Agenda item 2 is an evidence session on the Scottish Government’s draft budget for 2013-14. The committee has agreed that the following broad objectives will shape our scrutiny of this year’s draft budget: to determine how last year’s final allocations helped the Scottish Government to deliver its policy objectives; to identify the progress that remains to be made and how the allocations in this year’s draft budget will help to achieve that; and to assess how spending on further and higher education is contributing to the Scottish Government’s overarching purpose of increasing sustainable economic growth. The committee took evidence last Tuesday and we will have two evidence sessions today before we take evidence from both cabinet secretaries on 23 October.
Good morning, panel. Last week we heard concerns from Unison, the Educational Institute of Scotland, the University and College Union and the National Union of Students about cuts to college funding. People have given us various figures for what they believe the cut to college funding to be. What do you understand the cut to be? We also heard concerns last week that cuts to colleges will potentially harm economic recovery. Do you agree with that statement?
I am happy to go first. Thank you for the invitation to come before the committee.
I agree with James Alexander and with your witness Jeremy Peat last week, and if even the great economist Jeremy Peat cannot give you a figure, I am not even going to attempt it—I am really sorry.
We will not comment on the actual sums of money, but it is important that we look at how well that money is spent. I echo what Amy Dalrymple and James Alexander have said—we are operating in a time of constraint and we have to recognise that and be realistic. The more efficient and the more rationalised that we can be in the delivery of our public services, the better—in theory—but colleges have the potential to meet the needs of local businesses far better than they currently do. There is a lot of good practice out there, but it could be far more widespread.
We have received evidence from Scotland’s Colleges that there has been a drop of 80,000 in the number of students studying in colleges since 2008-09. The SCDI’s submission says:
On student numbers, there is a debate to be had about whether we want there to be fewer students on full-time courses or more students on part-time courses. I can see both sides of that debate, as can our members. To take a bigger-picture perspective, we want colleges to work with businesses to deliver the skills that are needed in the economy—that is the bottom line of what we want to be achieved. Whether that involves having more full-time provision or more part-time provision, we need to ensure that people are able to get the skills.
If anyone has anything to add, they may do so, but only if it is different. You do not have to repeat what has already been said.
There is perhaps a budgeting and policy tension for the Government between the short-term challenges that we face in terms of youth employment, with the funding that has been put behind the opportunities for all policy to ensure that young people have opportunities if they are unable to get work, and the broader, strategic needs of our further and higher education system and our economy, and how they interact.
We have to think—within the limits of reality—about the context of college funding and how colleges deliver their provision. For many years, we have talked about lifelong learning in the context of further and higher education. Lifelong learning may involve an individual realising that they need to learn a skill for a specific purpose, particularly at college level, and accessing that learning at a time that is good for them. Similarly, we need to consider the needs and contexts of the businesses that are investing in the skills of their staff and recruiting from the body of students that have come through the system.
On the point about STEM subjects, James Alexander’s written evidence states:
Some of the mismatch comes in the demand from potential students to study STEM subjects. I mentioned our young engineers clubs—and there are other such clubs operating—which try to enthuse young people who have potential to think about career opportunities in science and engineering.
Neil Bibby quoted a fall in student numbers of 80,000. The written evidence from Scotland’s Colleges states:
That is where colleges’ links with local businesses are vital. Colleges have engaged with local businesses for years, and we should provide colleges with the autonomy to engage with businesses so that they can say that the best thing to deliver is to put their SUMs or student numbers into whatever provision, whether it be part time or full time. The challenge is for colleges to maintain the quality of provision while delivering the same SUMs or full-time equivalents within a reduced budget settlement.
We also come from a perspective of wanting the education system to deliver for Scotland’s businesses and, therefore, Scotland’s economy. The Scottish Government’s massive programme of post-16 reform kicked off with the pre-legislative consultation document “Putting Learners at the Centre – Delivering our Ambitions for Post-16 Education”, which was about developing a learner-centred education system. The discussions that we have had over the past year or so and will continue to have are about how we balance the different needs of stakeholders. However, the Scottish Government was clear that it wanted a learner-centred system.
From our perspective, the pattern of more full-time students and less part-time could be slightly worrying. For vocational training, we would like to see more of a pattern of part-time students being in work or people doing part-time work and a part-time college course. However, we need to dig a bit deeper into the figures, as Amy Dalrymple said, because they could include part-time leisure courses and all sorts of different part-time provision, and accessing such provision has fallen away over the last little while. So, I would probably want to look a little closer at the patterns and see what is happening and how the student market is reacting to the economic situation.
So, from the Federation of Small Businesses’ point of view, you would support the opportunities for all initiative and the focus on employability skills for young people.
Absolutely.
In your written evidence, you state:
Yes—we would agree with that. We hope that college reform will deliver that step change. We believe that there is vast potential for colleges to contribute to economic recovery and resilience. There is a lot of untapped potential, and there is also a lot of good practice out there that could be replicated in other areas.
Will you clarify the figures that you quoted? Are the 43 per cent that found the interaction useful part of the 10 per cent?
