Scotland’s colleges are facing a combined funding shortfall of nearly half a billion pounds over three years, The Herald can exclusively reveal.

Overall student numbers have also fallen dramatically since the SNP first won power in 2007, and the number of key courses available has fallen by as much as two-thirds in just ten years.

Critics accused the Scottish Government of “chronic underfunding” of the sector and warned that colleges “simply cannot keep delivering more with less".

In order to establish the size of the funding gap facing Scotland’s colleges, and assess the financial state of the sector, The Herald asked the Scottish Funding Council (SFC) to provide comparable data on college resource budgets over the past ten years. The SFC, which distributes public money to further and higher education institutions, compiled and released information on the actual funding to colleges in each academic year going back to 2015-16.

Inflation costs were then added to the budget figures (excluding ring-fenced funds) from 2021-22, which was the period in which rates rose dramatically. This allowed us to calculate a relative funding gap between the government’s actual investment and the amounts that would have been required to keep spending in line with inflationary costs.

For the year 2024-25, colleges are due to receive a total of  £643,040,000 from the Scottish government; however, inflation since 2021 means that the sector would actually have required more than £834m of funding this year in order to avoid a real-terms cut to their budgets.

Over the three year period since 2021-22, the total combined budget gap stands at more than £464m.

Colleges are currently facing widespread disruption due a long-term industrial dispute that has escalated to resulting boycotts and strike action, with staff salaries accounting for the vast majority of institutions' costs.

The SFC has identified three colleges which they say are facing "significant cash flow issues", but declined to name them citing concerns that the dangerous financial situation and strained relationships could be pushed to a breaking point. The organisation has also stated that extreme financial pressures mean that the college sector “anticipates using compulsory redundancies in future”.

Audit Scotland has also warned that “risks to the college sector’s financial sustainability have increased” even in the past year.

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The Herald has also analysed data on college student numbers, and the entry levels for a range of different qualifications, over recent years. In both areas, marked declines can be identified.

Although student numbers have risen slightly since 2015-16, they are in fact down by around a third since 2008-09 – the first year after which the SNP won control of the Scottish Government.

Data from 2022-23 shows a total of 248,907 students in Scotland’s colleges, but in 2008-09 this figure stood at just under 375,000. The number of course enrolments has fallen by a similar proportion over the same period.

Although the FTE equivalent figure for student numbers has remained much more stable - a function of the shift towards full-time learning - it has still fallen by around 6.5% since 2008-09.

Entry levels for key qualifications have also fallen during the past ten years, according to data made available by the SQA. Major drops were recorded for NC (56%), HNC (28%), HND (42%), and Higher (68%) courses, while SVQ courses recorded a 13% dip in entry rates since 2013-14.

Ellie Gomersall, NUS Scotland President, told The Herald that while the revelations about the college sector are “deeply disappointing” they are “sadly not surprising.”

“We continuously hear from students that their colleges aren’t receiving the funding they need to function.

“Colleges often serve our most disadvantaged and working class communities and are therefore key in realising the Scottish Government’s stated goals of tackling poverty and inequality. But this laudable goal is not being met with the commitment needed, instead we are met with chronic underfunding and budget cuts year after year.

“Students, staff, and Scotland are all being let down. Education at its best is a road for people to achieve their highest potential in life, and to see so many discouraged from this is truly disheartening. The Scottish Government must put its money where its mouth is and fund colleges properly now.”

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A spokesperson for Colleges Scotland, which describes itself as 'the voice of the college sector in Scotland', said: “Cutting funding, again, creates massive challenges for college leaders.

“Without adequate funding to deliver education and training, major changes will have to be made. There will be difficult choices about what courses colleges can deliver, what buildings can be repaired, and how to cope with rising staff costs. Colleges have already seen their budgets slashed in previous years.

“As part of the public sector, colleges have to balance their books. It will be incredibly difficult with less funding available for colleges to do this in 2024/25.

“The SFC, in its report entitled Financial Sustainability of Colleges in Scotland 2020/21 to 2025/6, published in January 2024, stated that the financial position of colleges is deteriorating. SFC goes on to say that the sector reported an adjusted operating surplus of £7.2m in 2021-22 which represents a deterioration against the 2020- 21 result (£19.3m surplus). Eight colleges (30%) reported adjusted operating deficits in 2021-22.

“In addition, a number of specific funding pots previously available to the college sector have been cut. These include the Flexible Workforce Development Fund, as well as funding for supporting mental health and digital poverty. In recent years, other funding streams, such as Young Persons Guarantee and National Transition Training Fund were available for colleges, but these have also ceased."

They added that they "acknowledge the extremely difficult position that Scotland is facing but colleges require adequate funding to continue to deliver on Scottish Government priorities. This includes providing key workers for health and social care, upskilling the current and future workforce to support the Just Transition, and supporting other vital industries.

“Colleges are of critical importance to Scotland’s people, communities, and the economy, they simply cannot keep delivering more with less.”

A spokesperson for EIS-FELA, which represents Scotland’s college lecturers, said that the union “does not believe that colleges have been given sufficient funding to do the job they are expected to do.”

“It is clear that recent and current SFC funding envelopes for Further Education have stagnated, having a detrimental effect on college’s abilities to plan and operate appropriately and effectively, leading to them being unable to adequately meet increased and excessive inflationary pressures over the past few years. This has also had a detrimental impact on college lecturing staff receiving a suitable cost-of-living pay offer since September 2021.”

They also argued that colleges “do not have enough funding to pay for an improved pay offer to lecturers without making cuts elsewhere.”

“It has also been the case that, in many previous pay disputes between college employers and college staff, the Scottish Government has been required to intervene and make available funds in order to resolve the dispute. This is symptomatic of the funding inadequacies which the Further Education sector finds itself in.

“The sector is chronically underfunded and, as a result, colleges are unable to resolve the current national pay dispute which has led to protracted negotiations, a stall on meaningful pay offers and a frustration of EIS-FELA members and students at the need to take industrial action on an almost annual basis.”

A Scottish Government spokesperson said: “Despite Scotland facing the most challenging financial situation in the history of devolution, the Scottish Government remains focussed on delivering on our priorities. This includes maximising delivery of high quality apprenticeships, meeting our widening access targets and supporting the transition to net zero – all areas where colleges have a leading role to play.

“The Scottish Government will again invest around £2 billion this year in our colleges and universities, enabling over half a million people to access the learning opportunities they need to fulfil their potential and to deliver the skills that Scotland needs. This includes over £750 million investment in Scotland’s college sector, including £84.9 million in capital funding and £29.3 million in NPD expenditure.”

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