“The 2012/13 audit of North Glasgow College: Governance and financial stewardship”
We move on to item 4. The Auditor General for Scotland will brief the committee on a section 22 report. She is accompanied by Mark MacPherson, who is a senior manager at Audit Scotland, Martin Walker, who is assistant director at Audit Scotland, and Chris Brown, who is a partner in Scott-Moncrieff.
Thank you. This is a different sort of report from the one that the committee has just been discussing. It was produced under section 22 of the Public Finance and Accountability (Scotland) Act 2000, and is on the annual accounts of North Glasgow College for 2012-13.
It might be useful to give the committee a bit of background. On 1 November 2013, North Glasgow College merged with John Wheatley College and Stow College to form the new Glasgow Kelvin College. In the merger period, which covered the financial years 2011-12 and 2012-13, there was a reduction of about 27 in the number of staff who were employed by the three colleges, including a reduction of six in the number of senior staff. The principal and vice-principal of North Glasgow College accepted voluntary severance as part of the merger process.
The committee will be aware that the early departure of public sector staff, particularly senior staff, has been a matter of on-going public interest over the past few years. In May 2013 I produced a joint report with the Accounts Commission, “Managing early departures from the Scottish public sector”, the aim of which was to help public bodies to improve their management and reporting of early severance schemes and to set out clear good-practice principles.
Although the early departures report was published slightly before some of the severance arrangements that are described in the section 22 report were put in place, the principles have applied for much longer. In the case of the college sector, the Scottish Further and Higher Education Funding Council’s guidance on severance arrangements for senior staff has applied since January 2000.
In the early departures report, we said:
“Early retirements and voluntary redundancies, for example, can be a useful way of avoiding the delays and costs of compulsory redundancies and quickly reducing staff numbers and costs.”
We also said:
“significant amounts of public funds are also being spent on these departure schemes and, with a continuing need to reduce public spending, they are likely to remain an important management tool. Organisations therefore need to ensure that they follow the principles of good practice in how they:
design early departure schemes
ensure they provide value for money
report publicly on the costs and savings.”
The auditor’s opinion on North Glasgow College’s accounts for 2012 was not qualified, but the auditor highlighted that the college did not provide sufficient evidence that the severance arrangements for the two senior members of staff—the principal and vice-principal—had been subjected to the appropriate approval process, and that the college did not provide evidence that the costs had been assessed as providing value for money.
In my report I highlighted that it is vital that senior managers and board members be fully aware of the costs and benefits when they make such decisions. Before they approve an early departure, the people who are charged with governance must ensure that the arrangements represent good use of public money, and a clear audit trail must be retained. In this case, the college did not retain the evidence that was necessary to provide assurance to the auditor that those factors had been fully considered.
I also highlight two other issues in my report. The first is that the college did not include in its initial calculations all the costs relating to severance payments for all staff who were affected in the merger. The additional costs were identified during the audit, and they contributed to the college reporting a higher-than-anticipated deficit of £574,000 for the year.
The second issue is that the principal and vice-principal were granted a period of garden leave. The funding council’s guidance notes that
“There are few occasions where payment of salary in lieu of notice represents value for money”,
and that senior staff should normally be expected to work their notice period unless there are good reasons for them to do otherwise. As with the severance payments, there was a lack of evidence of the basis for the decision to grant garden leave.
I understand that the board of the new Glasgow Kelvin College is undertaking a full review of the audit reports to see what further action may be needed. More widely, it is worth noting that a small number of other colleges have made similar errors in their calculations, and a small number of others have provided payments in lieu of notice. However, the combination of the issues at North Glasgow College contributed to my decision to prepare my report. As in previous years, I plan to publish an overview report on colleges, and I will publish a report covering the financial years 2012-13 and 2013-14 in due course. In the meantime, we will do our best to answer any questions that the committee may have.
Thank you for that. My rough calculation is that £1.3 million was spent on severance payments, of which just under 20 per cent, or about £243,000, related to the principal and the vice-principal. That is a huge sum of money.
