Good morning and welcome to the 21st meeting in 2015 of the Education and Culture Committee. I remind everybody to make sure that electronic devices are switched off at all times.
I have received apologies from Liam McArthur, who has been a victim of the aeroplanes again. His plane has been either cancelled or at least delayed for several hours, so he will not make it this morning. I also welcome Liz Smith, who has again joined us at the committee.
Agenda item 1 is continuation of our examination of the spending decisions made and outcomes delivered by some of the key public bodies within our remit. Today’s evidence will focus on the Scottish Qualifications Authority. I welcome Dr Janet Brown and Linda Ellison, who are both from the SQA, and invite Dr Brown to make some opening remarks.
Good morning. I thank the committee for inviting us here and for giving me the opportunity to discuss the SQA’s work with you. I thought that it might be helpful if I provided a brief overview of our work and illustrated how our activities fit into the wider aims of Scotland’s education sector and complement the wider objectives of Scotland as a whole.
The SQA is a non-departmental public body that is responsible to the Scottish Government, the Scottish Parliament and the people of Scotland, and its overarching purpose is to ensure that high-quality qualifications are available for all. Our remit is very broad and is discharged through two distinct functions: SQA accreditation and the activities of the SQA as an awarding body.
SQA accreditation has the responsibility for accrediting vocational qualifications that are offered in Scotland, notably Scottish vocational qualifications—SVQs—and qualifications that are required for a licence to practise. SQA accreditation approves bodies that wish to deliver such qualifications and as such the function is distinct in the organisation, with a separate governance mechanism and an oversight body—the accreditation committee—that reports directly to the Scottish Government.
The majority of the SQA’s activities are undertaken through the awarding function. The Education and Culture Committee, and indeed most of Scotland, will be most familiar with the SQA’s activities in schools and most recently in developing and delivering the new qualifications to support curriculum for excellence. That activity has been reviewed at previous committee meetings and forms the basis of just over half of our work.
In addition, the SQA delivers other qualifications and awards that support the development of young people, notably skills for work and personal development, entrepreneurship and vocational qualifications that support the aims and objectives of the developing Scotland’s young work force strategy. We also support colleges, training providers and individual businesses in a wide variety of vocational and specialist qualifications at all Scottish credit and qualifications framework levels. Those qualifications, which are based on national occupational standards and are aimed at supporting people into work and as they progress in their working lives, range from entry-level qualifications to higher national certificates and higher national diplomas. SQA HNDs allow successful learners to transition directly into the workforce or into the later years of degree study in universities in Scotland and in many other countries.
The SQA portfolio covers a wide range of mainstream and niche sectors from aquaculture to engineering, and from food and drink to waste management. The SQA works closely with industry to ensure that our qualifications support industry requirements and, where possible, we embed other industry qualifications within our own. In computing, for example, we have the digital media and information and communication technology vendor alliance—or DIVA—which is a partnership between the SQA and leading global companies in information technology and digital media.
The committee might well have seen this morning’s announcement that Harvey Wheaton will be the head of Scotland’s new digital skills academy, CodeClan. The academy’s curriculum has been tailored to fit the real-time market demands in Scotland, and it is working with the SQA on industry-driven professional development awards in software development.
The SQA also works internationally. We do so for several reasons: to support the Scottish Government’s international goals; to learn from and share our expertise with other educational experts from across the world; to support the development of skills and educational approaches in other countries; and to use our core competencies to secure work that will minimise our dependency on public funding.
Scotland’s reputation as a centre for excellence in education and training is enhanced by the delivery of a number of our consultancy projects in areas such as assessment and quality assurance, and the development of systems, processes and procedures for education and training in international markets. That work involves partnership with a variety of other agencies, such as Scottish Development International, the British Council and other stakeholders, to ensure that we meet the needs of international learners in the countries in which we work.
First and foremost, however, the SQA is keenly aware of its responsibility to establish and maintain the standard of qualifications awarded in Scotland. We work in partnership with educators, businesses, parents and carers, learners and other key stakeholders in the education and skills system to ensure that our qualifications prepare learners for work and further study. That engagement takes place at all stages from identification of the need for qualifications to their development and delivery, and our remit to maintain standards lies at the heart of our approach.
As an organisation, the SQA is recognised for its expertise in assessment, qualification development and successful delivery. Unlike many organisations in the public sector, the SQA has a responsibility for major logistical and operational activities, and every year it brings on board around 17,000 appointees, manages more than 1 million assessments and successfully certificates almost 150,000 candidates on results day. The teaching professionals and industry specialists who support the SQA’s operations help to ensure that our qualifications accurately reflect learners’ knowledge and skills and that they provide routes to jobs and further study, and I take this opportunity to thank all of those who work with us.
The breadth of our activity must be undertaken in a manner that maintains quality and standards but which also recognises the importance of delivering value for public money. The organisation has focused on identifying new ways of working that will bring efficiencies and opportunities for reducing costs, and it has also demonstrated its ability to generate income through activities outwith Scotland that have helped reduce its requirement for public funds.
In conclusion, we are keenly aware of the responsibilities of our role of providing high-quality, relevant qualifications for the people of Scotland at a time of significant financial austerity. It is critical, therefore, that we continue to keep a balance between maintaining standards and providing secure delivery with opportunities to reduce costs and generate additional income.
Thank you for allowing me to make this opening statement. We welcome the opportunity to discuss our work with the committee today.
Thank you very much. We will move straight to questions.
Good morning. The SQA’s sole role is to develop education policy, measure its outcomes and delivery and ensure the quality of examinations. Recently, however, there was much controversy around the grade bandings in higher mathematics. The maths exam was so hard and so unlike the sample paper that it left people in tears. Are you able to advise the committee on why that happened and what you are going to do to ensure that it never happens again?
As you have rightly pointed out, the new higher maths was identified as being harder than anticipated. We developed a question paper along the same guidelines as the exemplification question paper and the sample question paper that we put out, but when we went through the two question papers—papers 1 and 2—and looked at the way that they had performed, it was obvious that they were of a standard that was over and above what we had anticipated.
The mechanisms associated with establishing the grade boundaries allow us to take into account the difference in the challenge that is provided by any question paper. That happens every year in every subject, and the procedure that we undertake at the grade boundary meetings is very intense and important. The meetings include members of the SQA community, both subject experts and senior management, as well as experts from the assessment community, including the principal assessor and other key figures in the specific subject that we are looking at. That allows us to look not only at the performance of the examination and assessment but at individual items. In the case of maths, we are able to look at individual questions and understand how they performed.
When we did so and looked at how the paper had been set, we identified that it was harder than we had anticipated. However, we were also able to understand that it had done its job in differentiating between candidates who were able to perform very well and candidates who were able to achieve a pass, and that allowed us to change and adjust the grade boundaries to make the qualification robust and to give the candidates the grades that they required.
As we do with any qualification no matter whether, as with the pre-existing highers, it is established and has been in place for many years, what we are doing to ensure that this does not happen again is to look at next year’s assessment, review the level of difficulty and challenge and the coverage of the course work associated with that assessment and make changes. We have done that with the new higher maths, and we are confident that next year’s paper will be on standard.
10:15
That is fine for now, convener. I have another supplementary—sorry, another question—but I will ask it later.
But it is not on this subject.
No.
Dr Brown, I want to pick up on some of the issues that you have just raised. Can you explain to the committee whether you feel that, aside from the usual procedures for ensuring that no child is disadvantaged, the advice that was given to schools regarding the course work and perhaps their preparation for preliminary examinations in some way lacked the necessary rigour? Many are complaining—indeed, I am sure that you have had many letters—that the exam did not have the structure that they had been expecting.
As I have said, the exam had the same structure as the specimen paper and the exemplar paper that had been issued, and we believe that we gave schools an appropriate level of information. We identified that the paper itself was of a harder nature than we had anticipated, but the paper’s structure and the nature of the questions within it reflected the course and were explained to teachers through the course exemplification materials.
As you will know, there was a lot of concern, and the issue was very prominent in the media. How confident are you that the grade boundaries reflect your comments in your opening statement about trying to attract people into taking those qualifications as well as ensuring that they have the appropriate academic rigour? The grade boundaries for the new higher maths paper, for example, were vastly different from those for the classical studies and modern studies papers. You will know from the submission published on the committee’s website that, with regard to classical studies, your colleague Dr Stewart has commented:
“the course assessment did not function as intended for either the Question Paper component or the Assignment”.
