Item 2 is on the Scottish Qualifications Authority. We have circulated to members a letter from Tom Drake, the interim chief executive of the SQA, in response to the Audit Scotland report "Performance management in the Scottish Qualifications Authority". Members will recall that we wanted to seek responses rather than to institute inquiries on a number of the Auditor General's reports—this was one of them.
The figures that we had were that the gap was around £12 million in 2005-06, so we have not been able to reconcile that figure with the statement that it will rise to £5 million in 2015.
The deficit was £12 million in 2005-06, so we are not clear whether that is an additional £5 million, whether the word "to" should be "by", so that the sentence reads "will rise by around £5 million", or whether the projections are that by 2015 the £12 million will have reduced but then increased again to £5 million. There is dubiety about the figure, so we will seek to clarify it. That is for members' information.
Is not there a proposal to reduce the number of examinations that pupils have to sit at age 16? Has that been factored into the calculations? If the total number of examinations were to decrease, the SQA would not be setting as many exams, which would reduce its costs. The price is kept up because the numbers go down, which means that the money that the SQA receives depreciates, but the expenses for setting exams and commissioning marking schedules stay the same. Surely reducing the number of examinations that children aged 16 have to sit will have a considerable effect on reducing the SQA's costs.
In principle, that is right. The letter suggests that only demographic changes have been taken into account. However, you will need to ask the SQA about what underlies its calculations and the extent to which it has taken into account the proposed changes.
We can include that point in our request for clarification.
I really do not know what to make of the response. The process that has been outlined involves various "assumptions on income", including "an estimate" on which a balanced budget is agreed. The real problem is the "widening gap" between expenditure and income. Although we now doubt whether the figure that the SQA has given us is accurate, its estimated deficit in 2005-06 is £12 million. Its response to the situation is to flatline its costs and to look for "commercial opportunities".
It is certainly within the committee's gift not only to seek clarification of some of the figures in the letter but, as Robin Harper has requested, of some of the assumptions on which those figures are based.
I am sure that not only we but the SQA would find it useful to indicate a range of reactions to the outcome of the curriculum review. For example, if the review reduced the total number of examinations that children aged 16 have to sit, things might look a little bit more optimistic for the organisation. It should at least be able to say the steps that will need to be taken in that case and in the worst-case scenario of things carrying on as they are. I believe that what we have in front of us is the worst-case scenario and that things could be a lot better.
Although flatlining its operating costs might well have been an achievement for the SQA, if the projections show that the potential business is going to shrink considerably, is such an approach a sufficient and proper reflection of what its operating costs should be? I am sure that the organisation is asking such questions, but the answers are not in the letter.
Enough red lights are flickering in respect of the response to make it clear that the problem is serious. Perhaps we should at the very least alert the appropriate minister to the response. In the end, if the matter is not dealt with, it will come back to a successor Audit Committee. We have been warned that the current process is neither financially nor organisationally healthy.
We are not yet in a position to alert anyone. However, if we get the information that we seek, we can alert Parliament to our concerns. I think that that is the proper route.
I am happy with that.
As there are no other comments, do members agree that a letter be drafted on the committee's behalf, seeking clarification on the points that have been discussed?