Agenda item 3 is an evidence-taking session on the Scottish Government’s draft budget for 2014-15. The committee has agreed to focus its scrutiny on the Government’s youth employability commitments, their funding and how the policy focus on younger learners has impacted on lifelong learning, and I welcome to the meeting John Henderson, chief executive of Colleges Scotland; Laurence Howells, interim chief executive of the Scottish Further and Higher Education Funding Council; and Gordon McGuinness, head of industry and enterprise networks at Skills Development Scotland.
Before we move to members’ questions, I have a general question for the panel. The Government has made various youth employability commitments that we will no doubt get into the detail of, but I wonder whether it would be useful if you could set the scene for those commitments and briefly outline the progress that has been made by each of your organisations in helping to deliver them and the progress that still has to be made.
Thank you for the invitation to give evidence. We are working hard primarily around the modern apprenticeship programme. Last year, the programme was delivered to 25,000-plus people—indeed, that is our target for this year—and the vast majority of those apprenticeships went to young people between 16 and 24. The programme is working well with a good success rate for sustainability into employment, and we will build further on it.
As a result of moving to a co-commissioning model for our employability fund, we have put a number of initiatives such as training for work and get ready for work into a common fund and have co-commissioned them with our local authority employability partners. It is still early days as far as that change is concerned, but initial results have been positive and we maintain a strong focus on progression into sustainable employment.
We are heavily involved with our local authority partners in the wage subsidy programme, the youth employability Scotland fund, and in promoting that activity through the combined our skillsforce website. The website is focused primarily at employers to ensure that they understand the offers not only from national organisations such as Skills Development Scotland and Jobcentre Plus but from local authorities, a number of which have allocated additional funds for wage subsidy and have put in place additional support measures to get young people back to work.
Things have gone pretty well but the economic climate is still very challenging and there are still a large number of employers that we would like to commit to recruiting young people. Through the Scottish skills planning model, which we refer to in our submission, we are highlighting the cross-sector work that we are doing and some of the demographic challenges that certain businesses are facing, and we are encouraging more employers to commit to recruiting and developing young people to give them business continuity and sustainability.
I, too, thank the committee for inviting me to give evidence. Our main actions to support all Government policies are set out in the outcome agreements that we negotiate with universities and colleges; as you know, that process is now two years old and is heading into its third year.
The expectations that we place on colleges and universities are based on what they address in their outcome agreements, and we negotiate improvements with them. For example, colleges are expected to set out in their outcome agreements their role, along with other partners, in delivering opportunities for all; to plan the curriculum taking into account local employers’ needs and their local demographic; to dovetail their provision with other partners; and to increase success rates and reflect improved quality of provision in the targets that they set for themselves.
The shift towards provision for young people across the whole of Scotland in the recent set of outcome agreements, with 70 per cent of all provision now focused on young people, is reflected in our current priority. Of course, the situation will vary in different regions because the agreements that we strike with individual regions will, quite rightly, be different depending on their different circumstances.
I also want to mention our role in relation to universities, which, after all, will have a similar if not quite as direct impact on this target group. Our expectations in that respect relate to the universities’ role in widening access; in that regard, it is particularly important that I highlight the extra impetus that we have given to two plus two and one plus three arrangements with colleges, whereby people or indeed young people can start on a higher national certificate course and then seamlessly progress to degree-level provision, by providing an extra 1,000 places in that area.
We are on a journey with outcome agreements, which essentially articulate what will be provided in return for the funding provided to colleges and universities, and I look forward to the set of agreements that we will negotiate in the autumn. I think that we have already reached common agreement on their structure, their content and the ambition that they should express.
It is clearly very important for colleges to respond to young people’s needs. As we know, high youth unemployment is a huge problem in Scotland and colleges are very much at the forefront of giving young people the skills to move into the labour market.
As Laurence Howells said, there has been a refocusing of college activity, and that has been due not only to a steer from Government but to the funding constraints that colleges have been under and the choices that have had to be made. Young people have been prioritised, but a price has been paid with regard to lifelong learning and adult learners going into colleges. No doubt we will talk about that later.
Nevertheless, the colleges have been delivering what they have been asked to deliver through the regional outcome agreements and are preparing these young people; indeed, as Laurence Howells pointed out, 70 per cent of college activity is focused on them. Of course, that is all taking place against a backdrop of deep cuts in college budgets over recent years and there have been consequences for other learners.
The other issue that I want to mention in this context is the huge structural change that colleges are going through. Despite that huge structural reform, which is being carried out very successfully, colleges have kept their eye on the ball in delivering for these young people. That has been a huge challenge for colleges but it has also been a great success.
Thank you. We will go on to talk about a number of areas of concern to members, and we will start with Clare Adamson.
I will concentrate on youth unemployment, which the Government is right to focus on. As a member of the European and External Relations Committee, I am aware of how big a challenge it is across Europe, not just in this country.
