About you
3. What is your name?
Name
Antony Clark
Organisation details
6. Name of organisation
Name of organisation
(Required)
Audit Scotland
7. Information about your organisation
Please add information about your organisation in the box below
4This response is being submitted by Antony Clark, Interim Director of Performance Audit and Best Value at Audit Scotland, on behalf of the Auditor General for Scotland.
The Auditor General for Scotland (AGS) is an independent crown appointment, made on the recommendation of the Scottish Parliament, to help ensure that public money is spent properly, efficiently and effectively. The AGS is responsible for the audit of all public bodies except local authorities. He reports in public to the Public Audit Committee of the Scottish Parliament.
The AGS is responsible for auditing further education colleges, and he appoints the independent auditors for Scotland’s 20 incorporated colleges and Glasgow Colleges’ Regional Board. He also appoints the auditors for the Scottish Funding Council, which distributes funding to colleges and universities.
Audit Scotland is a statutory body established under the Public Finance and Accountability (Scotland) Act 2000. It is Scotland’s national public sector audit agency and provides the AGS and the Accounts Commission with the services they need to carry out their duties.
The Auditor General for Scotland (AGS) is an independent crown appointment, made on the recommendation of the Scottish Parliament, to help ensure that public money is spent properly, efficiently and effectively. The AGS is responsible for the audit of all public bodies except local authorities. He reports in public to the Public Audit Committee of the Scottish Parliament.
The AGS is responsible for auditing further education colleges, and he appoints the independent auditors for Scotland’s 20 incorporated colleges and Glasgow Colleges’ Regional Board. He also appoints the auditors for the Scottish Funding Council, which distributes funding to colleges and universities.
Audit Scotland is a statutory body established under the Public Finance and Accountability (Scotland) Act 2000. It is Scotland’s national public sector audit agency and provides the AGS and the Accounts Commission with the services they need to carry out their duties.
Tell us your views on college regionalisation
8. What has worked well in the college sector in the years following regionalisation?
Please provide your response in the box provided.
8The AGS has reported on the college sector annually since 2012 (with the exception of 2014 and 2020). These reports cover a period of significant change in the sector, following the reduction in the number of incorporated colleges in Scotland from 37 in 2011/12 to 20 in 2014/15. The reports highlight what is working well in the college sector, as well as making recommendations for improvement to the Scottish Government, the Scottish Funding Council (SFC) and colleges.
The AGS’s reports on Scotland’s colleges are available on the Audit Scotland website, alongside the annual audit reports for each incorporated college, Glasgow Colleges’ Regional Board and the SFC.
The Scottish Government set out the high-level benefits it expected the programme of college mergers and regionalisation to deliver. This included reduced duplication, improved engagement with local employers to better understand their needs, and better outcomes for learners.
In Scotland’s Colleges 2015 the AGS recommended that the Scottish Government and the SFC should:
• specify how they will measure and publicly report progress in delivering all of the benefits that were expected from regionalisation and mergers
• publish financial information on the costs and savings achieved through the merger process.
These recommendations were endorsed by the Scottish Parliament’s Public Audit Committee and, due to a lack of progress, were restated by the AGS in Scotland’s Colleges 2016.
Following the AGS’s recommendations, in August 2016 the SFC published its evaluation report on the Impact and success of the programme of college mergers in Scotland. The SFC concluded that the strategic outcomes of the mergers and the anticipated key benefits for students and stakeholders had been, or were in the process of being, achieved. Overall, it deemed that the implementation and outcome of the merger programme had been a success, although it recognised that some colleges were still addressing specific challenges of merger, including financial and operational issues.
Since regionalisation, the AGS’s reports on Scotland’s colleges have focused on the overall performance and finances of the sector. The findings have highlighted common themes, although the sector-wide picture masks variation across individual colleges. The most recent report covers activity in 2019-20, and so does not reflect the full impact of Covid-19 on the sector. Up to that point, areas where the college sector was working well included the following:
• Overall, the sector has managed to maintain a relatively sound financial position each year since regionalisation, despite some challenging financial settlements. The sector’s underlying financial position (adjusted operating position) was a surplus of over £3 million in
2019-20.
