Auditor: three Scots colleges face financial problems

Caroline Gardner, Auditor General for Scotland

The Auditor General for Scotland, Caroline Gardner, has sent a report to the Scottish Parliament on the “financial sustainability” of three colleges — Edinburgh College, Moray College in Elgin and Lews Castle College in Stornoway.

Gardener said all three colleges needed “to take steps now to get on a firmer financial footing and strengthen their governance arrangements.”

This is the second year in a row that the Auditor General has reported on the financial sustainability of Edinburgh College.

The report on Edinburgh College said that while it had “improved its performance in some areas” the college’s financial position “remains challenging and continued progress depends on a number of factors, including a curriculum review and savings from a voluntary severance scheme.”

The report on Moray College said it had “weak financial planning and management arrangements” and forecast a funding gap of £472,000 in 2016-17 and shortfalls until 2019.

It said there was a “need for the college to urgently agree a recovery plan” with the Scottish Funding Council (SFC).

“It is also important that the University of Highlands and Islands (UHI), which manages the region, ensures that the college can deliver on its priorities within the resources available,” said the report.

The report on Lews Castle College said there were financial risks to the college “from its declining performance against student activity targets, leaving it open to financial penalties and funding reductions.”

It said Lews Castle achieved only 80.5 % of its target for 2015-16 and had delays in appointing board members “which had a significant impact on governance arrangements and committee meetings.”

Moray College received 72% of its 2015-16 income from the SFC.

Lews Castle College receives 66% of its income from the SFC, which also provides 75% of Edinburgh College’s annual income.

Gardner said: “These colleges play an important role in their communities, delivering education for thousands of students every year and providing hundreds of jobs.

“They are also heavily reliant on public funding which can have major implications for how they manage their finances.

“Each college faces different issues but all need to take steps now to get on a firmer financial footing and strengthen their governance arrangements.”