That is quite a criticism.
I remind the committee that this is the first year of the new highers and that once a qualification is well established the setting and development of question papers becomes a lot more routine. It is important that, when you start a new set of qualifications, you really analyse the first paper that has been set. You do not know whether and how things that are introduced in new qualifications are going to work until the first set of candidates has gone through. The mechanisms that we have in place allow us to make adjustments for that—and that is exactly what has happened with the adjustment of the grade boundaries not just for higher maths but for other subjects.
Parents understand that not all subjects will have the same grade boundaries, but the fact is that the difference between some of them is vast.
I know that you have had many letters of complaint this year. There is real concern for the children who are doing the new highers this year about the standards that are applied across the curriculum and the knock-on effect for college and university entrance. What guarantees can you give those children and parents that the new highers are being properly modulated, not only within their own academic boundaries but against each other, so that there is absolute confidence that SQA is delivering the quality that everybody expects?
You have raised a really important point. One subject should be at the same level of challenge as another, and one of the things that we do in that respect is to look at the national rating for a qualification. We have been doing that historically and, indeed, have been very focused on that in introducing the new qualifications. We compare how candidates have done in one subject versus another across the whole population of candidates undertaking the qualifications, which means that the national rating that we assign is based on the statistical data from all candidates undertaking all qualifications at a given level.
Our aim is for the national ratings for all subjects to be within about one grade band, and that is what we are monitoring this year. The vast majority of the new highers are within that one grade band. That is an important measure, because it is critical to be able to say that, irrespective of the subject, all higher level qualifications are at that standard.
We have also compared the ratings for the new highers with the existing highers. In introducing any new qualification, whether it be the new highers or the national 5 compared with the intermediate 2, we need to make sure that it has the same challenge and level of difficulty as the qualification that it is replacing. The content and the ways of assessing skills and skills development within the old and new qualifications might differ, but the level of challenge should be the same.
At this year’s grade boundary meetings, we undertook, as we did last year with the nationals, to look at each subject at each level as a whole. That meant that we were able to look at the existing highers and the new highers in the same meeting, with both sets of assessors and both sets of people who were involved in the development of the papers present. It is critical that we compare not only different subjects across a suite of qualifications, such as the new highers, but the new qualifications with the previous qualification structure. We are monitoring that, and we do make tweaks. If we see that one subject is getting on the hard side, we review the assessment methodology and make adjustments to bring it back into line.
How do you respond to Mr Milligan’s point in the submission from the Scottish Council of Independent Schools west of Scotland classics group that this year the pass mark for an A in classical studies was 83 per cent, whereas for the new maths higher the pass mark for the same grade was very much lower? He questions whether the process for setting grade boundaries that you have just outlined has happened.
In our discussion on setting grade boundaries, we look at the individual assessments and at aspects such as the level of challenge within an assessment, the breadth of coverage of the course and whether a particular question is easier for candidates because of the nature of the subject material it addresses. Although an A-grade boundary set at 80 per cent might appear to be very different from one set at 70, what we are saying is that the assessment that has been undertaken by those candidates means that those who are at an A standard in the first subject should be getting 80 per cent while those at an A standard in the other subject should be getting 70, because of the level of difficulty and coverage of the particular assessments.
Forgive me, but does that not say something about the make-up of the papers in relation to what might be deemed an easy question and what might be seen as more difficult? In fact, that is the point that Mr Milligan goes on to make. Parents want to know that any exam that their children are sitting has the same degree of difficulty in its structure and the choice within that. Are you able to give that guarantee?
That is absolutely what we are trying to achieve.
I am sorry—did you say that you are trying to achieve that or that you are achieving it?
As I have said, in introducing new qualifications and assessments and assessing different types of skills, we need to understand and learn from how those particular assessments have performed in the real environment while at the same time not disadvantaging the candidates who have undertaken them. That is what we are aiming at and in many cases across the new qualifications that is what we have achieved.
Were you surprised by the level of criticism of this year’s SQA presentations within schools?
Overall, the level of criticism of SQA qualifications across schools was not high, but people were uncomfortable with specific subjects. However, we need to remember that every single qualification was changed. As you will see from the submissions that other bodies have made, the overall perception is that the introduction of the new qualifications has gone well. However, I accept that there are things that we need to learn lessons from and that parts of the system need to be modified to ensure that the right activities are being undertaken.
Thank you, Dr Brown. You have given a glowing account of the SQA, but that view is certainly not shared by the Educational Institute of Scotland, which stated in its written submission that it is
“disappointed at the SQA’s apparent inability to respond appropriately to ... significant ... feedback from EIS members”,
who are all teachers. The EIS also said that that situation is
“a matter of deep and ongoing frustration”.
I wonder whether you could work more closely and a bit more constructively and positively with teachers, given that the criticisms have come not from politicians but from teachers at the chalkface, if I may use that word. From discussions with teachers, my understanding is that the problem with the maths exam was not that the pupils could not do the maths but that they could not understand the questions, which really fazed them.
I will do a Jeremy Corbyn with a question that I have for Dr Brown; someone sent me an email asking me to ask the question—I will call him Donald from wherever. Given that the Parliament is based on the principles of openness and transparency, it is a very reasonable question. The question is about the minutes of your grade boundary setting meetings, which Liz Smith asked about. Donald states that
“the English exam boards ... not only ... take minutes of their meetings but ... have Ofqual representatives sitting in”,
but that
“the SQA teachers and other SQA officials who comprise the grade boundary setting groups, basically decide on grade boundaries in secret with no accountability.”
I understand that the SQA has provided no evidence to justify its decision in relation to the higher maths exam. On that point, Donald states that there was
“a ruling two years ago that local councils cannot complain about the SQA’s practices to the Ombudsman. Essentially they can do what they like including covering over their own dodgy tracks.”
Given that there has been so much criticism of the exams this year, I think that it is only reasonable that there is some openness and transparency, and more accountability with regard to appeals.
Can the committee have a copy of the minutes of your grade boundary setting meetings? As Liz Smith said, 13 per cent was apparently added to the grade boundaries for the higher in classical studies, which obviously diminished pupils’ achievements, but the grade boundary for maths came down by an incredible amount. To help us maintain excellence in Scottish education, is it possible to have the minutes of your meetings and to have more openness, Dr Brown? Has Donald got it right?
In grade boundary meetings we record why we made the decisions to change grade boundaries, and those decisions are published in October. They come out as documents on a specific subject at a specific level and are aimed at teachers in order to give an explanation of why things changed.
So we will get all the information about the maths exam in October.
Yes. The course documentation will be published in October.
We will be given the reasons why you reduced the pass level.
Yes. That information is published every year, so it is available. It is given because there are multiple reasons why grade boundaries are adjusted. One of those reasons is the nature of the assessment, but in some circumstances there is an association with the course coverage to ensure that teachers are fully aware of the amount of material that needs to be covered and so on. Those materials will be published in October.
As you are probably aware, we also have a qualifications committee within the SQA. That is the body to which we take all our activity associated with the development of qualifications, the way in which we manage the policy on delivery of qualifications and the way in which we make decisions on grade boundaries and subsequent evaluation of how qualifications have performed.
The qualifications committee is made up not only of SQA people and board members but external people—teachers, college lecturers and people from outwith Scotland—who have the oversight ability to challenge what we do on the development of the assessments that we create and the way in which we evaluate and run the qualifications system. That is critical because, as I said in my opening statement, the SQA’s role is to set and ensure the standard. That is all that we exist for.
10:30
I look forward to reading the decisions in October, but you have not answered the second point. Is it correct that
“local councils cannot complain about the SQA’s practices”?
What can they do? The EIS expresses “deep” anger “and ongoing frustration”. Its members perhaps feel that they have let the pupils down. If they are not happy with the support that they have or with your practices, where can they go?
You quote the EIS. We meet the EIS regularly.
I am actually quoting Donald.
Okay.
Well, the EIS quotation is “deep and ongoing frustration”.
Would you like me to cover the local authority point?
I am talking about local authorities. Most teachers are employed by local authorities. If they find that there is “deep and ongoing frustration” with the SQA’s apparent inability to respond, where can they go? They cannot go to the ombudsman so where can they complain?