I think that those figures are not quite accurate, convener. If I can correct them for the record—
The report states that £243,000 related to payments to the principal and vice-principal out of a total of £1.3 million.
Some £243,000 of the higher-than-anticipated deficit of £574,000 related to the principal and vice-principal. I think that the total costs relating to their voluntary severances were £480,000. You are correct that £1.29 million was the total cost of voluntary severances for the college.
So, more than 30 per cent of the cost of severance payments related to the principal and vice-principal.
That is correct. It is worth saying that our concern in this case is not about the cost of the voluntary severances of those individuals.
No?
The posts are, by their nature, highly paid and tend to attract higher costs.
I understand that, but it is still a significant sum of money from college budgets, which have been exceptionally hard pressed in recent years. Courses have been cut, there are reduced student numbers and staff have been struggling to cope. Do we know how many people left the college with severance payments?
We have a figure of 27 people, which I think relates to all three of the colleges in the merger.
Do you have a figure specifically for North Glasgow College?
We would need to come back to you on that, unless Martin Walker has the figures to hand.
No—I think that it would, for accuracy, be better for us to come back to you. We know that there were some variations in the numbers. What we have from the accounts is the number of severances and the number of people in positions, because some people left and some people came into posts.
Okay. These are huge costs, which are associated with a process that many in the college sector thought was pointless. However, we have it, and we are moving on. The colleges are moving on and many are coping well. What is worrying is paragraph 15, which is part of your conclusions. It states:
“there was a lack of transparency around the process of agreeing the severance arrangements. The college did not retain the evidence needed to provide assurance that the arrangements were subject to the appropriate scrutiny and approval. As a result it is unclear whether those charged with governance ... considered that the associated costs would provide value for money.”
We are talking about a huge sum of money—almost £1.3 million. People are charged with that responsibility, but you are saying that it is not evident that they considered whether there would be value for money and that they did not retain the evidence. A serious charge is being made.
Are any of the people who were associated with those decisions still in positions of responsibility in the new college?
Our understanding at present is that they are not. They have moved on through the merger process and the formation of the new Glasgow Kelvin College. We understand that the board of the new college is reviewing my report and the report from the auditors and considering any action that may be required.
The report is more serious than many other reports that come before the committee. It states that the SFC guidance was ignored; the board of management was not consulted; there is a lack of “clear and comprehensive documentation” and accountability; and no details are provided in any minutes.
Who is accountable? Will further investigation take place, despite the fact—as I understand it from your answer to the convener’s question—that those who made the decision are no longer employed by the colleges? Will what has happened be brushed under the carpet and ignored? What further action will be taken?
I am pretty new to the matter. Was anything that was done illegal? I hesitate to use the word “fraudulent”. What concerns are you raising with the committee today? I hope that we will never again see a report like this one. How can the Public Audit Committee be sure that the £1.3 million will be accounted for, and that those who took the action will be held to account, whether that is through the courts or through any other process?
I have laid the report before the committee today because I share that concern. We have reported in a number of cases that voluntary severance arrangements can be an important—and indeed necessary—way of managing a merger process and reducing costs. There is nothing wrong with them per se, but the fact that they can result in payments being made to individuals, either directly or into their pension funds, means that the way in which such decisions are made is an important factor.
In this case, as I said in response to the convener’s question, there is no indication that the amounts that were incurred in relation to any of the severance payments, including those made to the principal and vice-principal, were calculated wrongly, or that they were illegal or fraudulent in any way. That is not why the report is here today.
The report is here because I believe that, where public money is involved, it is very important that there is a fair, open and transparent process to ensure that decisions are made properly and represent value for money, and that they are properly scrutinised and challenged by those who have governance responsibilities.
Chris Brown can talk you through his experience of auditing the expenditure and the process that the new college is undertaking to investigate.
It is not a fair, open and transparent process. The fact that there is a lack of evidence surely does not mean that it is acceptable.
I can only agree with you, Mrs Scanlon—that is why the report is here. It would be easy for any audited body to respond by saying, “It’s absolutely fine but we’ve got no evidence.” For us, the evidence is a central part of being able to demonstrate that good governance has been applied and that the decision was fair and properly taken.