In the 2014 budget there are cuts to the education maintenance allowance and to the post-16 transition to employment. What impact will those cuts have on tackling youth unemployment?
Who wants to start? Does anyone want to say anything? My eye has come to rest on Gordon McGuinness.
That is fine. Those cuts will not be in areas that affect SDS. We are trying to deliver greater efficiency in the reach of our services and how our staff deliver and we know where we are with public service funding—there are financial constraints. We seek to make the best use of the funds that are available to us directly and to work in partnership with, for example, the third sector and others to make our resources go that bit further. The cuts to the EMA and in other areas do not directly impact on SDS at this stage.
Our main concerns are college funding and the student support funding that we provide. As we have said before, it is good news that the college budget stabilised in cash terms, so from our point of view, that enables there to be provision.
On the student support side, which is next to the EMA question, it is worth mentioning that for 2013-14, we were pleased that we were able to increase the rates per head of that funding. I am not aware of the detail of the EMA funding; I apologise for not having an answer for that one.
The interim report from the Wood commission is hugely important on the point about the transition of young people into college and the labour market and there is great potential for improvement in that area. We have taken our eye off the ball of young people and colleges working in partnership. My submission shows quite a fall in the number of college and school partnerships. The Wood commission report is very welcome and we could deal with it if the resources were available for those partnerships, which help to make the transition less of a cliff. If students at school can get used to going to college for part of the time, and vice versa, there would be a much smoother transition between school and college, as well as in preparing for the labour market.
I do not have the detail on EMAs, but it is fair to give credit to the Scottish Government that we still have an EMA system in Scotland. The number of young people coming through into the college system shows that, in spite of restraints on funding, the EMA cuts are not proving to be a disincentive to people coming to college.
Given the focus on the provision for 16 to 19-year-olds, particularly in colleges, why has the number of young men who are not in education, employment or training increased from 14.7 to 14.9 per cent, and the number of women who are not in education, employment or training increased from 10.1 to 11.7 per cent in 2012-13? The question is for all three of the witnesses.
The numbers will vary according to labour market performance. Compared to the UK, we have made good progress north of the border. We do see regional variations in the level of unemployment and we seek to work and deploy our resources to address such regional disparities. However, that is subject to the general rises and falls in the labour market. We have made reasonable progress in challenging economic circumstances.
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I think that that is right. The difficult economic circumstances and the challenges that young people face lead to a need for more and better provision. Improving the connection between schools and colleges, as John Henderson mentioned, and SDS improving the guidance and advice that we offer to young people on how to progress their lives are key in that respect. That also points to the need for us to continue to focus resources on that group and perhaps be more inventive in the future about the kinds of provision that are available. As John Henderson said, the Wood commission might have some ideas to offer in that field.
This is speculation—I do not have any evidence for it—but I think that, because of the changes in the labour market, whereby there are more higher-level service jobs, young men are finding it more difficult to get entry-level jobs in the labour market. I think that the Wood commission idea of introducing younger people to vocational skills might be more motivational for young males than for young females. I am speculating that there could be more of a problem for young men with low skills entering the labour market than there is for girls.
The number of young people who are not in employment, education or training has gone up in spite of the focus on 16 to 19-year-olds, so I am not sure that the situation is fully down to the labour market statistics, but I take your point. In that case, how do we measure the success of opportunities for all? How do we know that it is having the required effect, if the number of young people who are not in employment, education or training is going up?
Opportunities for all is a broad strategy. SDS measures its performance in that regard regularly—we report to the Government on a six-weekly basis—and we measure ourselves against the national performance framework. As an overall offer, opportunities for all covers a whole spectrum of activities. It is a Government offer.
We have intensified the support that we provide through job coaches, not just in schools, but for young people in the NEET category, and we aim to provide a follow-up service for all those young people. Regular contact is made with young people in an effort to get them back into active learning and other activities that will progress their employability.
It is also worth saying that the agencies work together. We regularly meet SDS, which tracks information on students and offers information, advice and guidance. Our key question—with SDS and the other partners, such as the community planning partnerships—is to what extent colleges are playing their part in delivering opportunities for all. That leads to questions about the type of provision that is available, which is one of the reasons why we have encouraged colleges to offer more work placements as part of their courses. To build on John Henderson’s point, we all recognise that the experience of working while in a learning environment is good from the point of view of increasing people’s motivation and participation.
I honestly do not have any easy answers. It is clear that there is a structural youth unemployment problem, as well as a problem that relates to the economic recession. The labour market has changed over the past decade and young people are finding it more difficult to enter. Colleges cannot change the labour market. All that we can do is try to address the situation by enhancing the adaptability of young people who come through the college system. As well as giving them narrower vocational skills, we can give them broader employability skills. One hopes that, when the economy picks up, they will be able to adapt and go into the labour market.