The submission from the Association of Directors of Education in Scotland cites the close partnership working that we have with directors of education in the local authorities. We meet them—
I am sorry, I am not asking about that. I read all the submissions, so I read that. I am asking a specific question. If local councils—or, for that matter, colleges—are unhappy about the SQA’s practices, who do they go to?
Local authorities—anybody—can complain to the ombudsman. In fact, if complaints that we receive are unsuccessfully resolved, they can go to the ombudsman.
So they can still go to the ombudsman to complain and the ombudsman will carry out an investigation into your practices.
Into our processes and procedures.
That is helpful. Does it include changing boundaries?
How and by how much a grade boundary is changed is a matter of academic decision. The ombudsman can review the processes and procedures; the academic decision is the responsibility of the SQA.
I appreciate and understand that. That is helpful and I am sure that Donald will be happy.
Dr Brown, will you clarify when the external assessment report will be published?
That information comes out in October. It will come out in phases.
Do schools know that?
Yes, indeed. That is every year. We publish that information because, as we go through the grade boundary process and consider how the assessments have performed and whether we need to change a grade boundary, we try to understand how teachers have perceived the assessment and what they could learn from it. In some cases, we see really good practice in some areas and other areas for improvement. It is really important that we communicate that to teachers and that they access that material because it will help them to understand the nature of the qualifications.
Thank you. I do not think that the date has been put on your website. Schools are asking about that.
We will make sure that we go back and do that.
As your main task is developing policy, will you advise the committee what your role has been in the Scottish Government’s policy on reducing the attainment gap?
I am sorry, John, I do not mean to interrupt, but we will stick with the grade boundaries and maths. I will come back to you on that.
Parents want reassurance about the standard of exams and they need to be confident that the issues will not reoccur. Is there any evidence to suggest that, when there were concerns regarding grade boundaries in the past, lessons were learned and the same thing did not occur for that particular subject? I am thinking about back in October 2005, when one of the standard grade maths papers had a pass mark of 31 per cent. Did the same level of controversy over the pass mark in maths reoccur in the following period? If not, that would highlight that lessons were learned.
The grade boundaries have been published for many years. In the spirit of openness, we publish our grade boundary levels every year, so this year is not unusual in that. When we have had to adjust a grade boundary significantly, we look at that. In some instances, that will be to do with the nature of a question or the way in which it has been worded, and we will not do that again. There will be slow changes in the grade boundary that address some of the concerns that we have identified. When new qualifications are introduced, with new types of assessment and new skills being assessed, it is really important that we learn those lessons. For instance, in this particular round, with the new highers being instituted, we have learned things about the nature of how a question is asked and interpreted. Those things will be carried forward into future years.
Will any of that information be published, perhaps in the principal assessor’s report or something like that?
The principal assessor’s report comes out to teachers. Those are published.
When will they be published?
I have to admit that I do not know the date of those. I apologise for that, but we can get it for you.
Thank you.
I have a final question in this area before we move on. We have had people write to us, certainly about maths, but also about classical studies and human biology. How have you dealt with the appeals process, particularly for those subjects? Have you done anything differently this year to try to deal with appeals in those subjects? For example, it was not Donald from Dingwall who contacted me, but somebody else did and they feel that their child was badly impacted in the exam by an early question that was very tough and perhaps much harder than it should have been. They were distressed by the early question, which impacted on their ability to answer subsequent questions. They felt that they did not perform as they would have done had that early question been different. It was difficult to understand and perhaps, as I think you suggested earlier, much harder than it should have been. In what way can you take account of that, and have you taken account of it, in any of the appeals?
As you know, the post-results service that we undertake looks at the marking reviews that are associated with individual qualifications. When teachers prepare their students for exams and assessments, they make sure that students understand that, if they find a question hard, they move on to the next one, and that is what we saw. The performance for new higher maths and for any of the new qualifications was as most teachers would have expected. Most of the performance was very reflective of what we would expect from the nature of the candidates who were entered. Teachers prepare candidates to be able to get over those hurdles. For as long as maths exams have existed, there have been hard questions that individual students cannot undertake. They are asked to move on to the next one. That is part of what the teachers do in preparing the candidates.
I am sorry to harp on about this, but are you saying that you do not accept that the nature of this year’s new higher maths exam paper caused individual pupils to be distressed because of a very difficult early question, which was way above what was expected of them or what they had been taught to do, and which was written in such a way as to be very difficult to understand? As far as I am led to believe, they had not experienced a question being put to them in that particular fashion. You do not accept that that is the case.
In the curriculum for excellence in maths, a key focus and area of communication and engagement with teachers was the fact that questions would be set in context. There are a lot more words around the question. It is not just about solving a particular equation; it is about putting the mathematics in a context that allows candidates to demonstrate what they can do. That aspect is not new—it has always been in maths papers in the past. The challenge is to ensure that candidates are prepared for that. Part of the nature of the qualification involves being able to apply knowledge in different contexts.
We looked at performance on each individual question, and we did not see evidence that early questions caused changes to the way in which people performed later on in the paper.
Is that research available, or is it internal? How is it done?
It is done in setting the grade boundaries. The good news about the new qualification structure, in which a significant number of papers are e-marked, is that we get the average mark and the distribution of the marks by question. That information is available to the examination team and to the people who set the grade boundaries, so we can see what is happening.
But it is not available outside the organisation.
We do not generally publish that information.
Okay. We move on to the next set of questions, which I know that members are keen to ask. Chic Brodie will begin.
The SQA’s mission statement, as highlighted in its corporate plan, outlines the organisation’s purpose and vision. I will come back to the vision in a minute. The stated purpose is
“to provide products and services in skills, training and education which positively impact on individuals, organisations and society.”
That is a fairly significant purpose, against a landscape that has been changing. I find it surprising that, from the information that we received from the Scottish Parliament information centre, it appears that the SQA’s structures and management processes have not been considered in detail by the Parliament since the exams crisis 15 years ago. What exchanges have you had with the Government regarding any major changes that you have made to your structure or management?
It is also unclear what outcomes the SQA delivers beyond preparing and marking examinations. No information is provided in relation to how successful you are in that task—we have just discussed the maths exam issue. The information that would allow us to determine whether productivity is increasing and costs are reducing, and the extent to which you are seeking to utilise new technology, is not there. There are communications issues around a whole gamut of aspects such as management, structure and performance, and questions such as how you measure outcomes, who is measuring those outcomes and with whom you discuss that process.
First and foremost, the Scottish Government has observer status on our board, so it attends every board meeting that we hold. We also meet the Scottish Government regularly to discuss not only the organisation’s financial performance but the outcomes, particularly around the implementation of curriculum for excellence, which we have been meeting very regularly to discuss.
With regard to changes to our structure and management approach, if there are significant management changes—as in organisational structural change—within the SQA, we have to discuss those with the Scottish Government and get its approval.
With whom—the cabinet secretary, ministers or civil servants—do you discuss such changes?
We discuss them with civil servants, who then seek approval from the minister if significant changes are being undertaken.
We look regularly at whether our structure and management procedures continue to support what we are trying to achieve, and we will make adjustments if required to ensure that we have an appropriate management focus on different areas of the business.
The introduction of curriculum for excellence, given the complexity of the development and delivery of such a wide-ranging change in the organisation, meant that we needed to introduce a programme management methodology and structure that monitored each different aspect of the development, delivery and evaluation of curriculum for excellence in the SQA. That required us to institute programme management training in the organisation, and a programme management function that reports through the implementation group that is led by Bill Maxwell of Education Scotland. We provided regular monthly detailed programme planning updates to the Scottish Government through that implementation board to ensure that everybody was aware of whether we were on track or late, and of what we were able to deliver in the given time period.
We make adjustments as appropriate and ensure that we track and monitor what is going on. We undertake a quarterly performance review across the entire organisation and across everything that we do. That activity is reported through the audit committee to the board of management. Again, the board of management papers are passed on, seen and delivered to Scottish Government officials, and they are present at those meetings.
10:45
I will ask Ms Ellison to comment as well. The section on the SQA’s vision in its corporate plan states:
“We will digitally transform our organisation to offer customers better service by delivering efficient, scalable and new enabling approaches.”
What improvements have been made to the information technology systems and strategy since criticisms were levelled at the SQA by KPMG in the 2013 annual audit report? How are any changes providing value for money?
