“Scotland’s colleges 2015”
We move to agenda item 3, which is evidence taking from the Auditor General for Scotland on her report, “Scotland’s colleges 2015”. I welcome Caroline Gardner, the Auditor General; Fraser McKinlay, director of performance audit and best value at Audit Scotland; Susan Lovatt, audit manager; and Martin McLauchlan, senior auditor.
I understand that the Auditor General has a brief opening statement to make.
Thank you, convener. As the committee will know, Scotland’s colleges are the main providers of further education and they have an important role to play in helping to achieve sustainable economic growth. Colleges have gone through significant reforms in the past few years, and my report comments on those various reforms and how well they have been managed and delivered. It also provides an update on the financial position of the college sector.
Our overall message is that colleges have coped well with the significant demands that have been placed on them as they have managed the complex programme of reform. However, many of the changes are still taking place, and colleges will need to continue to manage them carefully.
We identified gaps in the way in which the Scottish Government and the Scottish Further and Higher Education Funding Council are monitoring and reporting on progress with the reforms.
The reform programme has reduced the number of incorporated colleges from 37 to 20 since 2011-12. Planning for college mergers was generally good and all the merged colleges were established on time. The mergers have contributed to efficiency savings, but the Scottish Government and the Scottish funding council have not specified how they will measure some of the expected wider benefits of the reforms, and they have not gathered reliable information on the overall costs of mergers.
The Office for National Statistics reclassified colleges as public bodies in 2010. That took effect from 1 April 2014, and it has led to greater accountability for the use of public money. Colleges are now required to submit more regular reports to the Scottish funding council on their finances and to seek approval for some items of expenditure. Reclassification has also led to the formation of arm’s-length foundations that are intended to protect colleges’ financial reserves. Colleges transferred £99 million to those independent foundations in 2013-14.
We found that changes to the college sector so far have had minimal negative impact on students in those colleges. The colleges continue to meet their targets for learning, and they delivered around 76 million hours of learning in 2013-14. Education Scotland has not identified any significant issues with the quality of learning and teaching in the merged colleges that it has reviewed to date. However, because aspects of the changes are still under way, it will be important for colleges, the Government and the funding council to continue to monitor learning and teaching quality, together with learning provision and student satisfaction.
The number of individual students attending college decreased by around 7 per cent between 2011-12 and 2013-14. The Government continues to prioritise younger students, and it has reduced funding for short courses and for courses that do not lead to a recognised qualification. As a result, there has been a reduction of 48 per cent in the number of part-time students and a reduction of 41 per cent in the number of students aged 25 or older since 2008-09.
Colleges’ finances continue to be generally sound. Adjusting for the transfers to arm’s-length foundations, colleges reported a small overall surplus of £3.8 million in 2013-14. Scottish Government funding fell by 12.3 per cent in real terms between 2011-12 and 2013-14, and college spending reduced over the same period, mainly through reductions in recurring staff costs.
Most of the staff reductions were delivered through voluntary severance. Although most severance was managed in line with good practice, auditors found significant weaknesses in the way in which two colleges managed and approved senior staff severance arrangements, and they found shortcomings in a further four colleges.
My report also draws attention to colleges’ relatively short-term financial planning. Although recent changes have made it more challenging for colleges to prepare longer-term plans, it is increasingly important that they now do so to ensure that they effectively consider, plan for and meet the needs of their regions.
We make a number of recommendations in the report for the Scottish Government and the funding council, and for regional bodies and colleges and their boards. In particular, we recommend that the Scottish Government and the funding council should specify how they will measure and publicly report progress in delivering all the benefits that are expected from the reform programme. It is also important that the Scottish Government and the funding council work with colleges to implement planned improvements in the way in which severance is managed in future.
Given the scale of change in the further education sector and the complexity of the new arrangements, we will continue to monitor colleges through the annual audit process and to report back to the committee on the regular cycle. As always, my colleagues and I are happy to answer questions from the committee.
Thank you. I open up the session to members. Colin Beattie will ask the first question.
Good morning, Auditor General. I am pleased by the comments in the report that, despite the magnitude of the changes, the colleges met their targets for learning and there is no significant effect on pupils. That really is good.