• The sector has consistently delivered national targets for the number of college students and amounts of learning delivered, as set by the Scottish Government and the SFC respectively.
• Colleges have generated relatively positive levels of student satisfaction in recent years. In 2020-21, Covid impacted on student experiences and saw a some decrease in satisfaction from the previous survey in 2018-19. However, 85.9% of all college students still expressed satisfaction with their course experience.
The AGS’s reports on Scotland’s colleges are available on the Audit Scotland website, alongside the annual audit reports for each incorporated college, Glasgow Colleges’ Regional Board and the SFC.
The Scottish Government set out the high-level benefits it expected the programme of college mergers and regionalisation to deliver. This included reduced duplication, improved engagement with local employers to better understand their needs, and better outcomes for learners.
In Scotland’s Colleges 2015 the AGS recommended that the Scottish Government and the SFC should:
• specify how they will measure and publicly report progress in delivering all of the benefits that were expected from regionalisation and mergers
• publish financial information on the costs and savings achieved through the merger process.
These recommendations were endorsed by the Scottish Parliament’s Public Audit Committee and, due to a lack of progress, were restated by the AGS in Scotland’s Colleges 2016.
Following the AGS’s recommendations, in August 2016 the SFC published its evaluation report on the Impact and success of the programme of college mergers in Scotland. The SFC concluded that the strategic outcomes of the mergers and the anticipated key benefits for students and stakeholders had been, or were in the process of being, achieved. Overall, it deemed that the implementation and outcome of the merger programme had been a success, although it recognised that some colleges were still addressing specific challenges of merger, including financial and operational issues.
Since regionalisation, the AGS’s reports on Scotland’s colleges have focused on the overall performance and finances of the sector. The findings have highlighted common themes, although the sector-wide picture masks variation across individual colleges. The most recent report covers activity in 2019-20, and so does not reflect the full impact of Covid-19 on the sector. Up to that point, areas where the college sector was working well included the following:
• Overall, the sector has managed to maintain a relatively sound financial position each year since regionalisation, despite some challenging financial settlements. The sector’s underlying financial position (adjusted operating position) was a surplus of over £3 million in
2019-20.
• The sector has consistently delivered national targets for the number of college students and amounts of learning delivered, as set by the Scottish Government and the SFC respectively.
• Colleges have generated relatively positive levels of student satisfaction in recent years. In 2020-21, Covid impacted on student experiences and saw a some decrease in satisfaction from the previous survey in 2018-19. However, 85.9% of all college students still expressed satisfaction with their course experience.
9. How might the sector further improve in the years ahead?
Please provide your response in the box provided.
Since regionalisation, the AGS has reported on the increasingly challenging financial environment in which colleges are operating. Although the sector has reported an underlying financial surplus since 2016-17, the gap between colleges’ total income and expenditure has continued to grow. The sector faces increasing cost pressures and pre-Covid increases in funding have primarily covered additional costs from harmonising staff terms and conditions. Current Scottish Government capital funding falls short of the estimated costs of maintaining the college estate.
Around three-quarters of the college sector’s income is from SFC grants. Colleges need to identify opportunities to diversify income sources and maximise non-SFC income. This is challenging and has been made more difficult by the impact of Covid-19 on potential income sources.
In Scotland’s Colleges 2019, the AGS highlighted the considerable variation across colleges in terms of student attainment and retention and those going on to positive destinations. Average attainment rates for students in full-time further education have remained relatively static over the five years between 2015-16 and 2019-20, at around 66 per cent. This is some distance from the SFC’s target of 75 per cent by 2020-21.
The 2019 report also noted that attainment gaps continue to exist for students from the most deprived areas, students with disabilities and for care-experienced students. Colleges are widening access to students from a range of backgrounds but need to continue to focus on reducing the attainment gap and improving outcomes for all students. The impact of Covid-19 on this attainment gap will be clearer once the SFC publishes data for the academic year 2020-21.