As you do not have any evidence, would you recommend further investigation, perhaps by the police?
Chris Brown will talk you through the audit work that has been done. He is a partner with Scott-Moncrieff, which carries out the annual audits of the college, and he is very close to the issues. I will then pick up any outstanding questions.
11:30
As the Auditor General said, we have no evidence of fraud or any illegality—in fact, the college has evidence that the remuneration committee took legal advice before it made the decisions on severance. What we cannot see is the openness and transparency that Mary Scanlon is talking about.
One of the key aspects of our audit is the consideration of governance arrangements in our colleges. We are aware that the public and MSPs expect high standards in the governance of public bodies, so we examine those arrangements quite carefully. In this area, the funding council’s guidance on severance arrangements is quite clear about the processes that colleges should go through when they are evaluating voluntary severance or any kind of severance arrangement, particularly for senior staff.
The process should be open and transparent, there should be a clear rationale behind decisions that are taken and a business case should be developed. That business case should consider various options—this was not the only option that the college could have taken—and those options should be evaluated so that a conclusion can be reached. That process should be documented and the documentation should be retained so that, at a later point, people can scrutinise it and challenge the rationale for the decision.
The problem that we have here is that we do not know the rationale for the decision because it was not properly documented. There is, therefore, a lack of accountability and openness, and there is a lack of an ability for you to scrutinise and challenge the decision. That is the key issue that we are raising. It is not that we found any evidence of fraud, illegality or even poor value for money. The arrangement might well have provided good value for money, but that is not clear and it is not clear that the college went through the right process in making the decision.
I appreciate that, but surely it cannot be acceptable in modern Scotland that £1.3 million of public funds can be disbursed to two or three individuals without there being an audit trail. In order to ensure that fingers are not pointed at anyone on the grounds of illegality of otherwise, what should be done to get that evidence? Under the previous Auditor General, there was a case that involved the National Library of Scotland, which led to a police investigation and detainment.
The fact that we have no information cannot be acceptable to people such as you. I cannot speak for my colleagues, but it is not acceptable to me. Where do we go from here? We cannot say, “There’s no evidence, so we’ll just move on.” What further action can you recommend, beyond what you have put in front of us today?
My main power and responsibility is to report to the Parliament. There is a question for the committee about what further action you might wish to take to hold people to account for this failure of governance. The other route that we are pursuing is to stay close to the action that the new college is taking to investigate what happened during the merger process so that we can assess whether the action that it takes, if any, is appropriate and adequate. We will stay close to that through the audit process and through the audit of the new college. However, it is important to stress that my powers are those of reporting.
Will the investigation by the new college give us the answers that we are looking for today? Will you come back to us with another paper to say that you now have the evidence and are satisfied that the accounts can be cleared?
All that I can say at this stage is that the fact that the new college board and the principal are taking seriously my report and that of Scott-Moncrieff, as the auditor, is a positive step. It is too soon for me to make any assessment of how effective that investigation will be. However, certainly, we will follow up any issues. Martin Walker might want to add to that.
On Monday, the new board of Glasgow Kelvin took the report from the principal on this issue. The first point to make concerns transparency, because the principal was keen to ensure that the board was aware of the report and the issues. My understanding is that the board of the new college agreed that the issue should be remitted to the new college’s audit committee and that it would be for it to determine what the next steps should be in terms of further investigation work.
From my discussions with the new principal, I believe that he and the new board are keen to ensure that robust governance arrangements are in place for the new college. I am not sure about the extent to which there will be a backward investigation at the same time as efforts are made to ensure that things are right in the future. As the Auditor General said, we will keep a close eye on that, through the appointed auditor.
