Colleges face growing funding gap, Auditor General warns

Colleges are facing a multimillion-pound shortfall in funding for maintaining their buildings, Scotland’s spending watchdog has warned.

Student numbers are rising but capital funding has fallen in the last year, the Auditor General has said, so that money allocated for buildings and infrastructure will not meet the estimated costs of maintaining the college estate.

The Scottish Government increased its funding for the sector by 1% in 2019-20 to cover a £50 million-a-year pay rise for staff.

However, general capital funding for Scotland’s colleges has been cut from £33.6 million in 2018-19 to £21 million this year. Backlogged maintenance will also cost an estimated £77 million.

With the majority of colleges forecasting deficits in the next five years, Auditor General for Scotland Caroline Gardner said: “It is likely that the gap between their income and spending will continue to widen without action.”

“Colleges are increasingly dependent on public funding to cover their costs,” she said, adding: “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.”

A report looking at college funding suggested that only a small number of institutions have identified specific actions to deal with shortfalls.

On the issue of attainment gap, colleges are widening access to students from a range of backgrounds, but are not meeting targets for students from the most deprived areas.

The report adds that colleges are behind the current target and the aim of delivering 20% of credits to students from the most-deprived areas by 2020-21 “looks difficult to achieve.”

“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.”

Commenting on the findings, the Scottish Conservative education spokeswoman Liz Smith 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.”

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.”

Shona Struthers, chief executive of Colleges Scotland, said: “The underlying financial position of many colleges is concerning, as almost half of the 26 colleges are forecasting recurring financial deficits by 2022-23.

“The report also highlights that there is currently insufficient capital investment to properly address the needs of the sector, so it is critical that the upcoming Comprehensive Spending Review delivers on revenue and capital investment for college learners by safeguarding the sector which trains, qualifies, and upskills the workers and supports inclusive economic growth.

“The Scottish Government is increasing revenue investment in colleges, which we welcome, but this additional funding is being used to cover the growing costs from harmonising pay, terms and conditions across the sector.

“Colleges will continue to work closely with the Scottish Government and Scottish Funding Council to provide sufficient sustainable investment which will enable colleges to continue delivering benefits for students, communities, and the economy.”