Yes.
So it is 43 per cent of the 10 per cent.
Yes.
That is really quite a low number.
We have been working on several parallel projects in this area. In one of them, we are working with Skills Development Scotland and the Scottish Qualifications Authority to develop a certificate of work readiness that will demonstrate to employers that people have such skills. That work is in its early stages, but I urge you to keep an eye on it if you are interested.
Thank you for a comprehensive and interesting answer. I will pursue the point a little further.
As a business group ourselves, we have members who feed in that sort of thing to us. Yes—some job applicants have problems with literacy and numeracy, but I did not raise that issue because I thought that everyone would agree that those are core standards that need to be achieved.
Quite a high proportion of the business community believes that the core skill element is not sufficiently broad and of sufficient quality to allow some of the young people who are coming into the business world to function as well as they might do, and some of your colleagues in the business community are having to spend quite a bit of money to help those young people to address some of those core skills. Is that view a correct reflection?
That is not a consistent view, but it is a view that we hear from several of our members.
I have one final point. We are being told that a number of graduates are picking up jobs that require intermediate level skills, which leads to additional pressure on FE graduates and people in the business community. Is that a fair reflection?
I would say that is. That poses particular challenges in the sense that everything moves down. There is a group of mostly young people—we have all seen the youth unemployment numbers—who struggled to get employment even in the economic good times, and they are the ones who are really struggling now. They need to be prioritised through the provision of skills and through support to get them into the labour market.
We are working with the Scottish Government to prioritise a graduate recruitment incentive programme to tackle the displacement issue, as it potentially has long-term implications for the employability of a whole generation. Given that we are looking to the long term and trying to tackle a short-term crisis—as I mentioned before—it is important that we tackle the underemployment issue. I can give the committee details of the graduate recruitment incentive programme, which is being piloted with four of our chambers of commerce.
With regard to what James Alexander has just said about graduate employment and unemployment, his written evidence states:
That is probably fair. We have a huge amount of skills in the country. In the past half hour, we have talked about developing the skills that employers need, but now we are talking about a group of people who have the skills that employers need but who are not being put in a position in which those skills are being used. Employers, educational institutions and young people themselves all have a responsibility to maximise skills wherever possible. That is quite hard to do, particularly given where we are economically, but we have got to be able to do that.
Some of this has already been discussed but, with colleges taking on a bigger role in training for employment through opportunities for all, the national training programme and the modern apprenticeship scheme, what is the role for the private sector?
The private training sector or—
No, the private sector in general.
The private sector has a role to play in working with colleges to co-develop the educational provision that will be relevant to the needs of business. For example, that might mean a business working with a college to deliver an after-work training programme in its own establishment for its own employees. That is the sort of flexible provision that we want to happen across Scotland.
Although there is a huge amount of willingness among our members, which are predominantly small businesses, to be involved with colleges in terms of provision and to feed into training programmes and so on, it is extremely difficult for them to do that. Of necessity, training programmes are led by pedagogical theory and so on, which most businesspeople have no idea about. They are thinking about the tasks that their employees have to do or their future employees will have to do, and that is what they want their employees to do. They are not necessarily experts at saying how to go about delivering that training; that is for the people who are experts in doing that to do.
I apologise for interrupting Mr Adam’s line of questioning, but I believe that he asked what the private sector might contribute in terms of training, and you seem to be talking about what the colleges can contribute in terms of getting it right for businesses. That is a legitimate subject to talk about, but the accusation has been made more than once that some businesses are disengaged from that training and see training as somebody else’s responsibility, and that they expect to benefit by receiving fully formed, fully trained individuals who have been trained at the expense of the public purse. You are not saying that, but you seem to be running close to that argument.
We have evidence to suggest that most of the training that was undertaken by those of our members who invested in training in the past year—around half of them—was delivered by private training providers. It was bought from private training providers because they could deliver exactly what the business needed in the format that the business needed and at the time that the business needed it.
Does that not go back to the fact that your members in particular do not engage with colleges? It is easier for the chambers of commerce to engage at that level. Is the issue that your members were not aware of what they could have tapped into?
Yes, that might be the case. I suppose that, if it is not the job of colleges to reach out and get more private sector customers to provide a chunk of co-investment money for training, there is not a problem.
You said that there were examples of good practice throughout the country and that there are places where business and colleges have worked together to come up with something that is relevant. For example, Reid Kerr College in Paisley, which just happens to be in my constituency, invested in a renewables business park, where it teaches small businesses and people such as electricians how to work with renewables technology. That added value to the students and enabled them to enter a new market. That is the kind of thing that I am talking about. There are good courses that people can get on to, but we are not managing to get the engagement.
It is difficult for an individual small business to engage directly, as it does not have the time, and it is also difficult for a college to engage with all the businesses in its area, as there are a lot of them. It takes a lot of resource to do that and if colleges are looking to put more of their resource into front-line teaching, there is a decision to be made there.
Can I quickly add something in response to your point, convener?
As long as it is short.