I seek clarification on the issue of remedy. Mr Brown said that he has not seen any evidence of fraud or illegality, so it is unlikely that that route could be pursued. This is not about a warning; it is about giving information to the boards of the new colleges—and, indeed, any other public agency—about what is expected of them. They are not there simply to rubber-stamp the wishes of the principals or anyone else in senior management; they have a legal and moral duty to look after the interests of their organisations. Is there a civil remedy if it is found that someone has acted without due diligence? They may not have acted illegally, but they may have failed to live up to the standards that are expected of them. Is there a civil remedy whereby the money can be recovered, not from the recipients, who have entered into a legal arrangement, but from those who made the decision to disburse the funds in the first place?
I am not aware of a civil remedy existing in relation to such decisions unless it can be shown that the circumstances were such that there is some liability. However, that is very unusual in audit terms. We will stay in close contact with the Scottish funding council on the new guidance that applies to colleges and, when we see the results of the college’s own investigation, we will think through the issues that that throws up about personal culpability. Liability is a difficult question in such cases.
It would be worrying if you found that, although the boards of public bodies are technically acting within the law, they are acting in a cavalier way that outrages the general public—by making decisions about the extravagant use of public resources—but, because nothing illegal has been done, there is no civil remedy and they can, basically, do as they wish without any worry. It would be a concern if there was no comeback on those who use public resources foolishly.
I make it clear that I am talking hypothetically, not about the specific case. The closest parallel that I am aware of is when an individual has been found wanting through a disciplinary process and a penalty has been imposed that impacts on access to their pension rights in the future. We have seen that in a number of public services in the most egregious cases. In general, however, it is difficult to demonstrate such personal liability. Instead, the route of redress is through the audit report and the committees then holding to account the individuals for the action that they took or failed to take.
We will see what happens, but it looks as though there may be no way of holding the people to account because they have moved on and the deed has been done.
I have some questions for Chris Brown. I am trying to establish a couple of facts. Mr Brown, you mentioned the remuneration committee. Did it make the decision on the severance of the people?
That is the key issue. We cannot see sufficient evidence that it made the decision.
There is no paperwork.
There is no paperwork. There is a brief minute—about a page and a half—of a remuneration committee meeting that was held on 3 June. It appears from the minute that most of that meeting was taken up with a discussion about the new principal’s salary. There is evidence that there was some discussion of the severance of the outgoing principal and vice-principal, but there is no evidence that the full details of the packages that were to be provided to those individuals were discussed or made available to the committee at that point.
Did that minute go to the board for approval?
No. One of the other big issues that we have raised is that that minute does not appear to have gone to the board.
How many people were on the remuneration committee? Can we name them? I presume that that is a matter of record.
Yes. We could find out their names.
But as far as you are aware, they were the people who took the decision. The only documentation we have is that, however many people were on that committee, they took the decision in relation to the severance packages of those two individuals.
As I said, our point is that we do not have the evidence that they made the decision. We cannot see evidence that the costs that were incurred by the college were presented to the remuneration committee, that it approved that expenditure and that that was then presented to the board.
They could not give you any written evidence. Do you think that it was an oral discussion?
It may well have been an oral discussion.
I do not mean to be aggressive about this, but presumably you interviewed them so you must have asked them directly, “What did you do? How did you come to this conclusion?”
The college finished on 31 October, in effect, and the new college started on 1 November. Some board members of the outgoing college continued into the new college but key individuals finished on 31 October. For example, the chair of the remuneration committee, who is the chair of the board of the old college, finished on 31 October, which was midway through our audit.
I spoke to the chair of the board, who was keen to talk to me and give me as much evidence as he had about the rationale for the decision. However, he could not give me evidence that the decision had been presented to the remuneration committee. He could not provide evidence that the whole board had seen that evidence, discussed it and approved it. By that time it was too late, because the board members had left.
When you say that he could not give you any evidence, could he say whether a decision had been made face to face or over the telephone?
Yes, he confirmed that. In fact, he has confirmed that in writing to other members of the remuneration committee. We understand that there was some communication between members of the remuneration committee regarding the evidence arrangements.
So it was telephone calls or face-to-face discussions rather than anything in writing. There is no email trail or anything like that.
There are some letters. We have not seen the letters from the remuneration committee to the chairman of the board, but we have seen a letter from the chairman of the board to remuneration committee members confirming to them that the proper process was followed. The chair of the board is very clear that the proper process was followed. It is just that all we have is his word for it.
