Audit Committee, 10 Jan 2006

Meeting date: Tuesday, January 10, 2006

Official Report 304KB pdf

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Further Education Colleges

We move to consider the response from the Executive to the committee's seventh report on further education colleges. Members have a paper before them from the accountable officer, Eddie Frizzell. I invite comments from members on the Executive's response. Afterwards, I will invite Audit Scotland to make its comments and observations so that we can consider where we go.

Can I start at the end of the response? When the committee was taking evidence on further education colleges, my concern was about funding for colleges that cover rural and remote areas. I am decidedly unhappy about the response from the Enterprise, Transport and Lifelong Learning Department, which says that there is at present no evidence to suggest that higher education institutions generally are being affected by the cost of taking students from remote areas. That does not fit with the evidence that we heard. We heard evidence about colleges having to provide an establishment at a distance. That is not dealt with in the response. We also talked about linking the funding to similar models, such as the Arbuthnott formula, yet there is no mention of that in the response. There is merely a statement in paragraph 47 that

"This review is scheduled to commence in May 2006."

Some colleges are still having difficulties because of the areas that they serve. I would have expected work to help them to be already under way. I know that we will get further information on FE colleges from Audit Scotland later this month. It may well be that that is an area to which we can return, instead of keeping the correspondence going.

Okay. The committee would be interested in keeping a watching brief on remoteness, but it is fair to say that, given that some colleges are more remote than others, we were surprised at some of the colleges that met the remoteness criteria.

Exactly.

It is clear that the definition of remoteness will be germane to Margaret Jamieson's point and what the Executive decides to announce.

Are there any more questions?

I want to deal with the situation at West Lothian College. Paragraph 11 on page 2 of the Executive's response mentions

"concerns about the College's ability to eliminate the ‘operating' element of the accumulated deficit"

within the agreed timescale, so it looks as if that timescale will not be met.

Excuse me—that part of the response is about Inverness College.

I beg your pardon; I apologise to West Lothian College. Is the timescale for eliminating Inverness College's deficit being revised and, if so, do we have a new date? Did the meeting that took place on 20 December produce any result? Finding the finance to deal with the accumulated deficit is a major problem, especially as it involves pension payments. Can Audit Scotland give us an update on the position?

I am not sure that Audit Scotland will be able to deal with that point. What struck me about paragraph 13 is that although it mentions that a meeting was to be held on 20 December 2005, it does not say that the information from that meeting would be forwarded to the committee. It is natural to assume that, having been told that there would be a meeting on 20 December, we would be interested in its outcome. It would have been logical to add to the information that there would be a meeting an assurance that we would be informed of its outcome. I rather suspect that members will want to know that outcome. At the very least, we will now have to write to the college or to the accountable officer in the Executive department to establish what has happened.

Rather than go backwards and forwards to Audit Scotland, it might be best to go through our observations first and then invite comments from Audit Scotland.

I want to comment on West Lothian College rather than Inverness College, although I agree with the points that have been made. We asked to be kept up to date on the negotiations on the private finance initiative contract at West Lothian College. As we have not heard anything, I can only assume that matters have not been resolved. I am conscious of the timing and am concerned that there could still be uncertainty as we go into the next financial year, which could prevent the college from getting on with its business. We should not be unaware of that. It would be useful to get any update information as soon as possible.

Paragraph 13 makes it clear that the

"underlying deficit of £516,000 represents a significant deterioration against a forecast outturn of £244,000 deficit".

That is quite a significant variation in the projections, which was obviously going to be discussed at the meeting on 20 December. [Interruption.] I should clarify that I am talking about the projections for Inverness College.

As there are no further comments, I invite Caroline Gardner to give Audit Scotland's observations on the response that we have received from Eddie Frizzell.

Rather than comment in detail on the response itself, I want to put it in context by saying where we are in the cycle of audit work on further education.

Two things are happening as we speak. The annual deadline for the receipt of audited accounts for FE colleges is 31 December, so we have just got in the audited accounts for all the colleges. It is likely that the committee will receive section 22 reports on at least one college in the next three or four weeks as we consider the accounts and examine the issues that they throw up. Inverness College is obviously a strong candidate for a section 22 report, given what the committee has been told by the Executive, although I must stress that that is based on unaudited information, as we have only just received the audited accounts.

You asked us for an update on the Scottish Further and Higher Education Funding Council's progress on the committee's earlier recommendations relating to the sector. That update is being finalised as we speak and is due to go to the printer this week. We expect it to be published before the end of January. It might be worth seeing both sets of information before members decide how they want to follow up the issues that they have identified today from the department's response.

That is helpful. From the unaudited information that you have received from West Lothian College, is there any indication that it is a candidate for a section 22 report?

I cannot comment on that at the moment. All that I can say is that that college's position in respect of the PFI contract has not yet been resolved, as far as we are aware.

Thank you.

From what members have said, it is clear that there is still a great deal of interest in a number of issues relating to a number of colleges, which we want to follow up. However, further evidence that is pertinent to our deliberations is still to be made available and it would therefore make sense to hold off further consideration until that information is before us. We should not have to hold off much more than a month at most; indeed, perhaps we can consider the information during the meeting on 7 February. Do members agree that such an approach is appropriate?

Members indicated agreement.

We will defer further discussion until 7 February.

I thank Caroline Gardner and suspend the meeting for a couple of minutes while our next witnesses take their seats.

Meeting suspended.

On resuming—