I am a wee bit concerned about what the report says on page 23, starting at paragraph 44, about the transfer of £99 million to arm’s-length foundations. We have talked about that before. One has to assume that at least part of that money consists of public funds, which are now going to third parties. Regardless of the fact that the constitutions of those foundations may bind them to a certain purpose, there are no guarantees.
There is a fundamental principle of following the public pound. How do we do so in this case? Can we do that? What has to change to enable that to happen?
You are right, Mr Beattie—that is a complex issue that we have discussed with the committee previously. The reserves that colleges had built up over time came from a combination of sources, including significant public funds, as well as income from commercial activities that colleges undertake. The reclassification of colleges as public bodies meant that a solution needed to be found to ensure that those reserves could be carried forward without reducing the overall spending available to the Government under the Scottish block.
I will ask Fraser McKinlay to pick up on some of the questions about the impact of the change and the future oversight of that money.
As the committee knows, we have been looking at arm’s-length external organisations for a good number of years now, not so much in the college sector but in local government in particular, and we have had conversations about them with this committee and with the Local Government and Regeneration Committee.
The arm’s-length foundations are, in effect, among those bodies, and the principle of following the public pound is absolutely key. What we can do—in this case on behalf of the Auditor General, and in the case of local government on behalf of the Accounts Commission—is ensure that the controls are in place to make sure that the flow of money between the two organisations is well controlled.
We audit the colleges, so we will be able to keep track of the money that they are taking out of the arm’s-length foundations and what it is being used for, and the controls around that process.
It is early days, but anecdotally we know of a couple of instances. We had a meeting with the FE sector auditors only last week, and there is some evidence coming through that the arm’s-length foundations are providing money to organisations that are not colleges but schools. We have not yet picked up any evidence of money going outside the education sector—that is where the articles of association are really important, as they define quite tightly what the funding can be used for. The committee should rest assured that, as those arrangements develop and mature, we will be keeping a very close eye on them.
There is an interesting tension in the system between our interest and the committee’s interest in ensuring that public money is well spent and well monitored and controlled, and the need to recognise the fact that those arm’s-length foundations are independent charities with independent trustees and that they therefore need to operate independently. They are regulated by the Office of the Scottish Charity Regulator, which has an interest in ensuring that the ALFs—if I can call them that—are operating independently of colleges or anyone else. We have experience of working through that sort of tension in the council sector in particular, and we will continue to keep a very close eye on the situation.
Are you satisfied that the measures that you are taking to audit the flow of that money will ensure that you satisfactorily capture all transactions and that you will be able to follow the public pound?
Yes, I am satisfied of that. That is not to say that we can give you a cast-iron guarantee that the process will be perfect 100 per cent of the time, because that is not what we do as auditors, but we are very alert to the very new development in the landscape that we are seeing. As I said, auditors will be keeping a very close eye on the issue.
Paragraph 7 of the report mentions that four colleges
“fell short of good practice”
in making severance payments. How serious was that?
That reference takes us back to pages 38 and 39, where we discuss in more detail the severance arrangements that were made.
Overall, we found that two of the colleges had some quite significant shortcomings. Indeed, there is another section 22 report waiting to be laid in Parliament on which I expect to brief the committee relatively soon. The other instances that auditors identified were less serious but still fell short of good practice.
As with your previous question about arm’s-length foundations, we have talked about the issue of severance payments in the college sector and in other settings a number of times with the committee. It is disappointing that an issue that is of such significant public concern is still causing problems. The bright point in the report that I can bring to you today is that the funding council has now worked hard to strengthen its guidance on the oversight of that. We hope that those instances are the tail end of past poor practice. I share the committee’s concern about them.
10:45
That issue leads back to paragraph 21, which says:
“The SFC also provided over £52 million between 2011-12 and 2013-14 to support college mergers. It plans to provide a further £6 million in 2014-15”.
The indication is that most of that went on severance payments. Was that money well spent? Have the benefits been properly measured? It seems that an awful lot of money was provided simply to pay people off. How many of the people who were given severance payments were senior staff—principals and so on—in the colleges?