Many of the SCDI’s members are thoroughly committed to training and to developing their workforce. For example, the oil and gas sector set up OPITO—the oil and gas academy—for exactly that reason. Every time we have events or engagements that involve the education sector, we have a high degree of interest and uptake in them.
One of the striking points in the FSB report is the fact that, as Mary Goodman said, around half of the FSB’s members invested in training for their staff in 2010-11 and, of those, 45 per cent engaged a private training provider, which is about four times more than engaged a college. On that point, I echo what George Adam said. In Orkney, the college deals not necessarily with individual businesses, the chambers of commerce or the FSB but with the construction sector, the tourism sector, the food and drink sector and so on. Are we not asking colleges to spread themselves even more thinly if we are asking them to ape what individual private training providers can do on site with specific businesses? If we still want colleges to have some form of campus arrangement for students, we cannot have them trying to fill that space, because it does not play to their strengths and that need is perhaps already being met perfectly adequately by individual private training providers. Is that a fair assessment?
I agree that there is no point in the public sector—in this case, a college—trying to fill the space that is already being filled by a private sector provider. That is a line that we pursue in many contexts. Orkney and Renfrewshire are areas in which there is good liaison between colleges and local industries—so it can be done. It is not about colleges spreading themselves too thinly.
We talked about how best to develop entrepreneurial and employability skills for graduates. Are you satisfied by the level of business involvement in our colleges? Are there indications that the approach is producing the mix of graduates that businesses want there to be?
The picture is inconsistent. In some geographical areas and industry sectors, business involvement is extremely good. Some colleges have developed good partnerships with a range of companies. For example, in Fife there is good liaison with the renewable energy industry, which includes on-site and off-site training and discussions about what the curriculum needs to contain. In other areas, liaison is not so good. I hope that the move to outcome agreements for the regional colleges will drive up standards of industry liaison throughout Scotland.
There has always been strong business engagement with college governance, and many business figures are on college boards. We want that to continue as we move to regional college boards.
I recently went to the opening of an innovation centre at Queen Margaret University. Do the witnesses have an opinion on the development and contribution of such centres?
We very much support the approach, which looks likes good policy. The idea of knowledge transfer and using the activity that is going on in universities to support new businesses and innovation in existing business is positive. Scottish Chambers of Commerce would like the area to be looked at, to ensure that there is no duplication of funding and that we are not making the system more complex. We must do all the right things, but we must do them properly.
Scotland’s research base is huge and tremendous innovations come out of our universities. We need to maximise the economic potential of the things that are invented and developed in our universities. In large part, Scottish inventions shaped the modern world. We must ensure that that continues into the future.
Many businesses would probably benefit from innovation centres and the knowledge exchange that comes out of universities, but many businesses do not engage. There is an issue to do with the platform for engagement. The FSB has always said that the business gateway should be the key interface between the business sector in Scotland and the business support and development that the public sector can offer. We want what Queen Margaret University and other universities can offer their local businesses to be more integrated with the business gateway, as it could be delivered through that platform.
Amy Dalrymple mentioned outcome agreements. The Scottish Further and Higher Education Funding Council is moving towards outcome agreements with universities and has set challenges for universities in them. Is the change in emphasis in the research base towards high-quality research and towards research that will deliver economic value the right priority?
A lot of our businesses would not find the world of research easy to interact with. However, there is a lot of potential for spin-out and enterprise from a university. We could maximise that and inject high-growth, interesting stuff that is coming out of our universities into a business idea that makes money and supports our economy. That is probably where I would go.
Historically, business engagement in research and development in Scotland has underperformed in comparison with the rest of the United Kingdom. We want that to improve. As I said a moment ago, the research innovation hubs and centres are crucial in making that happen and in making the research that comes out of our universities accessible to Scottish businesses.
Clare Adamson asked about targeted research. Universities are funded from several sources and they can fund their research from several sources. The Scottish Government’s overriding priority is sustainable economic growth so, if it funds universities to do research, it is logical for that research to fulfil the Government’s overarching priority.
The Scottish funding council is supporting a voucher scheme that can provide small businesses with up to £5,000 of funding if they commit staff time and a matching cash value. Is that scheme a sustainable way forward for involving small businesses?
I ask for brief answers, please.
We are keeping an eye on the scheme.
We are positive about the scheme; let us see how it progresses.
I say the same.
The SCDI submission is clear that the university sector contributes 12.4 per cent of the UK’s research, which means that we punch well above our weight. However, I was alarmed to read of your concerns about the damaging effect that the Westminster Government’s tightening of the international student immigration system could have on Scotland’s universities and the economy’s research engine. Will you say a little bit more about that?
Thank you for raising that. We are happy with the funding settlement that universities have and I am sure that the universities are happy with it. Our biggest source of concern for universities in Scotland is the tightening of student visas. Incidentally, it affects colleges as well as universities, but the impact on universities could be very significant.
Have you approached the UK Government yourself to raise your concerns?
Yes, we regularly engage with the UK Government and the Migration Advisory Committee, which is charged with providing advice to the Government. All our engagements with the Migration Advisory Committee have reflected our strong concerns about student visas.