Several of the recommendations in the SFC’s report on Coherence and Sustainability: A Review of Tertiary Education and Research (June 2021) are consistent with areas for improvement previously highlighted by the AGS. These include:
• improving medium-term financial planning supported by multi-year funding indications
• revising the approach to outcome agreements, including developing a new overarching National Impact Framework for the sector
• supporting learning through life and better aligning skills provision with the needs of students, employers and the economy
• reviewing existing activity targets and the assumptions that underpin existing funding models
• exploring options for capital funding to invest in the college estate
• refreshing arrangements in the three multi-college regions.
In Scotland’s Colleges 2018, the AGS reported specifically on the role and impact of the regional strategic bodies (RSBs) in the three multi-college regions (Glasgow, Highlands and Islands, Lanarkshire). The AGS found that the RSBs were fulfilling their core statutory duties, but that progress in meeting the wider aims of regionalisation varied. The AGS recommended that the Scottish Government and the SFC should assess and report publicly on the extent to which the RSBs were meeting the aims of regionalisation.
The SFC carried out this review and published the findings in its report on the Review of Regional Strategic Bodies in October 2020. The SFC made the following judgements:
• There are mixed views within the three Glasgow colleges assigned to the Glasgow Regional Strategic Board (GCRB) about the additional value being added by the regional arrangement. The GCRB and its colleges should explore options for reforming the regional structure.
• The University of Highlands and Islands (UHI), which is the RSB for nine assigned colleges, is yet to realise its full potential and deliver the significant wider aims of regionalisation. It should consider consolidation, shared services, recalibrated roles and responsibilities, and options to ensure it gets closer to a more fully integrated tertiary institution.
• The governance arrangements in the Lanarkshire model are not well understood or accepted, lead to constant friction and distract both colleges from their main missions for students and economic recovery. The RSB should be dissolved and both colleges manage themselves as separate regional entities.
In June 2021, the SFC’s report on its review of tertiary education recommended that the Scottish Government work with the SFC and key stakeholders to take forward these recommendations. The 2020-21 annual audit reports on the assigned colleges note that discussions and activity to refresh the regional arrangements are underway. The AGS will continue to monitor and report on progress.
Around three-quarters of the college sector’s income is from SFC grants. Colleges need to identify opportunities to diversify income sources and maximise non-SFC income. This is challenging and has been made more difficult by the impact of Covid-19 on potential income sources.
In Scotland’s Colleges 2019, the AGS highlighted the considerable variation across colleges in terms of student attainment and retention and those going on to positive destinations. Average attainment rates for students in full-time further education have remained relatively static over the five years between 2015-16 and 2019-20, at around 66 per cent. This is some distance from the SFC’s target of 75 per cent by 2020-21.
The 2019 report also noted that attainment gaps continue to exist for students from the most deprived areas, students with disabilities and for care-experienced students. Colleges are widening access to students from a range of backgrounds but need to continue to focus on reducing the attainment gap and improving outcomes for all students. The impact of Covid-19 on this attainment gap will be clearer once the SFC publishes data for the academic year 2020-21.
Several of the recommendations in the SFC’s report on Coherence and Sustainability: A Review of Tertiary Education and Research (June 2021) are consistent with areas for improvement previously highlighted by the AGS. These include:
• improving medium-term financial planning supported by multi-year funding indications
• revising the approach to outcome agreements, including developing a new overarching National Impact Framework for the sector
• supporting learning through life and better aligning skills provision with the needs of students, employers and the economy
• reviewing existing activity targets and the assumptions that underpin existing funding models
• exploring options for capital funding to invest in the college estate
• refreshing arrangements in the three multi-college regions.
In Scotland’s Colleges 2018, the AGS reported specifically on the role and impact of the regional strategic bodies (RSBs) in the three multi-college regions (Glasgow, Highlands and Islands, Lanarkshire). The AGS found that the RSBs were fulfilling their core statutory duties, but that progress in meeting the wider aims of regionalisation varied. The AGS recommended that the Scottish Government and the SFC should assess and report publicly on the extent to which the RSBs were meeting the aims of regionalisation.
The SFC carried out this review and published the findings in its report on the Review of Regional Strategic Bodies in October 2020. The SFC made the following judgements:
• There are mixed views within the three Glasgow colleges assigned to the Glasgow Regional Strategic Board (GCRB) about the additional value being added by the regional arrangement. The GCRB and its colleges should explore options for reforming the regional structure.