I will ask my colleagues to come in with more detail in a moment. It is worth saying initially that, because one of the reform programme’s objectives was to generate efficiency savings by cutting out duplication, we were not surprised that significant numbers of severance packages were agreed and that money was required to support that.
Across the public sector, a key way of responding to reducing finances is to make short-term payments that release bodies from long-term employment obligations. We are not surprised by that. It is important that that public money is spent properly, that it is well governed and that payments are made and managed transparently.
I ask colleagues to pick up on the detail of the split between senior and junior staff and the things that we have seen working well and less well.
Do we have that information, team?
We do not have in front of us the numbers of senior staff involved, but I am sure that we will be able to provide something on that. We have received some information from the local auditors and from the audited accounts.
As the Auditor General pointed out, given the duplication in the sector, which was going through a merger process, and given that around 60 per cent of college expenditure goes on staffing, such payments are the most obvious way to make long-term, recurring savings. That is why the process was financed in that way.
We will come back with more detail about the principals and senior staff, Mr Beattie.
That is good, because one of the points that have come out is that the SFC does not really have powers to enforce good practice on severance payments. All that it can do is penalise the college by recovering funds, which of course penalises the students, not the people who benefited from whatever process was misused.
We looked at that closely as part of the report, because of the concerns that the committee has aired before. The Scottish funding council’s revised guidance is clearer about what is required and links well to our guidance on managing severance. However, you are right that unless there is illegality—in most cases, there is not—limited sanctions are available.
The situation is made more complicated for the reform programme because, in most cases, the colleges that made the arrangements no longer exist as legal entities—they have been merged into new organisations with new leadership that has formal accountability but was not part of the decision-making process. As you rightly said, the penalties that can be levied would penalise the new colleges and the students who rely on them for learning support.
It is fair to say that the funding council recognises those difficulties. That highlights the premium that should be placed on ensuring that the guidance is absolutely clear and that oversight of that part of any merger process is done properly in real time, rather than by auditors coming along afterwards and identifying through the audit process where things have gone wrong.
I have a point for clarification. Is the Scottish Colleges Foundation set up in a similar manner to an ALEO? I know that Fraser McKinlay will be aware of that because he mentioned it in the Local Government and Regeneration Committee.
Can we clarify the acronym ALEO?
ALEOs are arm’s-length external organisations.
You do not need to say that again—it is just for clarity.
I understand that the arm’s-length foundations are all charitable organisations. In that sense, the position is a bit different from that in the council and local government sector, where ALEOs are a range of organisations. Page 23 of the report states that the arm’s-length foundations in the college sector are charitable organisations.
Stuart McMillan referred to the national umbrella foundation that has been set up, and several foundations have been set up locally and regionally. In that sense, the bodies are similar, and we understand that the articles of association are similar, in that they define quite tightly what the money should be used for.
My question is on the same point. As you know, the committee and particularly the previous convener asked a lot of questions about ALEOs, so I felt quite assured about what was happening in relation to the ALFs, the articles of association and so on. However, when I read the report—particularly paragraph 47—I began to get quite concerned, as the paragraph states:
“There is no guarantee that these funds will be returned to the college sector as this would raise concerns about the independence of the foundations.”
As has been mentioned, the report says that
“Other organisations such as schools, voluntary sector organisations or private sector educational providers can also apply for funding held by these foundations.”
Under the recommendations of the Wood commission in its “Developing Scotland’s Young Workforce” report, some modern apprenticeships may be done through colleges or through the school sector, but there is nothing to stop voluntary sector or private sector providers saying, “We will train X number of apprentices every year.” It is fine if the ALFs decide to give them money to do that—the main thing is that people are being trained. However, we lose sight of the trail of the public pound if that happens because, after money goes out to a voluntary sector organisation or a private provider, it is none of our business.
Colin Beattie made a point about the audit of the public pound. It appears that, once the public pound has been allocated to the voluntary sector or the private sector, we do not have such an audit. Am I correct?
The sums that are transferred to the ALFs can be used only in accordance with the articles—the objectives—of those foundations. I do not audit the foundations; they are audited by auditors who are appointed under the framework set up by the Office of the Scottish Charity Regulator and they are regulated by the regulator in the same way.