We have experience of looking at other areas in which substantial expenditure has been committed to IT systems, and we then find that they did not provide the outcomes that were wanted. I want to know two things. What was the contractual spend on the IT systems that you are using, and what changes have been made to those systems?
You say in your submission that the SQA will
“take advantage of technology to continue to deliver improvements in its service and create efficiencies in its processes.”
Is that happening now?
I can cover the approach, and I will ask Linda Ellison to cover the financial components of your question.
You are right to point out that KPMG highlighted that aspect. We had asked our internal auditors to look at our IT activity because we felt that we needed to focus on that area as we moved forward. The reason that it does not appear in the subsequent KPMG annual audit report is that we have made significant changes. The biggest change is that we have identified how we are going to proceed.
Everyone is familiar with the fact that the SQA is an information organisation. We gather information from assessments; we change that information; and we then reissue it—through certification, for instance. IT is therefore of significant importance to us. Our IT systems are of significant age: we have been using the same IT system for the results process for a couple of decades—
Forgive me for interrupting. You said that the IT systems have not changed for a couple of decades. There has been no communication with the Parliament regarding structure and management, yet I refer to my point that the landscape has changed substantially. You are using an old—I should not say “antiquated”—IT system. There has, in the public mind, been a rationalisation of management. What impact has that had on your performance and on some of the issues that we discussed earlier?
We have been continuously modifying the infrastructure to ensure that it continues to deliver what we need it to deliver. Over the past four or five years we have introduced e-marking, and we have been modifying our infrastructure and putting in additional infrastructure to enable us to undertake that change in our approach to assessment.
After looking at our IT approach, we decided that we did not want to, and did not feel that we should, go for a big-bang approach. We decided that we should evolve, and slowly migrate parts of our IT infrastructure on to new systems while ensuring that those new systems could be managed and modified for the future. We want to maintain our systems as fit for purpose as we go further forward—
So that has had no impact on your decision making on grade banding or on anything else.
No.
You are comfortable with that 20-year-old IT system, and the change in management has had no impact.
Our current IT infrastructure allows us to capture and analyse data and to provide statistical information on the way in which candidates have performed. I have no doubt that that is absolutely appropriate—it is fine.
And going forward?
Going forward, we need to make sure not only that we can continue to evolve our assessment databank but that we can move forward as an organisation in understanding our costs and improving the processes that we undertake in the organisation. Many processes in the SQA are manual, and one of the things that we are doing is applying technology appropriately to those manual processes when we can. There will always be things that human beings need to do, but there are other things that we do that we must improve. Much of the focus of that work is on the way in which we engage with customers, such as the way in which colleges and schools give us their candidate information and the way in which we invoice colleges and schools. That is a big focus for us.
Another aspect of IT that is very important for us and which is mentioned in some of the submissions is that if we can provide our support materials electronically, that helps by allowing practitioners to engage with us much more effectively. That is an area that we are focusing on for the future.
Given that it is a 20-year-old system, there might be questions about the data that it provides. You say that there are not but, in my experience, all the processes surrounding a 20-year-old IT system might hinder the collection of accurate data. As a percentage of your operating costs, how much does it cost to run the system? What are your intentions for a new IT system?
We are using the same level of budget that we have always used for our IT but, as Janet Brown said, we are gradually improving our systems. We spend up to £1 million in capital per year on our systems. That is in-house activity. We are developing the legacy system that we have been talking about, which is a critical business system. Although it is 20 years old, we have been adding to it over the years. That has made it effective for us, but it has also made it more fragile.
Therefore, we are looking to build what we term a parallel world. We are introducing a new corporate business system to run our finance ledger, our human resources activities and our appointee management activities. We are gradually moving things away from the critical business system in an effort to ensure that it continues to be robust. Over time, we are looking to take transactional activity away from that critical system to take the pressure off it. We want to end up with a stripped-down version of the existing system, and we want to do that in as risk-free a way as possible, given the importance of the information on the system. Once we have stripped it back to the information that is critical to an awarding organisation, we will be able to consider whether there is something off the shelf that we can buy in that will give us more robustness in the future and will allow us to do some of the things that we want to do.
Is that in your corporate plan?
Yes, it is part of our business systems strategy, and it is part of the digital agenda and our digital ambition.
We have an enterprise resource planning system—we use SAP at the moment. Given the size of our organisation, it has proved to be quite an expensive system for us to maintain, so the new corporate business system that we are moving to will allow us to maintain and support that in-house. In addition, we are using facilities to host that elsewhere, so we are trying to make sure that we reduce our costs and that we have as robust a system as possible. We are doing that in a canny way, because we know how important—
The main thing is that the data on which you base any decision regarding the customer is guaranteed, and I hae ma doots about that.
I have one final question. How do you work with Skills Development Scotland? What is the process? Who makes the decisions about the qualifications that are required? Where does the training provider fit in with that?
We work very closely with SDS. I sit on its advisory board and the skills committee. We have detailed discussions about the skills implementation plans that are developed by SDS for each sector. From those, there is an understanding of what the requirements of the sectors are in Scotland and the nature of the qualifications that the sector skills councils are developing for particular sectors. They drive the nature of the qualifications that we undertake to develop for particular sectors.
We also have an SDS representative on our advisory council. We close the loop in that way.
From an accreditation perspective, SQA accreditation works with SDS on data that it has on the vocational provision across licence to practice qualifications and across the sectors that SDS focuses on.
The SQA is on the group that is involved in the new foundation apprenticeships that SDS is developing, for instance, to understand the nature of the qualifications, the nature of the units that need to be in place, whether we need to modify anything that we currently have, and whether we need to develop anything new to be able to support the introduction of the foundation apprenticeships. That also applies to the modern apprenticeships that are now in place across the piece.
Thank you.
Liz Smith has a brief supplementary question.
Obviously, the vast majority of pupils learn on tablets now. In the not-too-distant future, you will have a difficult decision on whether tablets are permitted in exams. How advanced are your discussions on that issue?
They are in the early stages because most local authorities are not in that position at this point in time. We talk to ADES about the future direction of technology in the school sector. Obviously, things are slightly different in colleges. We currently have online assessments. Lifeskills mathematics, for instance, is currently delivered completely online.
We need to ensure that we are definitely not the people holding back the teaching associated with technology and that we maintain the standards that we need to maintain. It is critical that we understand what the nature of assessment online means, because we need to be able to assess the skills and the knowledge to the same extent that we do in other mechanisms. However, internal assessment allows us to do that.
It is very important that we continue to have those discussions.
Given your very confident responses to Chic Brodie, everything that you have done in information technology and the fact that KPMG noted weaknesses in your IT strategy in 2013, why were you unable to give an update on the issue in 2014?
I meant to say that KPMG did not include that in its report. I think that that was because we did a significant amount of work during the course of that year. It did not appear as a highlight in its report. That is what I meant to say.
Is that not unusual? At least in my experience, if there is a comment in an audit report, that is normally followed up the next year.
Essentially, what KPMG was referring to in the earlier annual accounts that you mentioned was its review of our internal audit activity. We had quite a bit of work done on our IT systems and strategy, and we worked throughout that year on the action points that arose from that. When KPMG came to do the external audit in the following year and reviewed the internal audit reports, it did not think that anything material arose. It thought that we had addressed the issues in the original report.
The internal audit report to which KPMG referred was tracked. We developed a detailed action plan associated with that, which was reported back through the audit committee and the board. That is part of the evidence that was given to KPMG in the subsequent year. We developed an action plan to address the issues that were raised.
Who signed off the internal audit report?
The audit committee.
Good morning. In the current financial climate we all live in, how does the SQA assess that it is providing value for money? In your submission you say:
“SQA is taking steps to secure a better understanding of its costs ... in order to truly understand whether SQA provides value for money”.
From my perspective—please correct me if I am wrong—saying that you are looking for “a better understanding” sounds as though you do not know whether you are providing value for money. Could you talk me through that statement?
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I will pass that over to Linda Ellison in a moment, but I will say that, first and foremost, we understand where our money goes and our value for money. One of the things that we are trying to do is to understand the costs of individual qualifications so that we understand how much it will cost us to deliver a particularly niche qualification as opposed to a qualification that many students will undertake. We are trying to reach a much more detailed understanding and breakdown of our costs on the basis of individual qualifications. We need to do that and it will help us to make appropriate decisions in the future.