Are you satisfied with the response that you have received from the UK Government?
Not at this stage.
We have touched on regionalisation and mergers of colleges. It has been recognised that there are opportunities to find efficiencies and to create a less confused landscape. However, reference was also made to potential geographic barriers and the need constantly to be responsive to the needs of local businesses in an area. What is the business community’s experience of engagement in the regionalisation process? Have individual businesses, sector bodies or business organisations been involved in decisions about how regionalisation or mergers ought to work?
Do not underestimate the perspective that a business leader can provide, even if they are from a business that is not relevant to some of the other businesses with which a college engages. The impact that such an individual can have in the governance and decision making of a regional college board is huge. We must value that input from businesses and, historically, colleges have done so.
I accept what you say about the input that such people can have, but what about if they are from a business that has no real locus or a sector that is not particularly important to an area? The economy in Orkney is distinct from the regional economy in the travel-to-work area in and around Inverness. The credibility of someone from that Inverness area as a businessperson would be beyond question, but their connection to the local economy in Orkney, the Western Isles or Shetland may be less obvious to people who look to them to represent those business interests at a board level.
The FSB is far less concerned with the structures and governance procedures than with the coverage issue. The key thing for any board, regardless of who sits on it, is getting the right information. Local labour market information is important. If a board knows its market and knows the private sector in different places, it can, we would hope, communicate with that market, understand what it needs and then provide something along those lines. It is important that boards get the business or private sector perspective, but exactly who is on the board is less important, so long as it has the right information on which to make decisions. I accept that loud voices often get the most attention. The important thing about regionalisation is using the labour market information.
The committee has dealt with a number of statutory instruments that are, I suppose, the manifestation of the merger process. In your view, has there been enough involvement of business groups, individual businesses and sector bodies in the process of deciding which colleges come together, how they come together and what they will deliver?
My perspective is that that depends on the area. We could tell different stories about that for each of the regions. The Scottish Government has consulted and, to its credit, has continued to consult with organisations such as ours. However, at the regional level, the situation has been more variable. For example, in the Glasgow economic partnership there are extremely good relations between the colleges, the council, the chamber of commerce and other groups such as Glasgow 2014, as the games are meant to have a long-term impact. The process has worked well in that area, but in others it has perhaps not worked so well. In areas such as West Lothian and Dumfries, the relationships have hardly changed, because those are single-college areas and only ever had one college. The approach has varied. As ever, the particular geographical issues in the Highlands mean that a different approach may be needed there.
That brings us to the end of our questions. I thank the witnesses for coming and for giving us their expertise.
I welcome our second panel of witnesses, who will provide the view of funding and representative bodies on the budget. I welcome Mark Batho, chief executive of the Scottish funding council; Katie Hutton, head of national training programmes policy and integration with Skills Development Scotland; Danny Logue, director of operations with Skills Development Scotland; Liz McIntyre, principal of Borders College and representative of Scotland’s Colleges; and Alastair Sim, director of Universities Scotland. We will kick off with questions from Neil Bibby.
We are here to scrutinise what the draft budget means for service delivery. What do you understand to be the cut in the budget for colleges next year? What will be the impact on the teaching grant and on courses, student numbers and jobs?
I thank the committee for the invitation to appear.
Liz?
Sorry—I was just absorbing that information for a moment.
I am sure that Neil Bibby would ask this, but I will ask it on his behalf. Given that Liz McIntyre has raised that point and that it was raised last week, I ask Mark Batho to clarify the issue. Last week, we heard about the possibility of clawback and that there is confusion on that.
Sorry, but this gets into horrible complexities to do with the resolution of the financial and academic years.
Can I clarify something?
I did warn you.
Are you saying that the money was spent in the financial year for which it was awarded, but that it was brought forward in terms of the academic year? Is that a short summary of what you are saying?
Yes.
Therefore, the money was spent in the correct financial year. Perhaps “correct” is the wrong word, but you know what I mean.
Yes.
Just to clarify that, what is the core teaching grant for 2012-13, for the academic year and financial year?
I can talk about the overall allocation to colleges for 2012-13. As I say, we fund by academic year rather than by financial year.
What are you waiting for clarification on from the Scottish Government?
We will get a range of things in the guidance regarding what the Scottish Government requires the resource to be spent on. Our budget is made up of a range of things: we have set aside some strategic funding for overall purposes and there is core funding that will go to colleges. There will also be a continuation of the scheme that is funded through SDS, which is something that the committee may want to discuss. We are awaiting details of the nature of that scheme. Those are all reasons why we are not in a position to finalise an academic year budget, based on the figures published in the draft budget.
It would be helpful to get some clarification on that point. I interrupted Liz McIntyre earlier—would you like to continue?
Therein lies the rub—the issue for colleges as we try to plan provision for next year is that we do not yet have clarity on what the budgets might be.
Last week, we heard concerns about a “biscuit tin” approach to funding, the complexities of the financial year and academic year, and money being brought forward from different pots of money. Could the system of funding colleges and the services that they provide be made easier? What improvements could be made to the funding system, and how could it be made easier to scrutinise, so that we can see what the issues are?