You are right—the process is less transparent. We can look at the money that is transferred into the funds by the colleges and the money that is transferred back to the colleges by the trustees. One of the OSCR requirements is that the trustees are independent of anybody who might benefit. That is just one of the corollaries that are there.
As we have discussed in the past, that process has implications for transparency, and we are aware of it in sectors other than further education. I am not sure that there is an answer; that is an unavoidable consequence of the bodies being foundations.
I understand that you can audit the flow of money between the colleges and the ALFs both ways. In your response to Colin Beattie, you said that you would always have an audit of the public pound, but the truth is that when money goes from an ALF to other organisations—even schools and voluntary sector and private sector providers—there is no longer an audit of the public pound. Is that correct?
You are absolutely right. Such bodies are audited outside the usual public sector framework and there is less transparency about what comes back to the committee.
I am also concerned about measuring the expected wider benefits. I think that every parliamentarian here voted for and supported the college mergers, which we thought were a good idea. You said that there have been some savings. In the report, you mentioned a funding reduction of 12 per cent, but in your previous report—two years ago, I think—you mentioned a funding cut of 24 per cent, so we have a 12 per cent cut on top of a 24 per cent cut, which is serious.
You did not mention the number of students. In a previous report, you mentioned that there were 140,000 fewer students, but we do not have an update on how many more student places have been cut, although we have a reduction of 48 per cent in part-time students and of 41 per cent in students who are over 25.
One of the outcomes that were set for the college mergers was to widen access to people from more deprived backgrounds to address the inequalities gap. If someone is over 25 or has other commitments—family, for instance—and wants to do a part-time course, access seems to be more difficult. They might be the people who most need training and further education. Has it become more difficult for over-25s and part-time students to get into further education? Will achieving that outcome be more difficult?
There is an awful lot in that question. I will have a first bash, and colleagues might want to add some detail.
You are right about the direction of Government policy for FE colleges. It is appropriate for any Government to set its priorities, and the current Government has decided to focus on learners aged 16 to 25 and courses that lead to a recognised qualification. That has led to a reduction in the number of students who are over 25 and the number of part-time students.
In relation to the first couple of elements of your question, you might be interested in exhibit 5, which shows the trend in the make-up of students attending Scotland’s colleges over the past seven years, broken down between full-time students and part-time students. It shows a marked drop in part-time students, in line with the policy.
I think that the drop is of 150,000. That relates only to part-time students. I wanted an update because, in the Parliament, we have used the figure of 130,000 to 140,000, but I saw in the exhibit that the drop is 150,000 in part-time students alone. I am also interested in the over-25s, because their number has had a 41 per cent cut.
I ask colleagues whether we can lay our fingers now on the number of students broken down by age. If not, we can certainly let you have that separately.
Exhibit 7 shows the trend in funding over a longer period—the eight years going back to 2008-09. As you said, we previously reported a significant drop between 2010-11 and 2011-12, when the overall financial reductions came through.
Our bigger point is that the reform programme was the Government’s stated response to its policy objectives and the fact that funding remains tight for public services. Although it is clear that the mergers have contributed to efficiency savings, the Government has not set out clearly enough how it will measure the expected benefits of mergers, in line with our mergers report, which is going back a number of years.
For some areas, good baseline information is not available. That is important for committee members and the Parliament as a whole to satisfy themselves that the objectives of reform are being delivered and that there are no unintended consequences for other student groups.
In paragraph 54, we talk about the number of people—the headcount—which might help a bit. We say:
“In 2013-14, about 238,000 people ... attended college”,
which was just under 20,000 fewer than in 2011-12, and that is 36 per cent lower than in 2008-09. That paragraph gives the overall number of people attending colleges, and exhibit 5 and the paragraphs following it break that down by age group a bit.
My final point is sort of included in the report. I am not sure whether it is entirely appropriate, but I am sure that the convener will advise me. It was covered in this week’s Times Educational Supplement and in the local media. I have raised the concern before—it is about the cost of the regional boards.