Like most organisations, we monitor our costs monthly and in great detail, for the purposes of the organisation. We analyse all our variances against our budgets and our forecasts and we do quarterly reforecasting. We have a very detailed understanding of our expenditure, which is primarily staff costs and the costs of appointees—the 15,000 to 17,000 people who work with us in the course of the year to prepare the examinations and assessments, invigilate and mark them and so on. The other big cost is information technology. Those are our key areas of expenditure.
As Janet Brown has said, we deliver a lot of products and services and we would like to understand better which products contribute best and which need to be subsidised from other activities. We are trying to get into the nitty-gritty of what we produce and deliver to the people of Scotland and elsewhere so that we understand where we are, where we need support, where we need to deficit fund and so on.
I understand that answer much better than the line in the submission, which raised concerns. Your answer makes a lot more sense. Maybe that is something that you should consider in future.
Yes.
I want to clarify a point. When you are separating out the courses to understand the costs that are involved in different courses—you mentioned courses that are taken by a lot of students and others that have only a small number of students—what is the endgame? Do you intend to start charging higher fees for the courses that have only a few students, so that you can recoup the money, or do you intend to eliminate the courses because they cost too much? What is the purpose of the process?
The purpose is to understand the costs. It is very important that any organisation or public body understands where its money is going. For the SQA, it is important to understand those costs at a granular level. The value of a given qualification is not only associated with how many candidates take it; a qualification can be hugely valuable because it is targeted at a particular region of the country where a particular sector operates or where a subject is of particular interest. The delivery of that qualification is equally valid.
That was my next question. How do you assess value for money? You can assess what it costs to deliver a qualification, but how do you assess the value of your provision of a certain qualification?
The value for money in SQA is about understanding the basic costs of delivering a qualification, its contribution to Scotland’s learners and culture and, if the qualification makes a profit, the surplus that allows us to offset our dependence on the public purse. Value for money is a combination of all those things.
How do you measure the contribution to Scotland’s culture?
We ask people. We spend a lot of time talking to individual organisations about what is necessary and what we should be delivering. We do not just make a decision about whether a qualification will cover the cost of its development; there is a lot of engagement with particular industry sectors and cultural activities whereby we ask whether that type of qualification is critical to them, and if it is critical to them, we will develop it. We subsequently have conversations with the Scottish Government about the breadth and nature of our portfolio.
You ask the Government and the industry sectors—who else did you mention?
We ask colleges and sector skills councils. We try to understand the demand for a qualification.
I am asking because—I may have missed this—you do not seem to be asking the pupils or those who might want to sit the exam whether they value it.
We do that as well. We try to get as much feedback as we can from all areas to find out whether the qualification will be useful to the learner. It is also important that the qualification takes the learner on a journey, so there must be progression from it as well as progression to it.
I will stop there, because a number of members want to come in. I would like very brief questions, please.
On the issue of value for money, I will read some figures from the SPICe briefing, which all my colleagues have. In the past 10 years, you have had an 84 per cent increase in entry charges, a 58 per cent increase in staff costs, a 26 per cent increase in income from the Scottish Government and a 17 per cent increase in staff, although the number of accreditation staff stayed the same. For all those huge increases in income for the SQA, you provided 1,092 extra certificates.
You have talked about all the people that you ask and how you provide value for money—I will not go over them again—and you have had huge increases in funding during the past 10 years from the Government and from entry fees, covering a 17 per cent increase in staff and a 58 per cent increase in staff costs, but all that Scotland has got out of that is 1,000 extra certificates. Is that value for money?
The certificates that you cite are those that are issued on results day and they form only a portion of what the SQA does. Every week we also certificate HNDs, HNCs, SVQs, vocational qualifications and other awards.
I am talking about the main diet of national qualifications and those figures are in the SPICe briefing. You provided 1,092 extra certificates.
Yes, but the breadth of the SQA’s qualification portfolio has also increased. For example, we were asked to expand the nature of our provision for curriculum for excellence and we have been doing that for the past few years. The number of qualifications and awards that have been undertaken by candidates throughout the country has increased.
Linda Ellison might like to cover the specific numbers.
You cite the increase in staffing costs. The preparation for CFE started about 10 years ago, when we started to bring in staff to work with us on a temporary basis to assist in the delivery of CFE. A lot of what we are doing is about developing and delivering the qualifications as well as certificating them. The costs have increased largely because of the increase in the number of temporary staff. Over the period, staff numbers increased from 693 to 811 and, in 2013, of those 811 staff members, 227 were temporary staff who had been brought in specifically to use the extra funding from the Scottish Government to allow us to develop and deliver CFE. Our underlying number of employees fell during that period and we got additional funding to allow us to develop and deliver CFE through the use of temporary resources. Some of the staff would have been secondees from local authorities and some would have been temporary staff.
The figures, which go back to 2004-05, were taken from your website. The SQA has had huge increases in funding. If we compare like with like, on the main diet of national qualifications there have been 1,000 more certificates in 10 years. I asked whether you provided value for money, but you did not answer that.
We provide value for money. Actually, we deliver an awful lot more than 142,000 certificates a year.
I am going to have to jump from member to member. Members will have to be quicker and we need quick answers.
I have a very quick question on fees that are paid on behalf of a candidate. In some independent schools the parent pays, in some state schools the school pays and in some local authority areas the local authority pays fees on behalf of all the schools in the area. I know that it is not your decision but are you comfortable that fees are paid through different systems?
We receive payment by centre and you have described how the centres collect the fees. Our job is to ensure that what we do is fair to the candidates. We form part of a system.
The choice of whether a candidate should be put forward for an examination or assessment for a qualification should be the teacher’s and the teacher should make that judgment based on the candidate’s educational need and the educational value that the qualification will provide to them.
I will follow up on the question of Scottish students’ contribution. What return do you get on international business and how do you measure its contribution?
The figure for activity outside the Scottish market in the current year is £13.3 million. Some of that is entry income, related to people who are doing our awards and the remaining £10 million is consultancy and other support internationally.
Is that more profitable than indigenous Scottish business?
Yes.
Yes. We have a broad portfolio in Scotland, as we should have. It requires a significant amount of money to keep it going. We should keep that portfolio.
I have a couple of questions on how you evaluate and review the impact of your activities. From the evidence that we have received, it is clear that there are a lot of reviews of your activity, but it would have been good to have seen some detail on what the reviews found, including the areas in which you were performing well and the areas that needed improvement. Based on your reviews, what areas are you successful in and what areas need improvement?
We get strong feedback that a lot of the qualifications that we develop and deliver are relevant, particularly in specific industry sectors such as oil and gas. There is very close engagement and understanding of what needs to be in a qualification and what needs to be developed.
We also get strong positive feedback that we work well with industry and that we have good content and mechanisms of assessment that allow people to be successful when they go into employment.
We need to continue to focus on ensuring that we understand how our qualifications are delivered and that we continue to respond when we need to provide additional qualifications. One of our challenges is to ensure that our suite of portfolios allows people to not only enter at the early stages of employment but also develop through the course of their lives.
Strong positive feedback comes from vocational qualifications and academic qualifications in the good progression that people make from one level of our qualifications to the next. There is really good progression in the new curriculum for excellence qualifications, from national 5 to higher and from higher to advanced higher. You will see that in feedback from teachers, and we have seen it from pupils who have said that national 5 prepared them for higher. We are very proud of that progression and we must continue to focus on it.
Would you be willing to make those survey responses public so that we can see the range of responses and areas for improvement?
Yes, we can do that.
Will you send them to us?
Yes.
11:15
Earlier, I asked about SQA’s role in reducing the attainment gap. Could you advise the committee what you are doing in that regard?
SQA does several things that will help to reduce the attainment gap. One important feature of learning is the fact that, if you enjoy your learning, you tend to do a lot better in it. That is statistically proven. We are therefore trying to ensure that we provide a suite of qualifications and awards that allows people to gain skills and knowledge in a context that excites them, engages them in learning and makes them want to continue learning. The curriculum for excellence is one of the things that allow that. The openness of the new courses and the fact that teachers can teach a particular subject in many contexts makes it possible to engage those students who, in the past, might not have engaged with the classical pull-the-textbook-off-the-shelf scenario. That is hugely positive.