It could obviously be made simpler, and that is also the view of the Scottish Government, which is aiming to make it simpler. We are in a transition period in which things have become more confusing—in the short term—than they were previously, but we understand that there is an aim to simplify the system.
On the question of simplification, we are aware of colleges’ need to have certainty about their budgets. The funding council is committed to getting the budgets out to colleges at the end of this year or the start of next year, as colleges begin gearing up on their recruitment processes and the like. It will take a significant effort to achieve that.
I want to bring in SDS at this point. The example that was given clearly indicated that there is at least a question mark about what happens. Does SDS want to respond to that?
When the Government first asked us to run the new college learning provision, the idea was that it would not necessarily be the same type of provision as previously. We outlined the principles underpinning it in the contracting strategy, such that it would be a commissioning process—so we would seek bids from colleges to deliver the provision—and that it would be a shift away from looking at, for example, participation measures of how many people are involved in courses and a move towards retention and achieving outcomes.
I take it that the learning programme will continue next year.
I was at a meeting at Scotland’s Colleges yesterday when the cabinet secretary indicated that that would be the case. He indicated that around £24 million would be ring fenced for colleges and that they could bid in to the rest of the employability fund.
Does that £24 million mean that the same number of weighted student units of measurement equivalents will be provided next year as have been provided this year?
All I have at the moment is the figure; I do not have any details around it. Ultimately, it is not a funding council scheme. I was merely a witness to what was addressed at Scotland’s Colleges yesterday.
Can I just clarify something? What is the £24 million that you referred to part of? Is it additional to the money that you mentioned earlier?
All I have is what I heard yesterday, which is that there will be £24 million ring fenced to the colleges out of an employability fund of £50 million. I do not have any other details.
It is part of the employability fund, so it is different—okay.
The more that we wade into this, the more confusing it sounds. I appreciate some of the uncertainty and the reasons behind it. We have heard second-hand about the cabinet secretary’s confidence in the deliverability of the range of commitments, and Mark Batho says that the Scottish funding council shares that confidence. However, given that we still do not have a picture of the extent or nature of the cuts and where they will fall, I am struggling to see how that confidence can be expressed.
Our confidence comes from the significant evidence that we have that the programme of regionalisation and restructuring of colleges can deliver, and is delivering, quite significant savings across the piece. For example, the City of Glasgow College, which is now up and running, has indicated that the savings from its merger are of the order of £6 million a year. In its business case, which was launched yesterday—its vesting date—Edinburgh College projected £9 million of savings as a direct result of the restructuring.
The colleges have indicated that they do not dispute the savings that are made, but my understanding is that a lot of them would dispute the timeframe within which they can be realised and, as you say, ploughed back into the teaching provision and meeting the other commitments.
That is absolutely right. We do not dispute that there are savings to be made. Last year, we were clear that we thought that the regionalisation agenda would force efficiencies through the sector and that savings would be made, but we are at the committee today to talk about the 2013-14 settlement. We know what the figure is, so there is no sense that an additional £20 million is coming back into the system following the two mergers. Those savings will take a bit of time to come through.
I want to go back to your earlier evidence when you seemed to question the opportunities for all focus on employability for 16 to 19-year-olds and suggested that it does not meet the needs of all your potential students.
There has not been a change in my approach. The college learning programme has its place and some young people will undoubtedly benefit from it, but it is a short, sharp intervention around employability.
The evidence that you gave last year was very specific that you were concerned that there would not be enough employability courses or opportunities for all places. That does not seem to be your concern at the moment: you have got them but you are not happy with them.
My concern is that it is difficult for individuals to match themselves and their individual aspirations to the programmes that are available.
You have raised the issue of modern apprenticeships. The SCDI, which has given written and oral evidence, has praised the number of modern apprenticeships, which has been vastly expanded. I take it that you welcome that.
I absolutely welcome that, but the challenge in modern apprenticeships is still about finding employers who have the capacity to employ apprentices and getting those employers on board. I am a great supporter of pre-apprenticeship schemes, which get people ready to move into apprenticeships, but such schemes have to be substantial and I am not sure that, as it is currently structured, the college learning programme enables that amount of development to happen.
There is absolutely no question but that the modern apprenticeship programme is on target, just like the 16 to 19-year-old opportunities for all is on target. That was your concern when you gave evidence last year, but that issue has been resolved and we will now have those places.
Yes, there has been a significant increase in the number of places available. However, my point is that we have to understand exactly what we mean by a place. Places are not all the same. A college place funded by the funding council for a substantive qualification is not the same as a place on a college learning programme. They are significantly different and they have significantly different outcomes. I am trying to make the point only that we should not conflate all those different things when we talk about places because they do not necessarily mean the same thing to everyone. It might be that an individual student wanted a college place but could not access one because insufficient college places were available.
But you would agree—
A short final question, please.
Would you agree that the opportunities for all targets are the hardest to reach?