• The University of Highlands and Islands (UHI), which is the RSB for nine assigned colleges, is yet to realise its full potential and deliver the significant wider aims of regionalisation. It should consider consolidation, shared services, recalibrated roles and responsibilities, and options to ensure it gets closer to a more fully integrated tertiary institution.
• The governance arrangements in the Lanarkshire model are not well understood or accepted, lead to constant friction and distract both colleges from their main missions for students and economic recovery. The RSB should be dissolved and both colleges manage themselves as separate regional entities.
In June 2021, the SFC’s report on its review of tertiary education recommended that the Scottish Government work with the SFC and key stakeholders to take forward these recommendations. The 2020-21 annual audit reports on the assigned colleges note that discussions and activity to refresh the regional arrangements are underway. The AGS will continue to monitor and report on progress.
10. How might colleges adapt in light of current challenges such as those resulting from COVID-19?
Please provide your response in the box provided.
In May 2021 the AGS reported that, overall, the college sector had responded well to the challenges of the Covid-19 pandemic, with governance and financial management arrangements continuing to operate effectively. Covid-19 exacerbated existing risks in the college sector and the effects are likely to be felt for years to come.
Various reports have been published over the last year, setting out the challenges presented by Covid-19 and how colleges are responding and adapting. This includes:
• A report by Education Scotland (June 2021) on how colleges adapted to the shift to remote learning during the pandemic, highlighting what worked well and the challenges that remote learning presented.
• A report by the SFC (November 2021) on how colleges and universities responded to Covid-19, based on a review of outcome agreements, focusing on outcomes for students and the role of tertiary education in supporting economic and social recovery.
• A report by the Scottish Government's advisory sub-group on universities and colleges (April 2022) on the impact of Covid-19 on students and staff, with a focus on the impact on learning, mental health and wellbeing, and social and financial effects.
• Research by NUS Scotland (February 2022) highlighting how the financial challenges facing Scotland’s students were exacerbated by Covid-19.
Stakeholders across the college sector recognise that responding to the longer-term impacts of Covid-19, within an increasingly challenging financial environment, will be difficult and will require change in the college sector. The sector will need to learn from what has been working well to support future change and identify opportunities for innovation and transformation.
As outlined in the SFC’s review, transformation will require taking a longer-term view. The sector and its partners will need to consider a range of issues including financial sustainability, the college estate, the experience of students and staff, and the role of the sector in supporting its local area and Scotland’s economy. There is also the potential for collaboration across the wider public sector, across regions, and with people with a shared interest such as employers and business.
Various reports have been published over the last year, setting out the challenges presented by Covid-19 and how colleges are responding and adapting. This includes:
• A report by Education Scotland (June 2021) on how colleges adapted to the shift to remote learning during the pandemic, highlighting what worked well and the challenges that remote learning presented.
• A report by the SFC (November 2021) on how colleges and universities responded to Covid-19, based on a review of outcome agreements, focusing on outcomes for students and the role of tertiary education in supporting economic and social recovery.
• A report by the Scottish Government's advisory sub-group on universities and colleges (April 2022) on the impact of Covid-19 on students and staff, with a focus on the impact on learning, mental health and wellbeing, and social and financial effects.
• Research by NUS Scotland (February 2022) highlighting how the financial challenges facing Scotland’s students were exacerbated by Covid-19.
Stakeholders across the college sector recognise that responding to the longer-term impacts of Covid-19, within an increasingly challenging financial environment, will be difficult and will require change in the college sector. The sector will need to learn from what has been working well to support future change and identify opportunities for innovation and transformation.
As outlined in the SFC’s review, transformation will require taking a longer-term view. The sector and its partners will need to consider a range of issues including financial sustainability, the college estate, the experience of students and staff, and the role of the sector in supporting its local area and Scotland’s economy. There is also the potential for collaboration across the wider public sector, across regions, and with people with a shared interest such as employers and business.
11. What should be the priorities of the college sector in the years ahead?
Please provide your response in the box provided.
Scotland's colleges play a vital role in helping people learn new skills and fulfil their potential. Colleges also have a significant contribution to make in supporting the country’s social and economic recovery from Covid-19 and supporting the delivery of Scottish Government priorities. The annual audits of colleges and the AGS’s wider reporting on colleges and skills highlight key priorities for the sector.