On enterprise, colleges are preparing young people for a different type of labour market in the future, in which they can create their own business. We know from our daily experience of dealing with small and medium-sized businesses in Scotland that many of those business owners have come through the college system and have made a great success of setting up their own business and then going on to employ people. Colleges are playing a role in changing young people’s mindset and helping them to view that as a possible route for them. Colleges are offering that enterprise approach through their education system.
I agree with Mr Henderson that colleges do fantastic work to help young people back into employment. However, given the budget cuts, there are concerns about course provision and lack of choice. What happens if a young person cannot access the course that they wish to study? How flexible is the opportunities for all scheme?
I will answer that, and I am sure that my colleagues will too. The proposition has never been that a young person going to college can do any course that they want. There has to be a match with what can realistically be provided. There must be realism about what the labour market in a particular part of Scotland can deal with when matching a young person with course provision. There has to be negotiation around that, rather than someone asking why they cannot do the course that they want, although the college does not offer it.
It is important that colleges work hard to try to match learners with the right course for them, taking into account their skills, experience, learning stage and ambitions. It is also important that the college has a duty to refer anyone who comes to it for provision that it does not offer or that is not right for them, to somewhere else that might be better for offering the provision.
At a local level, we work in partnership with our community planning partners in assessing where young people are in the skills and employability pipeline and looking at the various offers that are available to them from not just us and the local authority, but potentially other voluntary sector partners and the local college.
In relation to SDS’s contribution to the opportunities for all scheme last year, we had 12,700 young people going through modern apprenticeships and 9,500 going through the get ready for work programme. Fairly significant numbers were supported.
I will briefly follow up this line of questioning. The figures for youth unemployment in Scotland are lower than those for the rest of the UK and the employment rate is higher than that in the rest of the UK. However, I think that the overall figures mask a lot of individual differences. Mr Bibby read out earlier figures for male and female 16 to 19-year-olds who are not in education, employment or training. The male rate stayed pretty static in 2011-12, but the female rate went up from 10.1 to 11.7 per cent. The overall increase is almost completely due to the increase in the rate for young women. What actions do your organisations take to address that kind of statistic? The circumstances are that, for whatever reason, the figures for young males not in education, employment or training have stayed pretty static, but those for young women have increased, so young women are affected more than young men are. What actions do you take to try to deal with that situation?
From our point of view, the key aspect would be the negotiations with the colleges about the outcome agreement. One of the expectations that we have about that conversation between my organisation and the colleges is that we will look at local circumstances. Obviously, one of the things that is taken into account is the pattern of potential clients for the college system. We would ask a question about the gender balance in that regard. If the gender statistics were particularly skewed in one direction or the other in a particular part of the country, we would ask the college whether it had thought about how it adapts its provision to better meet the needs of its local population. That kind of on-going dialogue and the local intelligence that we might get from the CPP, national statistics or other sources is what we would put on the table for discussion.
I am confident in saying that the colleges are very thoughtful about how they react and respond to those sorts of changes. The key thing for them is to make what they provide attractive or appropriate to a particular group and to reflect the needs of potential local employers and the local economy. We and the colleges need to get that balancing act right.
I will speculate again on what might be one of the reasons for the gender imbalance. The male figure is probably steadier because of the structural difficulties in the labour market. The female figure might well have gone up because of the combination of structural as well as cyclical changes in the economy. Fewer jobs are available because of the economic downturn, and that seems to impact proportionately more on females. That could account for the rise, but I am simply speculating; I do not know whether that is the case.
What can the colleges do about that? Well, colleges cannot change the economy. As Laurence Howells said, all that colleges can do is prepare those young women for the opportunities that will arise in the future. It is sometimes said that colleges offer too many hairdressing courses. I do not accept that. We have to be careful about saying that a particular type of course and college is wrong. Such a course might well give young students a range of interpersonal and softer skills, and it might give them something that cannot be put down as a qualification—confidence and belief in themselves, which will mean that they can go on and do something. We should not underestimate the level of self-belief that a college education can give to young people.
At a local level, although the change in the female rate has been negative, it is difficult to pick up on those movements in terms of delivery. It might be reflected in the contract reviews of our training providers. The retail sector, for example, has been through a troublesome time, so there might have been a fall in recruitment in that area. We can analyse service and contract performance at that level.
The issue for individuals is where they access the best service for guidance and training support that is available to them. We would focus on that at the local level.
Mr Bibby talked about the college cuts. As we went through the college reforms, I was concerned about the amount of reserves that were sitting in colleges. I understand that the cabinet secretary was clear that money should not be sitting in banks: it should be used for delivery of services and improving outcomes for young people. That was why a cap of 10 per cent was put on the turnover of reserves that colleges could have.
