Subordinate Legislation
Further and Higher Education (Scotland) Act 1992 Modification Order 2009 (Draft)
For item 3 we are joined by Fiona Hyslop, the Cabinet Secretary for Education and Lifelong Learning, who is accompanied by George Reid, team leader, and Anne Black, policy official, further education strategy and college-specific issues, and school-college review team—I like the title. I invite the cabinet secretary to make a statement on the order.
Good morning. I am pleased to have the opportunity to outline why the Government seeks the committee's support for the order. If Parliament approves the order, it will represent the last brick in the wall in our measures, which have attracted welcome cross-party support in the past, to protect the charitable status of Scotland's colleges of further education.
I believe that our colleges and their interests are very much worth protecting. Colleges make a huge contribution in many areas. They deliver key employment skills to keep businesses competitive, they strongly promote access and inclusion, and they encourage many people into learning, often young and disengaged people. Colleges have already started to reposition themselves to help people to cope with the impact of the economic downturn. Overall, they deliver considerable public benefit. We share the view of the Office of the Scottish Charity Regulator that colleges have an inherently charitable purpose and therefore do not believe that it is right that their charitable status should be threatened.
All incorporated Scottish further education colleges are charities and, as such, must meet the charity test that is contained in the Charities and Trustee Investment (Scotland) Act 2005. The Parliament has already made legislative changes to help colleges to meet the charity test. Under the previous Administration, Parliament repealed ministers' power to give a direction to a college's board of management. Last year, Parliament agreed to exempt colleges from the requirement to operate completely independently of ministers. This third and final step concerns the need to deal with a ministerial power that is no longer used but which nevertheless requires to be addressed because it has never been repealed. The power in section 18 of the Further and Higher Education (Scotland) Act 1992 allows ministers, where a college sells an asset, to require the proceeds or .such part of them as determined by ministers to be paid to the Government. There are no conditions on what the proceeds should then be used for. OSCR has taken the view that they could theoretically be used for a non-charitable purpose.
Nowadays, all financial issues affecting colleges are a matter for the Scottish Further and Higher Education Funding Council and the college concerned, rather than for ministers. The policy of successive Administrations has been that those issues are best dealt with by the professionalism and expertise of the funding council, free from political interference. However, ministers' section 18 power has remained on the statute book and OSCR has highlighted it as being inconsistent with an important principle of charity law, namely that the assets of a charity should not be used for a non-charitable purpose. The intention of the order is to make a change that will satisfy OSCR on that point. Given that it is now the funding council's role to oversee the funding of the college sector, it is difficult to envisage any circumstances in which ministers would now directly intervene in the financial affairs of an individual college. However, if ministers ever did use that power, the order requires that the proceeds of the disposal must in future be applied for charitable purposes. Specifically, the order provides that the proceeds must be paid to an educational charity named by ministers rather than directly to ministers.
I will explain why we are not asking the Parliament simply to repeal the offending ministerial power, even though there is little prospect of its ever being used. The Government has made a commitment to undertake, along with stakeholders in the college sector, a comprehensive review of all the powers that ministers hold over colleges. We recognise that a number of stakeholders, such as the Scottish Trades Union Congress and the National Union of Students Scotland, attach significant importance to the existence of ministerial powers over colleges as a means of ensuring the democratic accountability of colleges. Those are legitimate views that we feel the review should consider. We believe that it would therefore be wrong to repeal the ministerial power in question in advance of that review.
It is important to note that colleges will still be subject to all other requirements of charity law. If they do not conform to those requirements—for example, the standard of conduct required of charity trustees—they will, like any other charity, be liable to lose their charitable status. There is therefore no blank cheque for colleges.
Finally, I point out that there are four publicly funded colleges that are not incorporated under the 1992 act: Orkney College, Shetland College, Newbattle Abbey College and Sabhal Mòr Ostaig. Those colleges are not caught by the problem identified by OSCR and will not be affected by the order.
The order is important as it addresses the final uncertainty that incorporated colleges face about their continuing charitable status following OSCR's ruling on ministerial powers. I commend the order to the committee and am happy to take any questions.
Thank you for that detailed statement. Members now have an opportunity to ask questions on the order.
Like other members, I very much welcome the order and the fact that a solution has been found to ensure that colleges retain their charitable status. As you have outlined, any payment would be made to an educational charity named by Scottish ministers. You suggested that it is unlikely that we would find ourselves in that situation, so this question is perhaps not very relevant, but do you have any examples of educational charities that might benefit from such a payment or of any other way in which you might direct the money? I appreciate that you have probably not thought through to that stage and that it would require an unlikely set of circumstances.
The power has not been used since devolution and it is unlikely that it would be used now, because we would expect the funding council to deal with such matters. The order says that any resources would be used for educational benefit—for example, an educational charity or another college—or put back into the funding council's pot for supporting colleges. That would be the most logical conclusion. We can reassure the committee that Cabinet colleagues would not necessarily want the proceeds to be used for other purposes. That is the sensible way forward.
That is helpful.
If there are no other questions, we will move to the formal debate on the motion.
Motion moved,
That the Education, Lifelong Learning and Culture Committee recommends that the draft Further and Higher Education (Scotland) Act 1992 Modification Order 2009 (SSI 2009/draft) be approved.—[Fiona Hyslop.]
Agreed.
You have perhaps been a little premature, Mr Gibson.
What enthusiasm.
Indeed. We are all enthusiastic about this. However, I am sure that the committee's enthusiasm in no way matches that of Mr Howard MacKenzie, who is sitting in the gallery watching the cabinet secretary, just in case the matter is not concluded to his satisfaction.
We now have up to 90 minutes to debate the order. I welcome the Government's commitment to address the issue. As I am sure the cabinet secretary is well aware, it is an issue that colleges raised during the progress of the Charities and Trustee Investment (Scotland) Bill in the previous session of Parliament. I was the convener of the committee that considered that bill, so I am particularly pleased that the Government has recognised those concerns. We will ensure that the measures introduced by the Government today protect not only the colleges but the integrity of the charities legislation.
Minister, do you have anything further to add?
No, thank you.
Motion agreed to.
I thank the minister and her officials for their attendance. Mr MacKenzie is waving in celebration behind you. I am sure that he will write to you and tell you how pleased he is with you on this occasion.