The other area concerns the fact that our qualifications are structured by units. We have small awards that encourage people and reward them for what they have learned at a point in time. Often, someone who is uncomfortable with learning or assessment can be encouraged if they are assessed on a system that is based on small units and awards. It encourages learning and makes people confident, which makes them willing to take the next step.
Attainment is critically important. It applies not only in the school sector but also outside the school sector, as learners move into college. We work closely with colleges and schools on personal development, ensuring that we provide something that enables people to reflect on what their skills are and enables them to put those skills to use in different contexts. Ultimately, that will raise the attainment of those individuals.
What do you think will be the impact on those from poorer households of charging for appeals?
As we have said before, the money that is received from our charges goes to schools and centres and it is for those schools and centres to decide what they do with that money. However, I stress that we make no charges for exceptional circumstances, such as when a candidate cannot undertake a qualification assessment because of personal circumstances or illness, and we make no charge if a post-results service request results in a change. The only time that a charge is levied is if no changes are made. We believe that the local authorities are providing adequate support, but it is for local authorities to decide that.
Is there a difference between the number of appeals from local authority schools and from private schools?
There was last year. We are still undertaking post-results services for this year; those numbers will be finalised at a later date.
Is there a difference between the outcome of those appeals for local authority schools and for private schools?
This year, we do not know, because we have not finalised the numbers yet.
Was there a difference last year?
Historically, I think that there was a slight increase in numbers. The challenge is for a teacher to understand whether they should put a candidate in for post-results services. Unlike the historical situation, if we review our marking and the grade needs to go down, the grade will go down. That will have an impact, appropriately, on the level of presentation.
I am sorry, but I am going to have to follow that up. When Gordon MacDonald asked you about the difference between the number of successful appeals from local authority schools and the number from the independent sector, you said that the number had gone up a little bit.
I do not know about this year.
I am not asking about this year; I am asking about last year. What is the difference between the number of successful appeals from independent schools and the number from state schools?
I do not have those numbers with me but I can provide them to the committee.
You just said that the numbers went up a bit.
My memory tells me that the percentage success rate in independent schools was slightly higher last year than it was in state schools.
That is what I am asking about.
I do not know what the situation is this year.
I am not asking about this year. I am asking about last year.
I do not know the numbers.
I am wondering what “slight” means. You said that there was “a slight increase”.
We can provide those figures for you.
That would be helpful.
Gordon MacDonald’s question has opened up the door a wee bit. Do you think that the reason for the difference is that those who use independent schools can afford to appeal, whereas those from poorer households cannot?
I have no evidence to support that. No local authorities have indicated that they have not submitted candidates that they felt that they should have submitted.
Just for clarity, when a student makes an appeal, do they appeal directly to the local authority or to the SQA?
The school decides whether to make the appeal.
The school decides. Okay.
I have a question but I assume that you will be unable to answer it now. When you write to us, will you give us a view on whether the supporting material that is supplied by state schools is different to that which is supplied by independent schools? If the success rate for appeals from the independent sector is higher than it is for the state sector, I wonder what the reason for that is. You would think that it would average out and that there would be no real reason why there should be a difference. If there is a difference, will you express a view as to why that is the case? Is it, for example, that more or better supporting material comes from independent schools as part of the appeal?
No supporting materials are sent to us because they are no longer appeals processes; they are post-results services processes. We do a marking review. No materials are sent to us, except in exceptional circumstances, when it is extremely important that we look at alternative evidence.
Okay. It would be good if you could provide the background to how the process works, the exceptions and the numbers.
Yes. We will do that. Hopefully, by that time, we will also have this year’s information, which I think will be very helpful.
That would be helpful. Thank you, Dr Brown.
How have you demonstrated leadership in ensuring that qualifications continue to be relevant to students, teachers and employers? You spoke specifically about the oil and gas sector. What have your surveys and reviews shown about how relevant the courses and qualifications have been across the piece in Scotland?
We try to engage everyone who has an interest in a qualification in the development and subsequent evaluation of that qualification. When we develop qualifications for industry sectors, we involve not only industry but colleges and training providers. Similarly, for curriculum for excellence, we involved industry, colleges, teachers and the learned societies group.
We routinely survey our customers so that we can understand whether they believe that our qualifications are current. We try to have continued engagement to understand whether we need to modify our qualifications to make them current, for example if an industry—such as IT—is moving quickly. In such cases, we ensure that we refresh our qualifications as fast as we can.
The other aspect of what we do is an on-going process of evaluation of qualifications. We will evaluate the success of the curriculum for excellence qualifications during the coming years, based on evidence gained from discussions with teachers, parents, pupils, universities and employers who take candidates. We will review what we find with the qualifications committee within SQA to make sure that we fully understand what has and has not worked well and what we need to modify.
One challenge is that, during the course of those discussions, we will get feedback asking us to add this or modify that. It is important that qualifications have a certain level of stability. During the development of the curriculum for excellence, we probably overreacted and overchanged, as we have discussed with the committee before. However, we need to continuously evaluate and evolve our qualifications.
Have industry, further education, higher education or teachers have raised a concern about any particular qualifications or courses?
Historically, the whole area of information and communications technology has been a challenge. There has been such significant change in computer science, for instance, because it was necessary to bring the qualification up to the requirements of the receiving organisations, whether universities, colleges or employers. We need to keep an eye on specific areas like that because they move so fast.
The SQA has plans to become self-financing. As an ambition or aspiration, is that desirable?
The term “self-financing” is an interesting one. You have probably heard during the course of the session that we have talked about reducing our dependency on the public purse. I think that that is a much better way of thinking about it.
The SQA is very much sought after outside Scotland as an organisation to work with. For example, we help developing countries establish qualifications and help countries establish skills development areas. In doing so, we are able to generate income. In a period of significant austerity when the public purse is under severe challenge, I think that it is appropriate for an organisation such as ours to see what we can do—while still delivering exactly what we need to deliver for Scotland—to bring in income that will allow us to reduce our requirement for Scottish Government grant.
On the question of how far that process will go, we have talked about the fact that the criteria for what is delivered in Scotland are not associated with whether that will bring in enough money to cover the costs but about delivering what is required in Scotland. Therefore, the amount of funding that we would require to be completely self-financing would be significant.
I think that it is appropriate for us to be taking this approach. It supports the Scottish Government’s international agenda. We work internationally for several reasons, and the first one is very much that: Scotland is a place on the world scene, and the Scottish Government’s international agenda includes working with specific countries. Another reason is the learning that we undertake—the learning that we get and the learning that we can provide to others by working with other countries and educational systems. That is very important.
Another reason is associated with making sure that we support other Governments in developing what they need in order to make sure that their educational systems provide value for their learners. We make decisions on that work by asking whether it is good for the learner in that country and whether that country is the right place to be.
The last reason is that, if there is surplus that we can generate, we really should do that, because then we do not have to ask for as much money from the Scottish Government.
In generating that commercial income, is there not a danger that you may sidestep into taking away the focus on your core function?
No. We are a national public body, and we take that role and that remit extremely seriously, as does our board, the qualifications committee, the Scottish Government and our sponsor division in the Government. That remit does not take second stage to anything. The reason why we look to generate income is not for the income as such but to reduce our dependence on the public purse.
11:30
Could you tell us what the present level of commercial income is, the sources it has come from and how profitable it has been for you?
There are many reasons why we undertake work outside Scotland that we get paid for. Some of the funding comes from the World Bank, for instance, through which we work with other agencies to help develop educational systems across the world. We would not expect to make a significant profit, if any, on that. We should be doing that as part of our role as a nation.
In other cases, we will go for significant income that has a value for us. Linda Ellison may have points to add.
I mentioned earlier that about £13.3 million will be generated in the current year. About £3 million of that is from other countries in which pupils are taking, for example, higher national diplomas awarded by the SQA.
The rest is from consultancy or contracts. We deliver consultancy to support vocational training or national occupational frameworks in other countries. Some of it is from contracts that we have won from the United Kingdom Government to deliver activities in the rest of the UK, such as dangerous goods driver training and other licences to operate.
Those are areas in which we can generate some funding to help offset the requirement for Government funding.
You have been able to tell us about the income, but what has been the resource cost of delivering that income?
We use the surplus to offset what we need from Scottish Government, but we set the costs of the activity against the income. It is very important that we charge the right costs to the commercial activities and do not subsidise them from our other activities. Some commercial activities are more profitable than others.