We took evidence from Professor Gallacher last week. I cannot remember his exact words, but he said that colleges were operating surpluses and that they wanted to safeguard and protect those reserves by forming trusts and arm’s-length organisations. Are you aware of that? Do you have any comment to make about reserves being used in that way?
There is quite a lot in what you say so I will try to unpick some of it. I am sure that Laurence Howells will also want to come in.
The latest Audit Scotland report on reserves in colleges says that the current cash reserves would cover just slightly more than the number of days that the Scottish Further and Higher Education Funding Council says that colleges should have in the bank. Yes, there are reserves, but those reserves are not like profits that need to be ploughed back into the college for capital projects or for meeting some of the costs arising from restructuring. We should acknowledge the fact that a lot of the costs of restructuring have been paid by the colleges themselves.
I do not recognise the 10 per cent figure, although the funding council might have something up its sleeve that I have not heard about.
On the question about what might happen in the future, that refers to the reclassification of colleges by the Office for National Statistics that will put them into the public sector in future rather than the private sector. That will affect colleges’ ability to accumulate reserves and engage in commercial activity to add to their income, which accounts for something like 25 per cent of their overall turnover, which is significant.
We are talking to Government about ways of allowing the colleges to retain that commercial activity for the benefit of students and the community. We think that a way of doing it is to have either one or a number of arm’s-length trusts that would be independent of the colleges but would be able to safeguard the money, which could then not be consolidated into accounts. I am sorry if I am getting slightly technical, but to keep them separate would mean that the colleges, students and communities could still benefit.
However, I take your general point. Colleges are not in the business of making profits for profits’ sake. If they generate reserves from their commercial activities, that is simply to plough money back into the good of their students and communities.
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I do not want to add to that. I simply say that I do not recognise the 10 per cent figure.
I could be wrong about that.
I think that it did come up, to be fair. I recognised it when you said it, but if it is no longer relevant, we can ignore it just now.
Neil Bibby has a supplementary question. After that, we will move on to the next area.
My question follows on from the earlier question about the number of women who are not in education, employment or training. I think that Mr Henderson said that that might be down to the jobs market. Is it not the case that the number of women in colleges has significantly reduced over the past couple of years as well? That might be another factor in the figure.
As a result of the budgetary cuts and decisions by Government, the number of college students aged 25 and above has fallen quite dramatically over recent years. More women aged over 25 than men were engaged in further education in colleges, so the cuts have disproportionately impacted—
Sorry, but can I interrupt you? The question and the figures that we have all been talking about concern 16 to 19-year-olds. Any changes in relation to over-25s cannot be the explanation for that.
I do not think that there has been a change in the under-25s between females and males.
According to figures that I have in front of me, the head count figures for 16 to 18-year-olds were 66,353 in 2008-09 and 57,592 in 2011-12, so it would appear that in terms of head count there has been a reduction in the number of courses available to 16 to 18-year-olds.
I do not recognise those figures, but if it would be helpful I would be happy to go away, do an analysis and provide that to the committee.
The figures are from the Scottish funding council Infact database.
I do not know whether this is actually the case, but I will explain why I think that the two things can be consistent. The numbers in terms of full-time equivalents have probably held up, but the actual numbers may have fallen. We are seeing more full-time provision in the colleges focused on all age groups, but particularly that young age group, and a fall in part-time provision, so the two things can both be true. We can have the overall numbers falling, but if we look at the figures in terms of full-time equivalents and overall activity, as the Government and the funding council do, the overall activity could be staying steady. However, Laurence Howells has offered to clarify the position.
Thank you. We will move on from that area.
I would like to focus on modern apprenticeships, because they are a key initiative. There seems to be considerable success in delivering on the target of 25,000-plus modern apprenticeship starts, and there seems to be a trend of increasing rates of achievement over the past five years. However, the percentage of people who have completed the programme and achieved the requirements that are attached to it is running at about 79 per cent.
What steps are taken on completion of modern apprenticeships to track leaver destinations and follow up whether young people fall into the category of being NEET?
You gave the figure of 79 per cent—I would use 77 per cent—for achievers and leavers. I am not sure of the full—
The figure of 79 per cent came from SDS, by the way.
Okay. Apologies.
A recent survey has shown that around 90 per cent are still in employment six months after. An important point about the modern apprenticeship programme in Scotland is that everyone has employed status, so they are in a job all through the apprenticeship programme and the vast majority continue in employment.
Those who leave do so for a range of reasons. Obviously, 16 to 19-year-olds—as many apprentices are—may start and decide to do something else after a period.
Statistics are not great at measuring how much young people have benefited from the programme. They could have been in it for 80 per cent of their qualification and then have left before their final achievements. It is difficult to evidence and justify how those young people benefit from the programme.
Presumably, we have people whom we have identified as falling into the NEET category. How do we track them after they complete a modern apprenticeship to find out what their final destination is?