Opportunities for all provides opportunities for people, but it is far too early to say whether those are always the right opportunities in the right place at the right time for the individuals concerned.
The written evidence from Scotland’s Colleges mentions a drop of 80,000 in the number of students in Scotland’s colleges since 2008-09. Do you expect that trend to continue? I would like—the previous panel said there is a need for it—some more information on that figure. Can you comment on the profile of those students—for example, the age range, the social demographic and whether they were part time or full time—and on the type of courses that would be particularly affected?
I do not have a detailed breakdown of the numbers, but I can give you a feel from my own perspective for what is going on. There is a combination of two issues, which were picked up in the earlier evidence session. The first is that, for a number of years now, ministerial guidance letters have urged us to prioritise full-time provision and provision for young people. That has resulted in a movement of resource away from part-time learning for older people to the younger age group. Everyone has attempted to follow that guidance as best they can.
As the focus moves towards young people, how will that affect those in other age ranges who might want to upskill when they are out of work? How will it affect the economic recovery if we move—as is hoped—towards an upturn, but those people do not have appropriate skills?
That would have a significant impact on those people. However, some of the impact is hidden. Individuals who are employed in a job that does not give them the opportunity to improve their skills or to increase their earning power might previously have been able to access training that would move them up to a higher level of employment, but they are no longer able to undertake that training, so they stay where they are. They do not appear in unemployment statistics, but there is a potential impact on skills utilisation for employers.
I want to chip in with one extra factor with regard to the fall in student head count. From around 2008 onwards, we have been strongly encouraging—in fact, we have been requiring—colleges to get out of providing courses that have a high head count but are very short-term and have low added education value. There were a lot of those courses going on, and they were funded by us. Courses that lasted for 10 hours and were of low education value, and which were taken by a large number of people, are now being translated into longer-term courses that award properly accredited qualifications and the like. There is value to be had in doing that, but the pure head-count figure has taken a significant hit as a result.
Given that your instruction was given early, do you expect further reductions in overall student numbers, such as happened after 2008-09 and 2009-10?
I expect the impact to be a one-off—at least, one that will be spread over two or three years. The impact on numbers has been significant, but it will diminish.
In table 5 of the submission from Scotland’s Colleges, on student numbers, the headcount figure for 2008-09 is 384,986. Is that accurate?
As far as I am aware, that is an accurate figure.
All your numbers are based on that figure. I was feeling pedantic and I was having rather a quiet weekend, so I checked the figures and found that the number is actually 374,986. In effect, an extra 10,000 students are included in the 80,000 figure that you have been talking about.
I am sorry; I really cannot answer you. As far as I am aware, the figures were extracted from the SFC performance indicators. If there has been a typing error, I am not aware of it.
I assure you that the 374,986 figure is correct.
I do not know, so I have to agree with you.
That changes the outlook on the paper.
We will check the Official Report for that.
His evidence was very interesting. The professor was talking about 16 to 19-year-olds, and he said that 31,000 young people could end up chapping the doors of colleges, trying to get in. He also said that at the other end, some older people would fall off. Could the argument be made that because of the generational shift in the opportunities for all agenda, a lot of young people who might not have engaged with colleges until later will be given an opportunity to engage earlier and to build something for the future?
That argument could be made. I suppose that it is part of the early intervention and preventative spending approach. The money that we spend ensuring that 16 to 19-year-olds have the opportunity to gain the skills that they need should eventually feed through, just as what we do with three-year-olds should eventually feed through into the system.
I thank George Adam for saving 10,000 places.
It is on the record.
Can the figures be clarified? Is it 374,000 rather than 384,000? Is 384,000 an SFC figure?
It is the Scotland’s Colleges figure, but Scotland’s Colleges was using our data—so we will work on that collectively.
Between you, will you confirm the correct figure in writing after the meeting, so that the committee can be absolutely clear?
Yes.
There is a substantial difference between 80,000 and 70,000, notwithstanding Mr Batho’s comments about factors that the figure reflects.
Perhaps I should have asked the following question earlier. Mark Batho said that the cabinet secretary gave a figure of £24 million yesterday, but we have evidence that the funding this year is £13.1 million. Is the £24 million a direct comparator of the £13.1 million or does it cover other training programmes?
I must present myself merely as a rapporteur from the event yesterday, so I cannot go into detail. The cabinet secretary made it clear that about £24 million of resource for the employability fund would be ring fenced to colleges—that is where the funding council’s interest comes in.
I have questions about the evidence from Skills Development Scotland. Your submission says that the new college learning programme
The point relates directly to one of the outcomes for which we pay. We pay for the retention of students and for outcomes. One outcome that is paid for is progression to a more advanced form of learning in the college setting.
So, assessment of the programme’s success will be based on destinations, rather than just on whether training programmes were completed.
We are looking at all aspects. We look not just at the number of participants but at the number of people who stay the course in a programme. At the start of the new college learning programme, we set minimums of 192 taught learning hours and 192 hours of work experience as a guide for colleges. Some colleges do more than that. The idea was that we would look at all aspects, because the programme is about retention and about where people progress to as a result of participation.