What is the total surplus?
We project that in the current year we will generate about £4 million surplus to put towards our activities. I will verify that and tell the committee if that figure is not quite correct.
I have just one more question, convener.
I understand that the SQA wants to reduce the pressure on the public purse through generating income. The final sentence on page 14 of the SQA’s submission suggests that qualifications are delivered
“at minimum cost to the public purse”.
If that is a reference to grant in aid, are fees from local authority schools and colleges not considered to be from the public purse?
Yes, they are considered to be from the public purse. We have not increased our charges to colleges and schools in Scotland since 2010.
If you are reducing the call on grant in aid from the Scottish Government, is there any possibility that you could be increasing the charges to local authorities and to schools and colleges?
We are currently discussing with the Scottish Government the whole way forward, particularly on curriculum for excellence. The committee will see from our submission that, as the curriculum for excellence is introduced, the different patterns of uptake have an impact on the number of qualifications that are being undertaken.
It is important that we consider the SQA’s requirement for resource across the piece. That is one of the discussions that we are having with both the Convention of Scottish Local Authorities and the Scottish Government. The goal is to understand that the public purse includes the local authorities and that the amount of money available in the system as a whole is limited.
That is one of the reasons why we are looking at increasing the amount of money that we could bring in from outside, while maintaining our focus on what we do in Scotland.
I want to expand on John Pentland’s questions. Can you explain what you have identified as “Other income” in your income and expenditure budget and your 2013-14 accounts? In 2013-14, that other income was £7.3 million, which was lower than the other income in 2006-07. What gives you the confidence that you will be able to increase the other income by 50 per cent in a two-year period, when you have not been able to achieve that in the previous seven years?
Are you asking whether our self-financing goal—
I am trying to understand what makes up your other income and why it has decreased over a period when you expect it to grow by 50 per cent. We do not have the 2014-15 numbers. We have only the most recently published accounts, which are for 2013-14. I am comparing those to your budget for 2015-16. That budget shows a nearly 50 per cent increase in other income. However, when I look back at the 2006-07 accounts, the other income was around £8 million.
Therefore, other income has dropped since 2006-07, as you have identified, yet you expect it to increase by 50 per cent over the next two years. I am trying to understand what feeds into that other income and what gives you the confidence that you will be able to increase it by 50 per cent when it has actually dropped over the past seven years.
I will cover what is in the other income and then Linda Ellison can talk about the numbers.
The other income comes from our consultancy work, which we have talked about. We will work with other regions of the world to help them to develop qualifications frameworks. For instance, we will help them to develop qualifications that are geared to their countries and areas. We also work across the UK to deliver specific programmes such as the dangerous goods driver training. We also have significant activity in China. As a result of engagement that the Scottish Government had with China 12 years ago, we deliver HNDs in China for Chinese universities. That is the nature of the other income that we have.
We actually submitted a graph showing the increase in other income over time. It stayed fairly static for a while, but it has been growing quite a bit since about 2011-12, when we started to see quite an increase. We predict that, in 2015-16, our other income will be £10.7 million. That is from known projects that are coming through, such as contracts that we have won or consultancy work that we have in the pipeline. We are confident of that figure.
To follow on from that, I want to ask about another issue that John Pentland touched on. The total expenditure in 2013-14 was £71.6 million and your budget for 2015-16 is £76.4 million, which is an increase of £4.8 million. How much of that £4.8 million relates to the increase in other income?
Elements of it relate to that, but the majority of the increase is to do with standing items—the normal costs that we have to build into the budget.
So it is inflation.
Some of it is inflation and some of it is to do with the costs of staff who were seconded to work on CFE coming back into our core budget. Our staff costs have increased as a result of that. I can find the figure for you, but some element of the increase will relate to the success on commercial income, because obviously we have the costs of delivering that work.
That is what I am trying to get at.
That goes back to the fact that some of our non-Scotland work will have zero surplus—although not negative—and some will be positive or significantly positive.
To follow up on that, I am not confused but amazed that your report has no detail on the nature of your international engagement and no information about the costs incurred. We have heard that it is £13 million, although it is not really £13 million but £3 million, because you are doing consultancy work. In your strategy, you must know, through some means of profit-centre activity, exactly where you are going to put your emphasis.
I am now very concerned. For me, the core business is Scottish qualifications. When you say that the international stuff is more profitable, and particularly that the Royal Bank of Scotland work is more profitable than other stuff, I am concerned that, given the drive to be self-financing, that will encourage you to do more and more consultancy work at the expense of indigenous work. Is that not true? Do you have profit centres so that you know where your focus is going to be?
We absolutely know where our income is coming from—
No, I am talking about profit centres. What are the costs associated with that?
We know where our income is coming from and we know, outside of Scotland, exactly how much it costs us to deliver that. That is critical. We have to know that, so that we can make our decisions. For instance, when a contract comes up, we have a detailed business plan drawn up that states exactly the amount of resources that will be required, how much it will cost and what the contract is likely to bring in.
We are very aware of that work, and we have a committee that focuses specifically on it. We have a detailed understanding of the pipeline of work that comes in. However, that is only one aspect of what we do. We are not an organisation that is tailored and geared to increasing that income stream just for the purpose of increasing that income stream.
But you are driving towards being self-financing, so anyone would consider income generation to be the prime focus.
I think that it depends on the criteria that are used for accepting a contract. We accept contracts that have zero profit because it is part of our remit to undertake activity to support the development of nations and qualification structures that are part of Scotland’s focus—
Forgive me for interrupting but, if I have a very profitable business from RBS internationally and zero profit from something somewhere else, and someone tells me that I have to become self-financing, where would I normally put my focus in those circumstances?
I am an NDPB and not a business.
But you want to be self-financing.
I am an NDPB that has a challenge to continue to deliver a quality service and a very broad portfolio of services to Scotland and to find a way to do that in the most cost-effective manner that requires as little public funding as possible. That is the nature of the decisions that we make.
To clarify something, I am not sure where the RBS reference came from—it was the World Bank that Janet Brown referred to earlier.
Okay—I thought that she mentioned RBS.
No—it was not the Royal Bank; it was the World Bank.
It is the World Bank, along with charity funders and the European Union. The work is to do with developing countries; it is absolutely not to do with RBS.
I thought you said RBS.
Dr Brown, I think that, when you said “World”, people thought that you said “Royal”.
Oh—it is my accent.
We will clarify it now.
Sorry. It is my accent. We have never been funded by RBS, but we get funding from the World Bank and other development organisations that work with developing countries around the world. I apologise for the confusion.
Whether it is RBS or the World Bank, the principle stands that, if you are self-financing, you will chase where the profit is.
Convener, I have one wee question.
I want to move on, but you can ask it if it is extremely small.
It is on the point that I mentioned earlier about some charges remaining static. The Scottish Parliament information centre briefing points out that some of those static charges are in the private sector. What was the commercial thinking behind that?
The static pricing that we are talking about is for schools and local authorities. We have held our prices at 2010 levels. That also impacts on colleges and training providers, as we have to keep the pricing constant there. However, for any other commercial activity in Scotland, we charge the going rate or the appropriate price.
I think that the question is about the fees that are charged for qualifications, whether it is to local authorities or the private sector. The fees have been frozen since 2010.
Yes, absolutely.
Do you mean independent schools?
Yes, it is about independent schools, not commercial income. The figure is the same for independent schools and state schools, and it has been frozen.
Yes.
Why?
Because we deliver the same sort of qualifications to all schools. We charge for a national 5 and for a higher. The price is the same whether it is to a state school, an independent school, a college or a community service organisation.
11:45
I have one or two specific questions about the SQA’s “Annual Report and Accounts 2013-14”. Before I dive into them, I note that the second paragraph from the bottom on page 10 of the SQA’s submission states that the
“SQA is taking steps to secure a better understanding of its costs”.
Of which costs are you trying to get “a better understanding”?
That touches on an earlier question. We understand our costs overall; we are trying to understand our costs at qualification level—how much it costs us not only to develop but to deliver individual qualifications.
I come back to the annual report and accounts. One area of concern is pension provision, which I imagine has been a concern across the public sector. The SQA’s “Annual Report and Accounts 2013-14” shows that the defined benefit liability increased from £12 million to £16 million. Based on other organisations that I have seen, I imagine that the position has not improved this year. Where are you on that and how are you managing it?