That is what I am saying. The survey that we recently undertook showed that a high percentage had retained employment with their employers or had gone on to new employment.
Do you have a percentage for that?
I will find it for you.
We have talked about achievement rates, which your submission says run at 79 per cent. What needs to be done to improve those achievement rates? What do you do with somebody who does not successfully complete a modern apprenticeship or achieve the outcomes that should be associated with one?
Our contracts with training providers, whether in the public or private sector, are geared towards output-based funding. Some of the qualification frameworks, such as those for electricians, will achieve percentages in the high 90s.
There will always be young people who decide to do something different after a period. They might start in a retail job but decide to move elsewhere, and the system will show that they have not completed.
We have a programme of contract management and improvement. Our skill investment advisers work with the training providers continually to raise their performance. You will have seen from our submission that, over a period of years, that has had a continued positive improvement rate.
So you are still in touch with people after they have completed a modern apprenticeship.
They would still be in the labour market and would still fall within our services, but the vast majority of those who achieve will be in employment and will continue to work.
What do you do with someone who does not successfully complete a modern apprenticeship but fails?
They would come back into the system through the offers that are available through the opportunities for all programme. If they present themselves to our offices, they are able to get further support.
Do you not have any formal process for tracking them?
We do not have such a process for anyone coming off the back end of an apprenticeship programme. If they were under the age of 19, they would come back to the benefits system. That is where we and local partners would pick them up. We would probably follow up with their training provider on why they had left the programme.
Would there be any benefit in having a more formal process for keeping in contact with and tracking people who have not successfully completed the modern apprenticeship? There are obviously a variety of reasons for failure. How far do you go in analysing that? Would there be a benefit in having a more proactive approach to dealing with them?
The approach probably is pretty proactive through the relationship with the training organisation, with which the apprentice will have built up a relationship and a record of achievement.
I can go back and do a further analysis of those who fall out of the system and with whom we lose contact, but I think that the numbers will be pretty minimal, to be honest.
Convener, it might be interesting to see that figure.
I am sure that Mr McGuinness will send it to us.
Sir Ian Wood’s commission for developing Scotland’s young workforce made a recommendation—I will spare you the full quotation—on the role that the modern apprenticeship programme has to play in supporting the Scottish economy and aligning skills to sport economic growth. What is your comment on that? Do you support it? Is it the right approach?
I am very supportive of it. The submission might have contained the skills planning model, a diagram that was used. We will continue to use that model. It does three things: tries to connect with employers to get their views; helps to shape the supply-side, in terms of colleges’ and our provision; and informs careers guidance on where the jobs will come up and what they are, and tries to bring that to life. The work that we have done through the industry leadership groups and with colleagues in the funding council focuses on that forward demand from industry in order to shape provision, get a better return from existing investment and fill any gaps where we see opportunities in the future.
Are you saying that the work that you already do fits in with the report?
Yes, very much so.
Is there any additional work or additional realignment that you need to do, assuming that the Wood report finds favour with you?
Our process is ongoing. A joint skills committee sits between us and the Scottish funding council. We will do an industry review, for example of the energy sector or hospitality and tourism, and take our report to that joint skills committee, which is an advisory body made up of academics and business personnel. The committee takes a view and offers guidance to the funding council and to SDS on where provision needs to be reshaped. That process, as described in the skills planning model, is ongoing and we have made good progress since it was adopted last year. It is about continuously improving the provision that we have.
To follow up on that point, the headline figure of 25,000 modern apprenticeships is impressive and their work-based nature has wide benefits as well. Do you have to hand figures for the number of modern apprenticeships that are in the public sector, the private sector and the third and voluntary sector?
I do not have those to hand but I can provide them.
That would be helpful. I have posed the same question to the minister and have been encouraged simply to celebrate the fact that the 25,000 figure is met.
I want to return to the quote from Sir Ian Wood’s interim report in which he talks about more actively targeting
“Modern Apprenticeships towards supporting economic growth and areas of the labour market where the long term prospects of young apprentices are greatest.”
Nobody would simply look to rest on their laurels but it does suggest that until now there has not been active targeting.
From your own dealings, whether within the skills group or from discussions with the Wood group, are you aware of any specific concerns, for example, is there perhaps a lack of engagement by the private sector in particular industries, which needs to be addressed?
I would probably add two things. We have seen fairly significant restructuring of the UK-funded sector skill councils—several of them have either consolidated or have lost Scottish managers—and the connection to their industry base. Sector skill councils are charged with delivering labour-market intelligence, and with maintaining and keeping qualifications up to speed with changes, whether in technology or otherwise. There has been a shift there.
SDS and the Scottish funding council are engaged with all industry leadership groups. A big part of our work around building skill investment plans is a challenge process of going back into the industry leadership group and, where possible, getting somebody from industry to lead that process. In the energy sector, for example, we have an energy skills action group, chaired by Frank Mitchell from Scottish Power networks. The group considers forward projections within the various energy sub-sectors, the provision that is available and where we need to fill any gaps in research or evidence-based future projections.