That is fair enough. I apologise for pursuing that process point.
The convener correctly asked about the fact that two individuals have gone who are presumably party to a legal agreement about what they have received. However, that legal agreement must be between them as individuals and the previous board. Some lawyer—I do not use “some lawyer” in a pejorative sense, so I will say a lawyer—must have drawn that up on their behalf, under instruction. An accountant must have signed an electronic cheque, as it were. There must be something behind all that. Is it the case that all that you found was that a lawyer was orally told to draft up a letter to go to said individuals, saying, “We will pay you X” and, on that basis, an accountant was told to sign a cheque? I am probably simplifying this enormously.
I am sure that you will understand that the basis of any audit has to be the financial statements, the audit trail, the minutes or the business case that has been drawn up. In this case, as Chris Brown said, the former chair of the board told us that due process was followed. We have not seen evidence to support that assertion, which is why we are bringing the report to the committee today. I need to stress again that we do not have any indication that the costs incurred in this were improper, but we are unable to satisfy ourselves that the decisions were properly taken and that they represent value for money for the public purse.
I appreciate that you are experts, and we are the committee and therefore, by definition, not experts, but the crux of this for us, when we come to analyse what happened, is that the person who was the previous chair of the board, who seems to be sure that the proper processes were followed, could not provide you with any evidence as to how that process was followed.
More generally, those charged with governance—the board—have a specific responsibility to carry out.
Mr Brown, you said that there was no evidence. Do we know who decided to make those payments?
We understand, from speaking to the chair of the board, that the remuneration committee took the decision. The point that we are making, though, is that we do not have the evidence of a minute of the remuneration committee and its supporting papers to support that assertion.
11:45
If a college, or its remuneration committee, decides to make a payment and there is no evidence that it was authorised to do so, does that leave it liable for any payment that is made? On whose authority was the payment made if there is no evidence to justify the making of that payment?
That is one of the matters that we hope the new college’s investigation will explore. As Mr Scott suggested, we would expect any payment to be properly supported by proper authorisation. The chair of the board has told the auditor that the decision was properly taken. We expect the new college board to investigate thoroughly what happened and who is responsible, whether they are a member of staff or of the board of the new college, or whether they left in October last year, as Chris Brown described.
At the very least, we can say that there has been a serious breakdown in governance. The general public will expect us to ensure that we follow the public pound, get value for money and unearth as much as we can. I accept that an investigation is going on in the college. When do we expect that investigation to be completed? The result might drive the committee’s decision on what action we want to take next. Our decision will depend on how in-depth the investigation is and what information it provides.
We need to check with the college on the remit and timescales for considering the issues. As I said, the new board considered the report on Monday and decided to refer the matter to its audit committee. The important thing is the next stage, which is understanding what action that committee plans to take in any investigation and in considering governance arrangements for the new college to ensure that such a thing does not happen again. When we know the planned timescales and remit, we will be in a much better position to consider how robust the action will be and what it might find in due course.
It might be appropriate for Audit Scotland to complete that exercise, but might it also be appropriate for this committee to write to the new college to ask what the expected timescale is and when the recommendations that flow from the investigation are expected to be in the public domain so that we can decide what to do on the matter at that stage? People will expect us to take the issue to the nth degree.
We can consider that under agenda item 6.
To clarify, will the money for the pay-offs be taken out of the additional funds that have been provided for merging Scotland’s colleges?
It certainly will not be funded directly in that way. Our understanding is that the impact of the total costs of the voluntary severances will be met by the college. A small grant was available to colleges for some parts of voluntary severance funding. The higher than expected deficit will then fall to be met from the new college’s funds. We have not seen the full impact of that yet. We will need to move into the new financial year to see the way in which that works. However, as the convener suggested, the cost is being met from the college’s overall budget, which obviously is primarily intended for providing education to lifelong learners. As I said, we have no evidence to suggest that the money was not appropriately calculated. Our concern is that we do not have evidence to suggest that it was, or that it was properly decided.