I will ask about implementation. The programme is quite new and is being delivered by Skills Development Scotland rather than by the funding council. There are all sorts of relationship issues with the colleges. Your submission refers to a buddy system with colleges. How is that progressing? What is the number of sign-ups? How many colleges are participating?
Only about five or six colleges did not contract with SDS for the other national training programmes. The idea was that colleges that had experience could work with others.
How have the allocations shaped the upcoming outcome agreements for colleges?
We are early in the process of agreeing with the funding council outcome agreements for 2013-14. We do not know what the allocations will be, so it is too early to answer the question.
I agree 100 per cent. The exercise in 2012-13 was useful, but it was almost like chasing after the cart. Colleges needed to know their allocations early in the year, which is when the starting gun was fired for outcome agreements.
Will the outcome agreements go into detail about the amount of teaching time that is required? Will they specify whether compulsory redundancies are off the table? Do you expect them to go into such detail?
Agreements will not go into the detail of whether compulsory redundancies are off the table, because that is not a matter for the funding council, which is dealing with autonomous bodies that are probably—or possibly—not in the public sector. However, agreements will go to the level of articulating the expectations from restructuring in colleges. We would certainly not get involved at the level of detail of staff numbers; it is properly a matter for the regional board of the particular colleges or the particular board in multiregion colleges to determine with the colleges in their region.
I appreciate the independent nature of colleges in all of this, but the minister has made clear the stated position of the Government. There is a degree of confusion, at the very least, about what the commitment means in terms of what will happen at regional level and at individual college level.
I think that the Government has made clear its position on compulsory redundancies in dialogue with the colleges. That is outwith the outcome agreement process, which involves a direct relationship with the funding from the funding council and what will be delivered as a result of that funding.
Is there anything to stop you having a no compulsory redundancies policy as part of the outcome agreements?
I do not think that it would be within the legal powers of the funding council to insist that the colleges that we fund follow that policy. However, the Government has made clear its position in direct engagement with the colleges.
Could Liz McIntyre, for the sake of my peace of mind, clarify the precise role that colleges will have in delivering the opportunities for all guarantee?
There seems to be a broad understanding that it is not the responsibility of colleges alone to deliver that guarantee. It is important that we work in partnership, which I think we are doing very well. We are working well with Skills Development Scotland, but we also have to work with the education departments of local authorities because, clearly, a significant number of young people stay on at school beyond 16, and that has to be taken into account. There is very much a partnership focus. We can deliver only the element of the guarantee that we are funded to deliver.
My second question follows on from George Adam’s question. Are the budgetary allocations contingent on colleges delivering the Scottish Government’s priorities? Is there a direct link?
Yes, there is a direct link. The money that goes to colleges is public funding, and the outcome agreements will be framed in the context of asking colleges to deliver the Scottish Government’s priorities. That is not an exclusive list—it is not saying, “You will do only these things”; but it is saying, “In exchange for the funding that you get, we expect the following,” and there will be a direct link to the Government’s stated priorities.
Thank you. That is clear.
Mr Batho, I am sorry to return to your role as reporter on yesterday’s event, but I would like to return to the issue of the £24 million, which is a significant sum. You said that, if it were to be ring fenced for colleges, the funding council would have a role in that—
If I may interrupt, I did not say that we would have “a role”. Of course, we would have an interest, because we have an overarching interest in colleges. Other resources that go into colleges must interface with the resources that we put into colleges, which brings in our interest, but that is not the same as our having “a role”.
In that case, I will substitute the word “interest” and say that you would have an interest in what you might decide to do in terms of your funding allocations.
It probably will, because we need to take account of colleges’ overall delivery of the Government’s objectives. Obviously, a ring-fenced £24 million will have an impact. We will need to liaise closely with Skills Development Scotland to ensure that we do not do any bureaucratic double counting and to see what the college sector is doing overall with the resource from SDS and the resource from us to ensure that the outcomes are being delivered. We will therefore have to pay attention to the £24 million, but we will not ask in our outcome agreements for accountability for that resource, which is not ours.
Can you clarify that you heard about the £24 million being ring fenced for colleges for the first time yesterday?
That was the announcement that the cabinet secretary made yesterday in front of the college chairs and principals.
I am sorry, but can you just make it clear that that was the first time that you had heard of that?
Yes—it was the first time.
Thank you.
I have our figures here, but from memory I recall that we said that the overall funding gap is in the region of £200 million and that by the end of the spending review that will, according to the calculations of the expert technical group that worked over the winter of 2011, be filled by a balance from a combination of the additional public funding that was allocated in the spending review and what we expect to project from rest-of-UK fees, plus an assumption about efficiency.
It was stated that the £97 million gap would be filled by making efficiencies and by business contributions and so on. Do you feel that in the years to come the potential to make significant further savings through university efficiencies and the business and philanthropic donations to universities will improve the situation?
