Colleges in Scotland face £30m funding black hole

Colleges in Scotland have a £30 million black hole in their finances and the gap is widening, a new report by the spending watchdog has found.

Student numbers are rising, but capital funding to maintain buildings has fallen

Student numbers are rising, but capital funding to maintain buildings has fallen in the past year, Audit Scotland has said.

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

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

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 (SFC) 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 only a small number of institutions have identified specific actions to deal with shortfalls.

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 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.”