Is there a threshold above which any such payments are referred to ministers or the Scottish funding council?
I do not think that there is. My colleagues are telling me that there is not.
Would such arrangements contain a compromise agreement or gagging clause of any kind?
As we have reported to the committee before, most voluntary severance arrangements are supported by a settlement agreement. Such agreements should not include a gagging or confidentiality clause, other than on the individual’s circumstances, and they certainly should not be used to withhold the cost to the public purse that the arrangements involved.
Chris Brown might know more about the circumstances in the case that we are discussing. In such cases, it is common for a settlement agreement to be in place.
There were compromise agreements with the senior staff who left, but we have no evidence that the agreements were unduly restrictive in the sense of containing gagging clauses.
Am I right in thinking that all compromise agreements must be referred to ministers?
That is right in relation to the NHS, but I do not know whether that is correct more widely and I do not want to mislead the committee by suggesting that. Can Martin Walker help?
In connection with, and not purely on the back of, the publication of our report last year entitled “Managing early departures from the Scottish public sector”, the committee has been in correspondence with the Scottish Government on settlement or compromise agreements—whatever people wish to call them. A process was under way to consult on the new arrangements, which I believe are taking effect from this financial year.
The expectation is that the Scottish Government will be consulted on cases in which settlement agreements are put in place. I understand that the objective of that is to ensure much more transparency. When the committee asked how many agreements had been made and where they were happening, the Government did not hold a central note on all the agreements. One aim of the new arrangements is to resolve that situation so that there is more visibility.
You are right about the new regime, but am I right in saying that it has not yet been implemented?
The intention was to get it in place for the current financial year, but we will need to check the detail. There was some consultation about that, so we will need to get back to the committee on that.
Since colleges became part of the public sector on 1 April, they have been subject to the guidance in the Scottish public finance manual—that is the guidance that Martin Walker said is being updated. However, at the time that we are discussing—November last year—colleges were not part of the public sector, so the SPFM guidance did not apply to them.
You said that you did not see anything to suggest that the proper processes were put in place. The report talks about
“evidence of legal advice received by the committee”.
I take it that that was the remuneration committee.
Yes—that legal advice was provided to the remuneration committee’s chair.
Does nothing suggest that the committee saw or discussed that advice?
There is something to suggest that. The remuneration committee’s chair told me that the committee saw the advice.
Is that not in the minutes?
We did not see evidence of that in the minutes or in any remuneration committee papers that we were given.
That is surprising. I was on a remuneration committee and everything went to the board for a final decision after we made our suggestions.
You referred to a letter from the board’s chair that was in response to a letter that you did not see from the remuneration committee. Did the chair’s letter contain much detail or was it a one-liner?
The letter had a fair bit of detail.
Did it suggest that there had been a process and discussions at the committee?
Yes. It set out the process that the remuneration committee’s chair—the same person as the chair of the board—believed had taken place. He was assuring remuneration committee members about the process that he had described to us as having taken place.
The letter is detailed—it contains a number of bullet points about the process. However, the fact that a letter had to be sent to the remuneration committee to describe to it the process that it had followed supported our view that the process was not as transparent and open as it should have been in the first place.
So you do not see that letter as a response to bullet points or whatever in a letter from the remuneration committee; you think that the chair was laying out what had been done.
I think so but, because I have not seen the original letter, I cannot say that for certain. I do not want to speculate on what the board and the Public Audit Committee will want to investigate, but I imagine that they would want to look at that.
You said earlier on, Auditor General, that the payoff itself was not unusual. Correct me if I am wrong about the language that you used. Is that fair?
We have reported on several occasions in the past that voluntary severance payments can be a necessary way of reshaping public services. Obviously, a situation in which three colleges are being merged into one and there are three principals and three vice principals is the sort of situation in which we might expect voluntary severance to be the right approach to getting a new management team in place. However, it is important to have proper governance and transparency because of the sensitivity of payments being made to individuals, or from which they benefit.
So, alongside the lack of transparency, the only issue that you have is the one about garden leave, which you thought was pretty unusual. Is that right?