We are, predominantly, part of the local government pension scheme through Strathclyde Pension Fund. We receive every year from the actuary and from the pension fund a statement on the condition of the fund and the liabilities. Essentially, we have no real control over that, but it has a knock-on effect on some of our staff costs. We are having to try to absorb those and deal with them. Because the statement gives the value of a fund on a particular day in the year—which depends on markets and on gilts—it is extremely difficult to do anything other than try to absorb any costs that arise from it.
Are you absorbing that cost? If the deficit was £16 million, where would you get that money from?
We are not reflecting that. We show that as a liability in our accounts, but we do not have to find that money, because the figure moves year on year.
What is your understanding of how the situation is being managed?
We are members of the Strathclyde Pension Fund, so we get regular reports from it on how the fund is doing, but to be honest we have no opportunity to influence that in any way. As members, we have to take the information on risk and valuation that the actuary provides when they do a triennial valuation.
The world of actuaries is a very complex one from which we just accept what comes out, at the end of the day. However, what do you do with the liability? Do you just report it in your annual report and that is it?
Essentially, yes: we report the liability in our accounts and we report it to the Scottish Government, so that it is kept aware of the position. As you say, our share of that deficit for our members is significant, but for the Scottish Police Authority it is huge. It is something that the public sector community has to try to manage, but we have very little influence over it.
I realise that it is a problem across the public sector. It is obviously a concern.
The SQA’s “Annual Report and Accounts 2013-14” show a bad-debt provision of £303,000, with £38,000 having been written off. Those debtors must surely be in the public sector.
We were setting that provision aside for our activity in China, because there was a change in the tax regime. Our partners in China advised us of the change in the tax regime, so we provided for the potential that we would be charged extra, because there was a retrospective element. The authorities maintained that our partner had been charging us the wrong tax rate.
As it turned out, that was cleared up and we released that provision the following year. We monitor our debtors very closely. Our debtors that are on payment plans—perhaps in the private sector—are few and far between; there are about half a dozen. We do not have a lot of bad-debt write-off.
Was the provision of £303,000 entirely in connection with the tax situation in China and has it been resolved?
Yes, and that was resolved.
You wrote off £38,000. What was it in relation to?
I will have to provide that information in writing as I do not have it to hand.
I am concerned, because if someone in the public sector has failed to pay—
It will not be a public sector client, but one of the private sector training providers with which we deal in the rest of the UK, or a printer—in the past we have had people produce exam papers for us—or whatever. It is that type of commercial activity that we might have a problem with, rather than with anyone in the public sector.
Would it be possible to find out who it was?
Yes.
Is it likely that there will be more write-offs this year?
There were no write-offs in the accounts this year.
SQA’s annual report lists business development specialists. There is no real explanation of what that relates to, but you spent just over £3 million on them in 2013-14. Are they consultants or some sort of agency staff? There is no explanation, and staff numbers have been increasing.
I do not have the information in front of me, but I can provide the exact breakdown. The business development specialists are the people whom we use to deliver our contracts and consultancy services overseas. They are often academics who work with our business development team.
So are they actually staff who are contracted to carry out a function?
Yes.
That £3 million seems like quite a lot of money.
We are undertaking consultancy activity outside Scotland. That can happen in one year, but not in the next; we bring on board temporary consultants to deliver such work for us. We do not send SQA staff overseas do that. The flexibility that that gives us allows us to undertake significant contracts. As you can see, such contracts bring in significant income, so that level of cost is not unsurprising.
Forgive me if you have already said this, but what is the net profit on overseas activities?
The net profit is something like £4 million out of £13 million. It is not a bad profit margin.
That is the total commercial profit.
I make the point, again, that some of the overseas contracts will be done for zero profit because they are carried out for different reasons.
Finally, in the report there is a note about £2.3 million of additional funding relating to HM Treasury and changes to the way in which income tax is managed. What is the reason for that?
That was a one-off situation in which we were assisted by the Scottish Government. Traditionally, we have paid the tax that is associated with the payments that are made to the 15,000 to 17,000 appointees who work for us, who are teaching professionals from across the country. We paid that tax once a year, in April. The advent of real-time information for Her Majesty’s Revenue and Customs obliged us to change to monthly accounting of tax for the appointees, which meant that we would pay the tax twice in the same year—the tax for the previous year that we would normally pay in April, as well as the monthly tax in that year. That meant that we had to find an extra £2.3 million. The Scottish Government gave us cash funding to allow us to meet that one-off cost and it was able to do so because the £2.3 million that we pay out in April related to activity in the previous year.
Are those thousands of people salaried, rather than being contractors?
They are appointees. They are the teachers and lecturers whom we bring on board to deliver the exam diet every year. They are not our staff, but we pay them and we pay the income tax that is associated with the fees that we pay them.
That is interesting. Administration of that must be quite substantial, given the sheer volume of people.
Yes.
That must add considerably to the costs.
Yes, it does.
The situation is not helped by the fact that those people are designated as workers for pension auto-enrolment purposes.
We have to auto-enrol them.
Are you saying that we provide pensions payments as well?
Yes.
Do we cover national insurance, too?
Yes.
Wow! Okay—thank you.
We have significant logistical activity in the SQA.
As—
I am sorry, Chic. Mark Griffin has not come in yet, so we will hear from Mark and then you.
I have a question about the zero-profit contracts that the SQA works under. Do you take the decision about the areas in which the zero-profit contracts operate? Is that done on a philanthropic basis, working with developing countries with which we have close relationships, such as Malawi, or is it driven by commercial relationships or by Government? Who takes the decision on whether a contract should be a zero-profit one?
We take the decision based on our work with a developing country. As you rightly pointed out, we did that in Malawi and we have also done that in Botswana. We have done that sort of activity in association with the World Bank.
Are there any zero-profit contracts in countries that are not developing countries—countries that would have significant reserves?
No.
Without breaking commercial confidentiality, can you tell us how much you pay the appointees per day?
We pay exactly the same as Education Scotland pays, but I do not know—
How much is that?
I do not actually know.
Is it £600? Is it £700?
No. The majority of them are currently serving teachers.
Would you be able to provide a full breakdown of all the international activities of the SQA? All of us round the table are interested. We are interested in the activities and all that we have discussed about how and who you charge. Is that possible?
We will go back and look at that.
Will you send it to us? You are hesitating.
I am hesitating because we sign some of the commercial contracts as a commercial entity. We will provide you with what we are able to provide.
I would certainly appreciate it if you could look at that. I do not think that there is any reason why you could not provide it to the committee on the same basis—with the same commercial confidentiality.
Okay. That is fine.
We are not asking for contracts.
I appreciate that, but I think that we want a breakdown of all the activities in as much detail as is feasible.
Yes.
We want to understand it properly—that is what I am saying. If that requires confidentiality between yourselves and the committee, we will understand that.
Okay. That is fine.
The final question that I want to ask concerns the SQA’s corporate plan. Page 5 of the 2015-18 corporate plan presents your mission statement and vision. The sentence about vision says:
“We will digitally transform our organisation to offer customers better service by delivering efficient, scalable and new enabling approaches.”
I have to be honest—I am not a fan of corporatespeak. What does that mean?
I will say that we are trying to say it a lot better in next year’s corporate plan.
It is not “better” so much as “clearer” that is needed.
That is what I mean.
We are trying to understand where we can use technology to make ourselves more efficient and more beneficial to our customers, our learners and our centres. We want to develop sharing of information with our centres digitally as opposed to using paper.
Linda Ellison has explained that we are in the process of changing the system of how we bill colleges. At the moment, we bill the colleges electronically, but the information that goes with that billing process is sent on paper. Colleges have to match the paper with what has come in through electronic data transfer; we need to change that. It is about thinking about how we can use technology to improve everything that we do. That includes improving the processes within the organisation but—addressing Liz Smith’s point—it also includes the ways we can use technology to improve learning and assessment. That is really what we are about.
I have to be honest and say that that is not what I understood by reading the sentence about vision in the corporate plan.
I know and I am really sorry about that.
I look forward to seeing next year’s plan.
Thank you both very much for coming along this morning. We appreciate your taking the time to attend the committee—it has been about two hours this morning. I ask you to remain seated while we take the final item on the agenda. I hope that it will be quick.
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