That is a very practical way to engage with all industry leadership groups. We have engaged with approximately 16 industry bodies, to invite conversation and encourage greater participation in the skills and how we shape that future agenda.
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I was going to move on to greater participation. Do you sense that the modern apprenticeship scheme relies heavily on a number of usual suspects in particular sectors, or has there been an improvement? My understanding is that the proportion of companies in Scotland engaged in modern apprenticeships is less than the proportion south of the border, which does not detract from the overall headline figure, but it suggests that the scheme is reliant on a smaller number of players punching above their weight.
You could say that, but you are not comparing like with like. The commitment north of the border to employ the young person in an on-going job is different from what you would see down south. We are looking at ways to bring into the programme smaller employers that have not committed before, and a number of pilots for shared apprenticeship schemes are being considered. Construction and engineering still play a big part in that offer and, within that, we are looking at a number of the engineering companies that are involved in national groups but which have moved away from committing to an apprenticeship programme in recent years, perhaps because of uncertainty about the future.
We are actively engaged with the Federation of Small Businesses, chambers of commerce, the Scottish Council for Development and Industry and the Confederation of British Industry in relation to our skills force, bringing together all the national offers and trying to simplify the amount of information and access to services. We are involved with all the business organisations in trying to address those issues, and I hope that we will minimise the number of young people who are missing out on opportunities through lack of information.
The committee has heard evidence from a number of witnesses who say that the cutbacks in college funding are affecting levels of staff and their capacity to do outreach work and to support female returners, people with additional support needs and those who want to reskill and change employment direction in their later years. We have also heard that colleges play an essential role in supporting that learning activity, because they are flexible and local and they offer childcare. However, if the money is not there to do that any more, where does that leave all those people, and what can colleges do to improve their chances? If there is nothing that they can do, what are the options for female returners, adult learners and people with additional support needs?
You are absolutely right. The consequences of the reduction in college funding have fallen largely on adults, and we seem to have retreated from colleges’ role in lifelong learning. They do what they can with the resources available but, as Laurence Howells and I have both said, where 70 per cent of provision is focused on young people there is not much left for adults. It is curious in a way, because investing in that initial stage of education and training rather assumes that jobs in the economy and in society will remain static in future, and we know that that is not the case. We know that people’s lives change and that the economy changes, and yet we no longer seem to have the capacity in the college system to respond to those changes, when people who have left the labour market as adults need new skills to get back into the market. Often, that group is largely women, and the numbers that we have provided show that the consequences of the reduction have fallen disproportionately on women.
Fortunately, up to a point, the Government has put some extra money in and is beginning to recognise that fact, but I would argue that more needs to be done, both in terms of the future needs of the economy and in terms of colleges’ ability to build social capital in Scotland’s communities. That is quite hard to measure, but when it is not there you notice the consequences in the justice budget, in the health budget and elsewhere, because colleges are so good at preventative spend.
There were two halves to your question, one of which was about the impact of cuts on staffing numbers in colleges, and John Henderson has ably answered the other half.
To focus on the first half of the equation, we are in the middle of a set of reforms designed to produce larger, more efficient, more coherent colleges that are responsible for provision in their regions and able to plan effectively. That is an important part of the reforms, in that it leads to a more efficient sector that is able to deliver provision in a well-planned, coherent way. That has led to a certain number of staff leaving the system, but the evidence is that the system is more efficient than it was and is therefore enabled to support greater numbers of students than would have been the case had we not made the reforms.
The last time I met you, convener, I had been chair of Reid Kerr College for the past few years, and I worked with it through the merger process. The observation that I would make is that there has been a reduction in funding, but there is still a significant amount of resource available for the colleges to deploy, and they do that very well. They are a key resource across the country, and SDS looks forward to working with them in a regional context to share information and to highlight where the changes in the economy will be taking place.
On a slightly different, albeit related, topic to do with funding, there has been a £1.25 million cut in funding for the energy skills academy. I read in our notes that the work that has been done will now be mainstreamed. I do not know what that means. What does that mean in terms of what is provided through colleges? Does that mean different sorts of courses or additional places, or has that £1.25 million just gone out of the system? What has been displaced to allow those places to be mainstreamed? Is that linked to the 1,500 low-carbon fund places, which are referred to in other papers that I have in front of me? I do not really understand what is happening around energy skills, the college sector and the Scottish economy.
That is probably a timing issue. Last year, a significant capital investment was made through energy skills Scotland. A number of the universities and colleges in the north-east benefited, as did Heriot-Watt University and Forth Valley College. On the back of that capital investment, there is also the energy skills challenge fund. Last year, we supported about 750 people through that programme. A number of colleges and trade organisations bid into the fund; Orkney College, for example, got contracts.
