Auditor warns Scotland's colleges face further cuts

Following an intervention from Holyrood, a deal was accepted for a 4.14% rise for 2025-26, with 95% voting in favour on a turnout of 84%.

Despite a resolution being found though the Auditor General, who appoints auditors to Scotland’s central government and NHS bodies; examines how public bodies spend public money; helps them to manage their finances to the highest standards; and checks whether they achieve value for money has said further cuts are likely.

Read More:

• 'You don't know where the money's coming from?' Dey pressed on college pay deal

• How The Herald has shone a light on The State of Scotland's Colleges

• 'Chronic underfunding' – Colleges face budget gap of nearly half a billion pounds

A report found nearly 500 staff left colleges in 2022-23 in voluntary severance schemes, with staff costs making up around 70% of colleges' budgets.

The Auditor General said the sector, which employed 10,957 full time equivalent members of staff in 2022/23, expects further cuts in the coming years.

It warned that colleges need more clarity from ministers on which parts of their role to prioritise as financial challenges mount.

Stephen Boyle, Auditor General for Scotland, said: “The college sector is facing huge challenges. But to plan effectively for the future, colleges need a much stronger steer from the Scottish Government on what parts of their role to prioritise. 

"The Scottish Government also needs to respond quickly to the results of its consultations on post-school reforms to provide the college sector with more certainty.”

Shona Struthers, CEO of Colleges Scotland, said: “A 17% reduction in real terms funding for colleges is dire, impacting colleges as organisations, students, and the wider economy. The reduction translates to colleges losing almost £1 in every £5 they should have received from the Scottish Government.

“An increasing number of colleges are reporting financial deficits - college leaders are under enormous pressure to keep colleges solvent as well as performing successfully. Colleges are public bodies and could play a bigger part in helping the Scottish Government deliver its top priority of eradicating child poverty but there hasn’t been sustainable funding available to do this fully, a missed opportunity. College education gives people opportunities to gain qualifications, progress to university, and supports industry with upskilling and retraining, so clearly reducing funding at this scale can only harm that prospect.

“We agree with Audit Scotland that the reform of parts of the tertiary system should be moving at a faster pace, and that priorities for colleges should be clearly articulated by Ministers.

“The report also highlights a range of infrastructure issues, including RAAC, and the slow delivery of an estates and digital plan from the Scottish Funding Council. An urgent funding solution has to come forward for RAAC repairs and more broadly to address the poor conditions of estates to benefit students and staff.”

Scottish Conservative shadow education secretary Liam Kerr MSP said: “This is a damning verdict from Audit Scotland on the SNP Government’s funding cuts to Scotland’s colleges.

“While colleges have seen a huge reduction in their budgets and staff, ministers have dithered over post-school reforms, and failed to spell out the priorities they expect them to deliver.

“The SNP’s underfunding of our college sector, which has the potential to contribute billions to economic growth, has left many institutions with an uncertain future – and Audit Scotland predict the situation is going to get worse with further job losses and rising financial deficits.

“These repeated failings also impact the level of opportunities provided for our young people coming through the school system, as well as to older learners.

“The SNP government must respond to this justified criticism by upping the pace of reform, and providing clarity to Scotland’s colleges to allow them to plan for the future.”

The Scottish Government has previously been criticised for declaring its desire to end poverty while cutting promised funding to college courses, overwhelmingly attended by students from poorer backgrounds.

According to Colleges Scotland, 24% of entrants to higher education courses in colleges are from the 20% most deprived areas of Scotland, of whom 46% went on to university after graduating.

The Scottish Liberal Democrat leader Alex Cole-Hamilton accused Holyrood of presiding over the "quiet death of further education", after a pledge to deliver £26m - £1m per college - in the 2023-24 budget was reversed.

Under the new budget the net college resource budget is to fall by over 8%.

In 2023 City of Glasgow College planned to impose 100 compulsory redundancies on top of 75 voluntary ones due to a budget shortfall of around £6m.

That led to close to 10 months of industrial action, including strikes, by EIS-FELA members.

Lecturers eventually accepted a proposal meaning no compulsory redundancies in December of that year after what College Employers Scotland described as "compromises on both sides".

In June the Scottish Funding Council, which distributes Scottish Government funds to colleges and universities, stated that six colleges could face a cash deficit by the end of the 2025-26 term.

A report said: "No college reported a cash deficit at the end of July 2022, but four colleges are forecasting a cash deficit by the end of July 2024, increasing to six colleges by the end of July 2026.

"This projected deterioration in liquidity, particularly in the context of continually challenging budget settlements and continued high government savings expectations, will make it increasingly difficult for SFC to manage cash advances and reprofile grant payments to ensure colleges have sufficient cash to manage their liabilities, as we have done in the past.

"It will also become increasingly difficult for colleges to self-fund staff restructuring activity and rebalance their cost base as a pathway to sustainability."

The Herald revealed in April that colleges were facing a combined funding shortfall of close to half a billion pounds over three years.

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.”