The expert technical group projected an efficiency saving of £26 million. We have a lot of work in hand on the efficiencies front. We significantly overperformed in efficiency in the most recent spending review period. This time round we have the university experts in an efficiency task force and we have programmes on information and communications technology and on procurement—we are already well ahead of other publicly funded sectors in the amount of shared procurement that is being done.
Thank you. I will come back to some of those points in a minute.
I want to see how the situation pans out in England. Our prediction was based on the aggregate amount of new income that we expected to go into the sector in England as a result of the Browne reforms that were implemented. I think that we have to let the system run at least until the medium term before we can assess whether the instabilities in the English system have settled down and we can calculate the overall quantum of new income that is going into the sector in England.
Rightly or wrongly, south of the border many institutions are setting fees that are higher than was predicted. Surely that is of concern to Scottish universities, in that the potential for widening the funding gap is increasing.
The technical expert group gave us the formula, and as we looked towards the spending review we considered what the average English fee had turned out to be, once the Office for Fair Access had approved the access plans. If I remember rightly, the figure came out at about £7,781, once various discounts for students of limited means had been taken into account. We worked on the figures with the Scottish Government before the spending review was published, and the spending review figures were predicated on the fee as things turned out in the first year of the new regime in England.
A medium-term run means a bit of waiting to see what takes place. We want to ensure that the university sector is delivering cost reductions and efficiency savings, as well as the quality that we all want it to deliver. Given that there is an uncapped system for rest-of-UK and international students who come to Scotland, and given that there is a funding gap, there will be pressure on some universities to ensure that they get additional income from rest-of-UK and international students. Is that correct?
There are two elements in that regard. As, I think, members are well aware, there is a protected number of Scottish and EU places and universities face fines if we do not recruit up to that number. The most recent figures from the Universities and Colleges Admissions Service demonstrate that we are recruiting up to that number. Indeed, there are extra funded places in the system, which will help the figure to grow.
There are funded places, but you need the students to fill them. You said that acceptances at universities are up 2 per cent in Scotland but down 15 per cent in the rest of the UK. Is that a direct result of the fees situation, or are other factors at play?
As far as Scotland is concerned, the protection of home and EU places—and, indeed, the injection of certain numbers of extra places into the system—has been good. We have capacity.
We heard that the Scottish Council for Development and Industry was concerned by the UK Government’s restrictions on the immigration of foreign students. In your written evidence, you talk about the significant earnings that your sector receives from foreign students. Do you share the concerns that the SCDI expressed about the UK Government’s attitude?
As the UK Border Agency has revised the visa regime for students in tier 4 and talented staff in tier 2, we have been consistently clear that there are quite a number of concerns about the impact that the changes may have on our competitive ability to attract international students to a country that is recognised as a great destination for them and on our ability to attract and retain highly talented academic staff.
You gave a fair assessment of some of the success that we have had, but it is clear that more needs to be done. I was not surprised by your suggestion that Canada and Australia have a more competitive proposition than the UK, but it struck me as slightly odd that you said the same about the US because, over the past number of years, there have been a number of complaints that there was almost a shutdown in the US system post 9/11. Has it opened up in the past two or three years?
As I understand the situation from what we have been looking at in the past month in making those international comparisons—although I would not want to give you an exact quote from memory—the US realised that it had overrestricted and that it had to reliberalise, because a shutdown of the migration of talent is just so wrong if you are trying to create a vibrant and outward-looking economy. There has been a swing of the pendulum to some degree, as the US realised that being overly restrictive was stifling its vitality.
I want to have another quick kick at the funding gap. I am a new boy on the committee, but from reading the papers over a long period I have seen many figures around the funding gap. Different people have different calculations for how much it is—I have seen huge figures and smaller figures.
Actually, no. Over the winter of 2011, the technical expert group did some exceptionally useful and detailed work on the scale of the funding challenge. It looked at the projections of what might happen in England and, more importantly, produced a ready-reckoner formula, which runs through what is happening in England—once that is known—and identifies what the funding gap will be.
Have you produced a model that extrapolates the funding gap beyond that period?
Yes, although—to come back to what I said earlier—the instabilities in the English system would not give us a lot of confidence beyond 2014-15. On the one hand, one would expect aggregate income to the sector in England to keep on increasing beyond 2014-15, but on the other hand, there are cohort effects from more people coming in under rest-of-UK fees.
I do not know whether you have had a chance to look at the oral evidence that we heard last week. There was some discussion about the impact—or lack of impact—of the measure of growing the knowledge economy on employability and the economy in general.
I will tackle that in two parts. I will talk first about connectivity with business and then about employability. In our written evidence, we point out that, for the most recent year for which data is available, universities in Scotland did business with 9,000 Scottish companies, including 2,500 SMEs. We have a good system in the Interface website, which provides a portal for small businesses to find out how universities can help them.
I am interested in the higher educational assessment—
It is the higher education achievement record.
Yes. It sounds like a step forward. Those of us who got a degree got a bit of paper, but that was all that we had to take to employers, who were often not sure what it said about skills. I assume that the achievement record will be broader and more detailed.
If it is helpful, we can write to the committee and outline the current state of development.
That would be helpful—thank you.
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