How can a government implement an ambitious education reform agenda while considering almost half a billion in public spending cuts?

This tension dominated the almost two hours that Higher and Further Education Minister Graeme Dey spent giving evidence to the Scottish Parliament's Education, Children and Young People Committee on Wednesday.

Dey's comments illustrate one of the Scottish Government's major challenges across all education stages: finding money to fund reform.

Following the publication of James Withers's independent review of Scottish skills delivery in 2023, which offered a slew of recommendations for improving the sectors, the Scottish Government and Mr Dey have spent months discussing their reform agenda for further and higher education.

Building on the report's findings, Mr Dey spoke on Wednesday about streamlining the higher and further education sectors and improving collaboration between institutions. Naturally, this plan costs money to implement.

None of that is surprising. The tension in the committee meeting had another source.

While Mr Day expressed  "frustration" at the slow pace of reform, he both declined to rule out in-year budget cuts and was unable to point to the source of recent funding deals.

"One of the difficulties in trying to answer a question as honestly and openly as you can is that you set hairs running," he said.

It should. These days, the financial situation is difficult, and in constant flux.

As Mr Dey pointed out, Scottish teachers have just been offered a 4.27% pay rise, which the largest union, EIS, has recommended members accept. 

Teachers received their last pay rise in December 2022. It was preceded by a protracted dispute and nationwide strikes, leading to a significant settlement. According to the Scottish Government, it amounted to a 14.6% uplift over 28 months and provided £320m in funding over two years.

However, the full cost became apparent in the aftermath of the deal. During budget meetings in 2023, the Scottish Government announced that a planned £46m boost to colleges and universities was being rolled back as "essential savings."

Subsequent comments from Mr Dey throughout 2023 made it clear that the college and university funding was redirected to fund the teacher pay deal.

Although the proposed deal on the table is smaller, the government's financial situation is tighter. This week, Finance Secretary Shona Robinson confirmed £500m in public spending cuts will be needed to balance the budget.

Against this backdrop, all new spending comes under scrutiny. 

On Wednesday, committee members pressed Mr Day for details on the source of the government's recent promise of £4.5m in recurring funding for a college lecturer pay rise. 

Earlier, Mr Dey had pointed to cross-portfolio work occurring ahead of the upcoming budget and the "interconnected" nature of government planning.

Rather than offer the committee concrete details, Mr Dey told members that the government was "looking actively" for the £4.5m, while giving college employers "assurances" that the funding would recur each year, beginning in 2025/26.

Committee members were visibly concerned by this response.

"You don't know where the money is coming from?" MSP Willie Rennie asked incredulously. Mr Rennie was quick to suggest that Mr Dey had previously held committee members to account for the same political misdemeanour: promising funding before you've found it.

(During a debate on April 30, in response to Scottish Labour Education spokesperson Pam Duncan-Glancy's calls to address the college sector's funding gap, Mr Dey said that Labour was being "reckless" by offering a list of demands "without in any way identifying how that would be funded.")

The Scottish Government has been approached for comment on how the potential 4.27% teacher pay rise and the recurring £4.5m for colleges will be funded.