Art college hits back in row over financial management

THE Edinburgh College of Art (ECA) today said it would "balance its books" by the end of the year after receiving criticism from the Education Secretary over its financial management which has forced it into the impending merger with Edinburgh University.

Announcing his backing for the plans, Mike Russell said the art college's "significant weaknesses" had led to it becoming financially unsustainable and that the situation "should not have been allowed to develop".

The art college today refuted his comments, saying it has developed "robust procedures" which will result in the return of the institution's financial stability by the end of the year.

Part of its recovery is a voluntary redundancy scheme which will save the college 1 million per year in salaries.

The art college has racked up 9m of debts and its annual budget was projected to be in recurrent deficit between 818,000 and 1.3m.

Mr Russell revealed yesterday that the Scottish Government had approved the merger and it would be backed by 13.8m of new investment from the Scottish Funding Council.

He said: "Whilst I recognise the benefits that will result, I have approved the merger with regret as well as anticipation.

"It is clear that the financial situation within ECA is unsustainable in the medium to longer term. This position should not have been allowed to develop and it points towards very significant weaknesses in ECA's internal controls and governance structures at crucial stages in recent years."

The merger will go before the Scottish Parliament for final approval and, if granted, it will take effect from August 1.

Donald Workman, chairman of the ECA Board of Governors, said the board did not accept that the college's financial situation was unsustainable.

He said: "A new chief operating officer and a head of finance have implemented robust procedures to ensure more rigorous and regular financial reporting which will allow the college to balance its books this year.

"The 1m annual savings achieved to date have put the college on a much more sustainable footing."

The ECA said it would transfer all its staff in post at the time of the merger and retain its own name, identity and buildings. It will become the fourth college of the university.

Edinburgh University principal, Professor Sir Timothy O'Shea, said: "This will bring considerable benefits to students, the arts and creative industries and, more widely, to Scottish higher education, society and the economy."

Professor Ian Howard, principal of ECA, added: "This is a very important step."