The low-carbon skills fund is slightly different. We fund that on a 50:50 basis with companies. It might be used with staff who are working in new technologies—air-source heat pumps, for instance—and who require new skills. That is a different funding pot. The Government has made a commitment for 1,000 places this year through the energy skills challenge fund, and we are in dialogue with the Government about the final budget for that. As regards the disbursement of that fund, we have already taken about £750,000 to contract.
Is it age related? Can people of any age do that sort of training?
Anyone can apply for it. Because of some of the operating conditions offshore, employers are looking for younger employees aged 21-plus. We are trying to target individuals who are making transitions within their careers, who might have been in automotive mechanics and are moving across, for instance, and they tend to be in a slightly older age group.
I will follow up on a couple of points. John Henderson was talking about the effect of focusing support on those in the 16-to-24 age group. You spoke about a reduction in numbers in the 25-to-69 group. The figures in your submission show a reduction from just over 160,000 in 2008-09 to between 108,000 and 109,000 in 2011-12. I was also struck by another point that you made in your submission, which was that almost two thirds of that 108,000 had no qualifications at all. What is your feeling about the effect that the reduction in numbers is having on the cohort of people who would previously have benefited from those learning opportunities and on their ability to get back into work?
It is likely to have a profound effect. If they cannot get into college—because they have no qualifications or because the places are not there any more—the ability to get the skills to get into the labour market will no longer be there. I would argue that there is also a ripple effect. A few years ago, one of our award winners was an unmarried mother who had no qualifications but who went back to college and gained them. I was struck by two things that she said. The first was that her confidence rose to such a level that she felt able to go back into the labour market. The other interesting thing that she said was that her children now saw the value of education. If, as a society, we deny older people the opportunity for education, I worry that the ripple effect will mean that their children will say, “Why should I bother with education?” If, as a society, we do not respect education and inculcate that respect through parents to their children, there are risks.
You talked earlier about the budget reduction. Are we seeing the effects or impact of that now, or is it your expectation that we will see more of an impact in the coming years?
I think that it will be a long-term impact that will not be seen immediately. We will see an impact on the opportunities that are available for adults, and we might even see an economic impact. This might be difficult to prove, but our economy might be less effective if we do not reskill adults. Most of the workforce are not young people entering the labour market; they are people who are already in it. As the labour market changes, if we cannot upskill those people, I suggest that the Scottish economy will not perform at its optimum level.
The other figures that leapt out at me from your written submission are those on staffing numbers. You and Mr Howells have conceded that there has been a reduction in staffing levels. The figure that I have is that, from quarter 2 in 2009 to 2013 there was an overall reduction of 3,200. Last week or in an earlier evidence session on the budget, the point was made forcefully that, although it might be more efficient if we try to maintain the number of courses and full-time equivalent students with reduced staffing, the quality of what is provided will be inferior—perhaps not in every instance, but in a number of cases—because of the ratio of staff to learners. Do you concede that that is a concern? Is it happening already?
The recent Audit Scotland report on colleges said that we need to keep a careful watch on the impact of losing quite a lot of experienced staff in colleges. It is too early to see any evidence of the impact of that. Given the large proportion of college funding that goes on staffing costs, as funding falls it is inevitable that staffing levels fall. Through the regional outcome agreements, we need to watch for the impact on performance indicators, and I know that the funding council will do that. Education Scotland will assess externally the quality and range of the provision in colleges. I think that the jury is out on the impact of that.
To add to John Henderson’s point about the outcome agreements, some of the key things that we put in place in those agreements are the measures on quality. We have particularly focused on retention, which is important, and completion rates. In the outcome agreements, the colleges have committed to enhance and improve retention rates, at the same time as taking forward the reforms. I underline John Henderson’s point that we are working jointly with Education Scotland to ensure that maintenance of quality becomes an important thing and that regional colleges use their economies of scale and their systems to effectively underpin ways of tracking and supporting learners, and that they provide the support that is required through the process.
Obviously, the headline figures and quality assurance will be helpful, but they perhaps do not capture those who need additional levels of support, which becomes more difficult when the ratios are higher. Is that being picked up and dealt with through the outcome agreements?
12:30
Indeed. We require all colleges to work with individuals to develop individual learning plans that reflect their needs. Part of the funding package that is provided includes an allowance for extended learning support and other aspects. A particular focus that we have with Education Scotland in its reviews of colleges is the extent to which they are supporting people’s needs. It is also worth saying that if that support is not provided, we will not see the results in retention rates and performance indicators. It is quite important to reflect the fact that individual colleges have set themselves targets to achieve and that they will be held to account for the delivery of those targets.