Quite a bit has been said recently about the Glasgow Colleges Regional Board, but my concern is mainly that the money that has been allocated to the University of the Highlands and Islands Further Education Regional Board has been taken from front-line education in colleges. Will you give us an update? Generally, do you have any concerns about the governance of the regional boards and their cost? I am aware that that takes money from the front line, or the chalkface.
11:00
On page 20, we say clearly that the new governance arrangements are complex. It is too early for us to be able to say whether they are working, whether they are having the intended benefits or whether the concerns that colleges and others have expressed about the clarity of roles have substance.
We will audit the regional arrangements as part of the audit of FE in the future. The Glasgow Colleges Regional Board has not yet been required to produce a full set of accounts that we have audited, but that will be our way in. It will do so, and we will audit those accounts. We will look across Scotland at how the new arrangements are working, as part of the wider scope of audit that we do. All that I can do is assure you that we recognise some of the tensions and that we will look at the issues as part of our audit work and report back to the committee if that seems appropriate.
What is the timescale for that work? Will it be done this year?
It will be done on the back of the latest set of audited accounts. I am afraid that I have lost track of what that actually means, because there have been so many changes to them. However, that will be within the next 12 months, to keep the cycle going.
I am not surprised that you have lost track. You said in your opening remarks that there is no reliable information on the cost of the mergers. Is that so?
We do not think that there is good enough information on the cost of the mergers. The Government and the funding council know what was made available to colleges for central funding, and that is set out in the report. There will have been other costs that were not captured well enough. Equally, the baseline for some of the changes is not available in the way that we would expect it to be.
When will we have that information, or will we ever have it? I suppose that the better question is: is that auditable?
That is a good question. As we say in the report, the funding council plans continuing evaluations, and it expects some of the information that we have been looking for to come through that process. That is welcome and we will look at how well it works.
However, we are conscious from a range of work that we have done that, in some cases, it can be hard to go back and put in place information if it was not collected at the time. A number of things can change, including the broader funding allocation changes that would have happened in any case. It can be hard to go back and set the counterfactual of what the number might have been had everything else not changed.
The quid pro quo is that an assertion was made about savings to be made, which cannot be proved.
At this stage, the funding council and the Government could not give us the information that we asked for to demonstrate the costs of the merger process.
À la Mary Scanlon’s question, do we have any notion of when the committee might be allowed to understand what the numbers might be?
I ask Susan Lovatt to talk you through the plans for evaluation, what we think we will have and what our concerns are.
As part of the merger process, the funding council agreed to undertake two post-merger evaluations for each merger college—one at six months and one at two years post-merger. As part of the fuller assessment—the two-year post-merger evaluation—the funding council will focus on the costs and efficiency savings that the colleges have identified. At this point, we do not have that detailed information, but the funding council has highlighted that it will address that theme as part of the two-year evaluation.
I am sure that that is true, but your report says:
“The Scottish Government identified that mergers would deliver £50 million of efficiency savings each year from 2015-16”.
Where is the evidence for that?
At this stage, we do not have it. That is why we recommended on page 6 that the Scottish Government should publish that information.
It strikes me that this is like the situation with the police. The Government has made an assertion about how much will be saved, but the Auditor General has told us that she has not been able to find that assertion to be correct.
We do not have the information at this stage. Susan Lovatt outlined what we have been told are the plans for collecting it. As you know, the issue goes way back to our original report on managing mergers, in which we said that clarity about the expected costs and benefits is important to underpin the rationale for making the changes.
It would be fair to assume as a parliamentarian that, when a Government says that it will make £50 million of savings, it has a pretty decent reason for having come up with that figure—otherwise it might have been £20 million, £30 million or £140 million. As you say in your report, it made a clear statement about £50 million. Did you find any evidence in your audit of the Government of how it came up with the figure of £50 million?
We have looked for evidence of the savings that the process has generated and have not found that. That is a question for the Government rather than for us.
I apologise; I am sure that that is entirely true.
Paragraph 29, which is on the whole area that you have very fairly described, describes a change in the target or the scale of savings expected—I do not know what you would call it. The paragraph says that the letter from the Cabinet Secretary for Education and Lifelong Learning
“was superseded by revised guidance in March 2013”.
Were you able to understand why the Government changed its guidance? That must have been genuinely difficult for everyone involved.
