community needs.

“We know some students’ learning was inevitably disrupted as a result of Covid-19.

“However, more than 90% of those who were unable to complete their studies in 2019-20 due to the pandemic have returned to college by 2021-22, according to the latest College Performance Indicators.

“Work continues to re-engage the remaining students across 2019-20 and 2020-21.”

A Colleges Scotland spokesperson said the financial squeeze facing the sector will make it “difficult to continue to deliver the same volume of learning as in previous years”.

They added: “However, the sector has proven itself incredibly adaptive and resilient in recent times and will continue to do everything possible to provide the lifelong learning opportunities our students demand and deserve.

“More than 200,000 students take advantage of the outstanding teaching and delivery of skills provided by colleges every year.

“It is, therefore, encouraging that the report has also called on the Scottish Funding Council and Scottish Government to provide support for colleges to plan for change within the new financial constraints to help us continue to provide access to world-class learning.”