I have a brief question for Mr Henderson. You quite rightly pointed out that we must be careful about the balance that we strike between young learners and adult returners and what it means for the balance of the economy. I certainly agree with that. However, do you not also agree that, during this time of economic difficulty, it is quite right for us to reprioritise resources from those who have been doing college courses when they are over the age of retirement? Those resources should be shifted to those who are at the younger end of the scale, such the 16 to 24-year-olds, rather than being used for those who are of retirement age.
If you accept the proposition that college budgets should be cut, I accept that, given high youth unemployment, it is right to prioritise available resources on the young. However, I suggest that just as we take the view that investing in the capital infrastructure of Scotland is important—the bridges, the roads, the new railways—investing in human capital in Scotland is equally important. The problem is that the budget is too small and the impact of the cuts on adults has been disproportionately large. We should keep our focus on young people, but I would like to see more resources made available for more provision for adults.
I would like to ask Gordon McGuinness questions on partnership working. What steps have been taken by SDS to ensure that everyone is joined up from schools to colleges to employers small and large? You have answered some of that question today, but what are you doing to ensure that that is all happening? It is no easy task for you.
That is correct. In our early days of operation, we offered to have a service delivery agreement with every single local authority in Scotland, and that was accepted. I do not know whether many national agencies have gone down that route. The offer was made to provide training and support services in schools and that was reflected in an agreement with each local authority. It was then embedded into the community planning partnership. Like a lot of other agencies in which we could see that level of activity, local employability partnerships would operate as part of the community planning partnership.
I talked earlier about our work with industry leadership groups and we are following that up this year in conjunction with the funding council and Scottish Enterprise to do regional skill assessments. We are about to complete a pilot in the Highlands and we will undertake those assessments across the board. After the demise of local enterprise companies, some took the view that there was not the same level of scrutiny or understanding of what was happening in local and regional labour markets, so that new service that we are offering to bring to the table will help to inform future planning and allow the alignment of training provision with the future needs of the labour market. That is a commitment to an on-going process.
I also touched earlier on the our skillsforce website and the partnership offer database. Mr Swinney challenged us to align Scotland’s employability service better. Probably for the first time ever, everything is on the one website. It is still not perfect and we are working with partners to tweak and shape it as well as communicating with businesses to make sure that they are aware of what is happening. We also have a modest resource on the ground so that we can work with local partners on connecting companies up to that service. We set a great deal of store by that service and our chief executive leaves it open to partners to challenge it at all times. If they feel that they should be getting more, we sit down and talk it through, and relationships with our partners are pretty positive.
I strongly support the joint working between my organisation and SDS, particularly on bringing together the demand in sectors and in regions.
As a committee, we are asked to scrutinise the budget in the normal way, but in recent times the committee and its predecessor committee have had issues with the interpretation of certain budget lines. Following the reclassification of colleges—this is not about the debate on whether the current approach is right or on how the issue should be addressed—I understand that the full expenditure and income for the sector now has to be set against the central Government’s departmental budget lines. Is that correct?
Effectively, yes.
What is the impact of that on our ability to scrutinise the income for the college sector and how that money is spent?
The budget now includes a set of lines about what income the colleges earn—essentially, that is their commercial activity—but the committee’s focus ought to be on the line showing direct Government support. That is what buys education provision for students in Scotland, which is what we have always provided. The other lines are really to do with conventions of Government accounting.
Following the reclassification, I understand that the reserves—unless moves are made to put them into arm’s-length trusts—become one body of money rather than remain with separate colleges.
The technical issue is that, if that money was spent, it would be spent against Treasury spending targets, so it would need to be given budgetary cover by the Government. In effect, that means that those reserves would be frozen and could not be spent. The arm’s-length trust idea is one that creates an ability for that money to be used by colleges for the benefit of education in their regions.
Let me just be clear about this, as I am a bit confused on what exactly that means. If those separate trusts are set up, will colleges still be able to decide how the money is spent, or will it be up to the Scottish Government to decide?
It will be up to the trust to agree how the money is spent. We imagine that the way in which that would work is that the college or region would request the money from the trust. When the money was put into the trust, it would be specified what purposes it would be spent for, which would be only for the development of college education in that locality. Therefore, it would not be decided by the Scottish Government.
To scrutinise how effective college spending is, we will need to look at the budget line, which is obviously now defined in a different way, plus all those trusts. Is that correct?
An important point is that the trusts will be set up in such a way that the money can be used only in line with Government policies. It is important that those trusts deliver that requirement, but they will be legally set up to do that.
Will charitable status be accorded to the trusts?
That is the plan at the moment, yes.
Is that your understanding, Mr Henderson?
Yes.
I thank the witnesses for their evidence this morning, which has been of great assistance to the committee in examining the draft budget.
Our final evidence-taking session on the draft budget will be next Tuesday, when we will hear from the Cabinet Secretary for Education and Lifelong Learning. As we have agreed to take our next two items in private, I now close the public part of the meeting.
12:39 Meeting continued in private until 13:02.