Our understanding is that that was to prevent unintended consequences to individual colleges in being asked to make very significant savings. It was not about the overall quantum; it was about the spread of savings across colleges. Again, you may want to explore that with the Government.
Did you discover whether, when that guidance changed, it made a material difference to the potential savings that could be accrued through the whole merger process?
No, it did not. The figure of an expected £50 million of savings through the merger process remained.
But that would be a reasonable question to prosecute.
I think that Colin Beattie started on this area, but I want to take you back to your conclusion that
“The changes to date have had no significant detrimental effects on students”.
Will you talk us through how you came to that conclusion? What did you look at that allowed you to arrive at that conclusion?
I will ask Susan Lovatt to speak in a moment.
It is clearly important to put the matter in context. The changes are still very much under way, and the curriculum reviews in particular are still in process. We know that the focus can be only on the students who are in further education, not on those who have not been able to access it because of changing priorities.
Susan Lovatt can talk members through the material in the paragraphs from paragraph 48 onwards on the evidence that is available and why we drew that conclusion.
As part of our audit fieldwork, we requested information from the fieldwork colleges. We requested surveys that they had done with students to identify any issues that arose through the merger process. The Scottish funding council had carried out all its six-month post-merger evaluations. As part of that process, it had met a range of students to gather views. We also reviewed the reports from Education Scotland, which was also involved with discussing with students their expectations and experience of the merger process. From gathering all that information together and analysing it all, we reached the conclusion that there had been no significant detrimental effects on students.
As part of our discussions with the merger colleges, significant emphasis was certainly placed on maintaining business as usual for students. Their ultimate priority was to minimise any negative effect and ensure that learning provision was maintained throughout the merger process.
That is helpful.
I presume that you have seen the comments that Larry Flanagan from the Educational Institute of Scotland made in response to the report. He said that that conclusion is “simply wrong”. To find some common ground between Audit Scotland and the EIS, I take it from what you have said that your assessment was very much about current students at college and that a lot of the debate and commentary on what has happened in our colleges relates to the figures that Mary Scanlon asked about: on the thousands of kids who are not at college, the places that are not available and the courses that are no longer taught as a result of the changes. You did not comment on that impact in your report. Is that correct?
That may be part of the difference that has been expressed. I will ask Fraser McKinlay to say a bit more about that in a moment.
As Susan Lovatt has outlined, we looked at all the evidence that was available from the surveys of the four merger colleges that we looked at in detail, the SFC work and the Education Scotland inspections that have taken place. All that evidence tells us that there has been no detriment for the students who were consulted. That has been an objective of the colleges to maintain.
We know that there are students who, because of the policy priorities that are in place, are not in education in colleges when previously they might have been. We have not looked at their views at this stage—that is a bigger question.
There is also the important caveat that significant things such as the curriculum reviews may lead to changes in future in what teaching takes place and where it is delivered. It is too soon to know what those changes might look like or what the effect would be.
Fraser, do want to add anything to that?
I can do so briefly, in terms of our work.
We are reviewing how we go about doing this and our other overview reports. We do reports on the national health service for the Auditor General and on local government for the Accounts Commission. The report is, by definition, an overview report of the sector. However, given the substantial issues that are raised in the report, we are looking at what else we might do in a bit more detail in the next period.
As part of that exercise, we would of course be delighted to speak to the EIS and other unions, as we do for other, more specific work. They were very closely involved in the education report that we did last year, for example. We have seen the EIS’s comments, and we are more than happy to engage with it and others as we take the report forward and think about what issues we might want to take a closer look at in the future.
Clearly, there are points in some of the comments that the EIS has made that support the report’s conclusions and there are areas of common ground between the EIS’s conclusions about what is happening in the sector and your conclusions based on the report. However, given that the report is an overview of the sector, do you think that you could have done more to engage with the EIS in the report’s production?
I am absolutely happy to reflect on that. As I said, because of the nature of the report, we have tended to use evidence that is generated by others, so our starting point was to see what evidence there is from colleges, Education Scotland and others. However, as I said, I am very happy to reflect on how we do that in future.