Yes. The governance concern is the main one. As the convener said, £1.3 million in total—about £480,000 related to two individuals—were costs to the college budget and it is important that the college can demonstrate that that was decided on properly. We also mention some errors that the college made in the initial calculations for all of the voluntary severances that it agreed and then the garden leave or payment in lieu of notice for the two individuals.
Do we have any evidence that shows how the college worked out the figures in the first place and got them wrong or is that something else that is missing?
As Chris Brown said, there is no business case that says what costs would be incurred, what benefits the college thought that it would get and why it thought that the decision was value for money. We would expect such a business case as an absolute basic in any voluntary severance decision.
Mr Brown, did you say that the chair of the board was also the chair of the remuneration committee?
Yes, that is right.
Perhaps we need to consider whether there should be some kind of split in responsibilities. We can do that later.
I have a basic question, as someone who is not a qualified accountant. I notice that the report says:
“The auditor gave an unqualified opinion on the college’s accounts.”
Several members, particularly Mr Dornan, asked about process and chairmanship. Could you give a qualified opinion on those matters or is it just that, although you have been able to identify the money, the process for handling it is controversial?
It is. The accounts fairly reflect all the costs of the severance arrangements and the payments themselves are not, on the face of it, irregular because they are the normal kind of payment that we might expect in a voluntary severance scheme. They are a voluntary severance payment, which is a contractual payment, in addition to an enhancement of pension, which is not necessarily contractual, and costs relating to garden leave, which was a period—six months—in which the individuals were not working for the college but were getting paid.
All those costs are normal costs that we might expect in a VS situation and other colleges have made similar arrangements in such situations. However, they have been clear and ensured that they documented the rationale for the decisions that they took to demonstrate that the costs were value for money. The problem that we have with North Glasgow College is purely a value-for-money and governance process issue.
I was just unclear about at what point the unusual compared with the usual ends up producing a qualified set of accounts, as the report says that the accounts are unqualified.
If the costs had not been reflected in the accounts at all, for example, that would have been an issue for qualification.
Auditor General, do you have any indication by college how many senior staff were on gardening leave and for how long prior to the mergers and creation of the new colleges?
12:00
Not at the moment. The team is currently reviewing the accounts and audit reports for all of the outgoing colleges. In some cases, we are going back and asking further questions of the auditors because an issue is not clear in the accounts or because we would like to know more about the circumstances. If a particular issue arises at a college, I will report on it separately. Otherwise, I would expect to sweep the matter up as part of my next report on the college sector, as part of our update on the progress of reform.
It would be interesting to see that information, because I am aware of concerns being raised at, for example, James Watt College in Inverclyde—that is the one that I can think of off the top of my head; there could be others—about senior management being on extended garden leave. It would be interesting to see the extent of that and find out whether colleges were using substantial amounts of public money to ease their way through the change process. Any information that you could get on that would be helpful.
I will check one final point. I have just found a letter that the committee got in November 2013 from the SFC about guidance. It says:
“We expect colleges’ internal auditors to consider any risks presented by processes … and”
advise
“SFC if … these do not conform to our guidance.”
The SFC expects colleges to notify it of any overall severance costs and
“to provide information on numbers of staff leaving and associated costs before making any payment towards such costs.”
Was the SFC asked? Was it told about the payments? The letter says, by the way:
“We have received no such advice.”
That was in November 2013, so it might be too close to the case.
I think that there is a timing issue, anyway. As Chris Brown said, the colleges were finishing on 31 October. You also said that the SFC was to be notified, rather than that it was to approve the payments, so there is a question about the process that was required. Our starting point is that the funding council’s guidance dating back to 2000 was absolutely clear about what good governance looks like in such instances and the process at North Glasgow College did not follow that guidance by some way.
I thank you, Auditor General, and your colleagues for your evidence.
Before we move on to the next item, I note for the record that apologies have been received from Colin Beattie and that David Torrance has attended as his substitute. I apologise for not putting that on the record earlier on.
12:02 Meeting continued in private until 12:33.Previous
Section 23 Report