The risk to financial sustainability is the most significant challenge facing the college sector. Colleges are facing rising cost pressures, particularly around staffing and maintaining their buildings, while trying to maintain the level and quality of provision to learners. The financial outlook is challenging, and the latest report from the SFC on the financial sustainability of colleges and universities (March 2022) notes that the sector is forecasting an underlying deficit of £5.7 million in 2021-22, followed by a deficit of £2.7 million in 2022-23, before returning to a small surplus of £2 million in 2023-24.
Colleges will need to work together, and with the SFC and Scottish Government, to identify how they can mitigate the significant risks to financial sustainability whilst continuing to contribute to the delivery of Scottish Government priorities and national outcomes. This includes providing quality learning that will help to meet demand for skills and support sustainable economic growth, and supporting all students, regardless of their need, to maximise their potential.
The implementation of the recommendations in the SFC’s review of tertiary education will play an important part in starting to address these challenges. Priorities should include activity by the Scottish Government and the SFC to:
• provide multi-year funding assumptions, to support more effective medium-term financial planning in colleges
• set out the strategic intent for the tertiary education sector and develop a new National Impact Framework, to provide clarity on the outcomes expected of colleges
• review existing activity targets and funding models, to ensure they remain fit for purpose in the context of the challenges facing the sector
• develop an infrastructure investment strategy for the sector, reflecting the impact of Covid-19 and the move to net zero on the buildings and equipment needed to deliver future learning
• work with colleges, employers and other partners to identify ways to better align skills provision with demand.
The Scottish Government, the SFC and colleges will need to make difficult decisions to ensure the sector can continue to operate effectively within available resources, over the long-term.
Through the annual audits of individual colleges, the AGS will continue to seek assurance that colleges are demonstrating good governance and financial management and are taking action to remain financially sustainable and provide value for money. The AGS will also monitor progress in taking forward recommendations for change in the three multi-college regions.
The AGS’s next report on the college sector will be published in July 2022. It will highlight the financial position of the sector and the risks and challenges it faces going forward.
The risk to financial sustainability is the most significant challenge facing the college sector. Colleges are facing rising cost pressures, particularly around staffing and maintaining their buildings, while trying to maintain the level and quality of provision to learners. The financial outlook is challenging, and the latest report from the SFC on the financial sustainability of colleges and universities (March 2022) notes that the sector is forecasting an underlying deficit of £5.7 million in 2021-22, followed by a deficit of £2.7 million in 2022-23, before returning to a small surplus of £2 million in 2023-24.
Colleges will need to work together, and with the SFC and Scottish Government, to identify how they can mitigate the significant risks to financial sustainability whilst continuing to contribute to the delivery of Scottish Government priorities and national outcomes. This includes providing quality learning that will help to meet demand for skills and support sustainable economic growth, and supporting all students, regardless of their need, to maximise their potential.
The implementation of the recommendations in the SFC’s review of tertiary education will play an important part in starting to address these challenges. Priorities should include activity by the Scottish Government and the SFC to:
• provide multi-year funding assumptions, to support more effective medium-term financial planning in colleges
• set out the strategic intent for the tertiary education sector and develop a new National Impact Framework, to provide clarity on the outcomes expected of colleges
• review existing activity targets and funding models, to ensure they remain fit for purpose in the context of the challenges facing the sector
• develop an infrastructure investment strategy for the sector, reflecting the impact of Covid-19 and the move to net zero on the buildings and equipment needed to deliver future learning
• work with colleges, employers and other partners to identify ways to better align skills provision with demand.
The Scottish Government, the SFC and colleges will need to make difficult decisions to ensure the sector can continue to operate effectively within available resources, over the long-term.
Through the annual audits of individual colleges, the AGS will continue to seek assurance that colleges are demonstrating good governance and financial management and are taking action to remain financially sustainable and provide value for money. The AGS will also monitor progress in taking forward recommendations for change in the three multi-college regions.
The AGS’s next report on the college sector will be published in July 2022. It will highlight the financial position of the sector and the risks and challenges it faces going forward.