That takes me to my final point. Beyond the criticisms about what has happened to the students who are no longer in colleges, there is the criticism that the report is driven from a management perspective. That is borne out slightly by the fact that the information that you base your conclusions on is provided as a result of the administration or the management of the college system.
I suppose that this point goes back to the earlier point about redundancies. I think that you said that you would give us a bit more information about who has left the sector. Do you have a view about what balance you would expect to see? Clearly, the EIS as a professional body would be concerned about head count in terms of its members, which is understandable. Would you have expected to see the balance that is there in terms of senior managers leaving colleges as a result of mergers? At the heart of the argument for mergers was that having the same senior posts is duplication but that having people in lecture rooms, classrooms and workshops teaching is not duplication because that is the purpose of the service. Is what we are seeing what should be happening? Do you have information on that, or could we be provided with it?
I have a couple of observations. First, you are right in that we used evidence from a range of sources, but I would not want the committee to be under any illusion that we are not professionally sceptical about that evidence. It is our job to look at all the evidence that we receive: we look at what confirms it and what might counter it, and we ensure that the picture as a whole is consistent. If it is not, we go and look for more evidence. We are not uncritical in any circumstances of what is provided to us by colleges, by the funding council and by the Government.
On the question of who we might expect to be leaving the college sector as a result of the reforms, you are right that we would expect there to be a reduction in the management teams. For example, if three colleges are merging, they do not need three principals and three times as many assistant principals as they might have had. That is why some of the focus where a merger has not been managed well is very much at the level of the most senior people.
Equally, as the merger process continues and the new colleges and their boards are looking at what learning is required in their local region and how it can best be delivered to meet the needs of employers and learners, we would expect to see some changes quite unevenly distributed among both the teaching staff and the support staff of the colleges. It is that picture that we have not been able to give you in detail today.
We will have a look at what is available and come back to you on that issue. However, for people other than those in management teams, I would expect the position to be quite variable because it should properly be based on an assessment of needs and what has been inherited by the new colleges.
We can help the committee with a bit of detail through exhibit 12 on page 37 of the report. The table does not show specifically who has gone through voluntary redundancy or severance schemes, but it gives us some picture of the shift in staffing across groups. The table shows that the teaching staff reduction variance as a percentage is about 9 per cent, and that the biggest chunks are in “Other support services” and “Other income-generating activity”.
There is a mix, but it is difficult for us to say whether it is the right or the wrong mix. Obviously, within each of those groups, there will be lots of very interested parties, not least the trade unions for the different groups of staff, who will be concerned about the mix.
A big part of our job going forward will be to continue to monitor the impact, as this is all pretty new. Although, as Caroline Gardner says, we are not seeing lots of strong evidence of detriment, we will keep a close eye on the situation as the merger processes bed down.
11:15
Would you say, on the basis of what you have looked at, that, as a result of the programme, Scotland’s colleges have a flatter management structure than before? Has the proportion of the budget that is spent on managing our colleges, as opposed to teaching people, decreased?
There are fewer managers in Scotland’s colleges, but because colleges are still looking at their staffing structures we do not yet know whether they are flatter across the piece. As Susan Lovatt said, the focus has been on continuing to deliver teaching to learners during the early stages of the process.
We will keep the matter under review as we continue our work in the sector, and we will bear the points that you raise in mind when we pull all the information together for the next stage. At this stage, however, the reform programme is still in process, as we say clearly in the report, and we do not have a settled idea of what the management structures look like or the proportion of the budget that is spent on senior staff relative to what is spent on teaching staff.
Your comment about the changes having had
“no ... detrimental effect on students”
is a pretty significant statement. The whole purpose of the reform programme is to improve the student experience, but those who are no longer on part-time courses because of the emphasis of the programme have not been consulted.
If somebody carries out a survey at a college, that misses a significant body of people who should have been at the college and who, if they had been consulted before they had left, might have said that the changes had had a significant impact on them. Your statement is a significant one, given that a body of people is missing from the process.
I understand the ways in which we go about assessing these things, but it is probably not the most objective way to collate opinion to ask the Government body that has a significant role in the process whether it thinks that it has been pretty good. Is there not something to be said for taking a more objective approach?
Those are two different questions, convener.
The question that we have looked at is for the students who are being served by Scotland’s colleges, and it asks how their experience has been affected by the reform programme. We have not just asked the colleges whether they think that the programme has had an impact; we have looked at the student satisfaction surveys, the SFC evaluations and the inspections that have been carried out by Education Scotland. We have pulled all that information together to arrive at our careful conclusion in the report that, to date, there is no evidence that there has been a detriment to students’ experience. That is not as positive as saying that the position has improved—we will look for that improvement in the future—nor is it saying that there has not been a detriment; we are just saying that there is no evidence of that.
You are right, however, to say that there is a bigger question about—
To be fair, though, should the audit team not have said, “Wait a minute—there are all these students who are no longer on the campus but who have been affected by the merger”? Somebody on the team that carried out the work should have said that. I can see that straight away, and I am not an auditor.
Somebody could have said, “Why not ask those students who have been affected by this?” To be fair, the students might have said that the changes had allowed them to move on to a full-time course. However, they have not been part of the consultation process, so how can we say so strongly that the programme has not had any detrimental effect? I take on board the point that you are making, but it is still a strong statement to say that it has had no detrimental effect on students.
I agree with you. That is a separate question—and an important one. We have looked at the students who are still being served by colleges, and that is the conclusion that we have come to. However, it is entirely appropriate to ask about the students who were in part-time further education before and about older students who had access to courses. That is something that the Government—
People at college are probably happy about it because they are still there. It is the ones who are not there who have had to move on.
I genuinely think that there are two separate questions. It is quite possible that there could have been a negative impact on the experience of students who are in colleges from all of the things that are involved in reform, ranging from college management having their eye off the ball to disgruntled staff—from all of the things that could have affected them. From the evidence that we have, there is no evidence that that has happened.
I entirely agree that there is a separate question about the effects on the part-time or older students people who might have been in further education previously but who, because of the Government’s policies, are not. That is not something that we as auditors can look at, though—it is something that you might wish to explore with the Government and the Scottish funding council to see what they know about the impact of that policy decision and to establish how else those people might have their particular learning needs met in the context of the Wood review and the focus on younger people’s skills.
Good morning, Auditor General. I take you to paragraphs 79 to 81 of the report, on pensions. Clearly, there is a general issue around public sector pensions, and there is the imponderability of future returns. Therefore, actuaries will keep going on a cyclical basis, giving us different numbers and values relating to how underfunded or overfunded we are.
My question is in the context in which this report on our colleges has been written. Is there anything significantly different between what you were considering on colleges and the general problem of public sector pensions, to which we will presumably return another day?
I would say not—colleagues might wish to add something in a moment.
What we are seeing here is a significant pension liability, which needs to be managed over the long term. The staff tend to be members of either the teachers superannuation scheme or the local government pension scheme. One is unfunded and one is funded, so they throw up slightly different questions, but both of them have been through the process of negotiated changes over the past few years, which were intended to make those liabilities more manageable. We will be looking at the effect that they have.
The difference is that colleges tend to be small bodies, so the impact of changes on their balance sheets from one year to another—in assumptions, in discount rates and in life expectancies—can look like particularly large numbers in this context. However, that is not a different issue for colleges compared with public bodies across the piece.
That is helpful.
The report mentions that staff numbers have decreased across the estates by nearly 10 per cent over the past three to four financial years. It says that those reductions were met “mainly through voluntary severances.” Are there a number of reductions that were not managed through voluntary severance arrangements?
Martin McLauchlan may be able to add a bit of detail on this but, in most mergers, we would expect people to take other opportunities, too. For example, if somebody resigns to go to another job, that post will not be filled so as to help towards the process.
As has just been outlined, there is natural wastage—people will be resigning and retiring who might not be replaced. That is why we cannot say that 100 per cent of the reductions are due to voluntary severance. There will always be an actual turnover of staff.
Have there been any compulsory redundancies?
As far as I am aware, no.
No.
It is Government policy not to have compulsory redundancies. I asked just for clarity in relation to that paragraph of the report.
I thank the Auditor General for her evidence.
11:23 Meeting suspended.Previous
“Major Capital Projects”Next
Section 22 Report