Item 5 is on "Estate management in higher education". I invite the Auditor General to brief us on his report.
This is the first report to Parliament that I have made concerning the higher education sector. I am not responsible for the audit of individual institutions in that sector, but I have a statutory right to initiate studies into economy, efficiency and effectiveness in most higher education institutions. That right does not apply to the eight oldest universities in Scotland. However, I was pleased that they agreed to take part in our study. There are currently 21 higher education institutions in Scotland. Their estate includes more than 1,000 non-residential buildings on 72 sites. The total estate has a value of almost £5 billion.
Thank you. I am sure that when the committee deliberates on what inquiry to hold, there will be rigorous examination of certain questions and ideas. The issue with which the report deals is critical for the future of Scottish education. We cannot have a high-performing higher education sector, if we do not have resources that allow students to study and staff to deliver high-quality education. We are in a competitive UK and world market, so there are big issues to deal with.
No, we did not consider that issue directly, but we examined what had been happening at individual institutions. The prevailing pattern is of each institution designing its estate strategy primarily around its own requirements and plans, which I suppose is perfectly understandable and appropriate. We did not find much evidence of collaborative use of estates by different institutions. Graeme Greenhill and Andra Laird might be able to fill that answer out a bit.
There certainly was not a lot of collaboration in planning estate development works, but there was a bit more sharing of the existing estate.
There is quite a lot of joint use of equipment. An institution might allow lecturers and students from other institutions to use a particular piece of equipment. The key point that we are trying to get across is that, when buildings are being designed or equipment is being purchased, it is done for the institution's own benefit. The institution might consider subsequently how best to use the facilities, rather than considering that earlier, when they might find other potential users, which could change the specification of what they buy or build. We hope to see more collaboration in the earlier stages.
Should the funding council take a closer interest in that?
We are suggesting that the funding council could refine and develop the criteria that it uses to help to steer the strategic approach to all this. I said a moment ago that it has a couple of core criteria. When it is evaluating performance, it tends to consider the overall condition of the estate and the total value of the maintenance backlog. We think that the criteria could include factors such as financial indicators to demonstrate the efficient use of assets; space-use indicators, which are common in the management of estates; fit-for-purpose indicators that demonstrate that the assets are being effective; and environmental indicators, which look at water and energy use and the long-term sustainability of the estate.
I want to ask about future funding. You referred to the improvements in investment that have been made since 2001-02. You have reflected on the greater challenges that Scottish universities face, for historical reasons, including the large number of listed buildings. You said that it is too early to see the impact of the greater investment that has been going in. I note from your report that the universities raise a significant amount of money themselves to invest in their estates. However, that still does not take away from the big issue confronting universities in Scotland, which is how they compete in the first instance on a UK basis.
That would require a forward look, which is not easy or appropriate for us to do in any great detail, but there are a couple of points that are perhaps worth making to help your general appreciation of the issues. Let us first consider exhibit 1 on page 9 of the main report, which I think is replicated in the summary.
The exhibit is also in the key messages document.
The chart indicates different categories of institution: the SSIs, which are small specialist institutions such as the Royal Scottish Academy of Music and Drama; the pre-1992 institutions; the post-1992 institutions; and what we call the ancients, which is rather a nice term. It also shows the total.
In other words, although much has been achieved, there is a huge amount more still to be done. The questions are whether it is realistic for the Government to provide the resources and, if not, where else those resources might come from given the political constraints that are put on funding by politicians.
That is an important issue. In its last spending review, the Scottish Executive committed funds through to 2008, but there is no indication of the funding beyond that. There has certainly been evidence of a steady build-up of funding each year from a starting point in 2001-02 of £15 million to the much more significant sum of £126.5 million in 2007-08. There is currently no indication of the plans for funding beyond 2008, although we have had indications from within the Government that it is using the report to inform its thinking.
I want to follow up on the convener's questions about funding. You indicated earlier that the maintenance backlog across the sector was in the region of £700 million. It is a well-known phenomenon, not just in the public sector but in the private sector too, that when funding gets tight instead of making cuts in salaries or head count, organisations put back the things that can wait for another year, such as non-essential repairs to buildings. Is that what has been happening in the estate? In other words, does the £700 million backlog represent in effect a sort of hidden deficit in funding that has accumulated over a period of years?
Statistics are available from about 2000, so we cannot give you a robust answer based on a long-term view. It is true to say that problems of maintenance, repair and refurbishment are long running—there will have been an historical problem. That was first recognised explicitly back in 2001-02 by the Executive, when it started making a specific allocation of money—albeit a small sum in that year of only £15 million—to address the problem of the higher education estate. Of course, that has been built up subsequently. My colleagues may be able to shed more light on the extent to which that is a problem inherited over many years.
Before 2000, and ring-fenced funding, institutions were investing in their estate. For example, the University of Edinburgh started developing Little France. What institutions have said to us is that having the money ring fenced since 2001 for capital projects has been very helpful in that it has enabled them to be sure what they are doing and what they are getting.
You mentioned that part of our problem is that we have older buildings, which are often listed, especially in the case of the ancients. A hard-nosed businessman would probably say, "Okay, let's sell up the old and buy some new state-of-the-art buildings, and maybe make some money on it." Do you see a trend in future of such rationalisation on the part of universities, or has it already started?
The high-level answer is that every institution is in a unique place because of the make-up of its estate over many years. In Glasgow, for example, at one end of the spectrum there is the University of Glasgow which, as the report highlights, has a large inheritance of listed buildings and old buildings that are expensive to maintain and refurbish, and, at the other end, there is Glasgow Caledonian University, which has made major investment over the past few years on what was a fairly rundown site. The university is seeing the benefit of that, which is showing through in some of our statistics. The situation varies enormously, but I am sure that the team can say more about that.
We have discovered that many institutions really value their listed buildings. They are what attracts people into the country, so there is a limit to what can be done in terms of putting them aside if they are becoming expensive to maintain.
Some of them are almost icons.
Yes.
I was interested in the point that someone made earlier, when they said that it is sometimes of secondary consideration that new equipment could be procured in a way that would provide benefit to other institutions, particularly local ones. How do we get closer to improving the co-location of facilities and services and the procurement of equipment? Do we have to build it in as a requirement in the procurement process? You were saying that institutions tend to operate individually—they deliver for their own students and their own campus. You said that we are perhaps moving into a new age in which they need to think more seriously about co-location and joint procurement initiatives.
I think that our report adds support to that point of view. As I think I said earlier in an answer to the convener, we have suggested some of the core criteria that might be used to steer future investment. One criterion has to be whether a particular project is designed to be used by more than one institution. An evaluation of the options should take account of what already exists not only in individual institutions but in the wider area.
On the first point that Mr Coffey raised, after the report was published, someone in the sector told us that they recognised the need to do more, and to be seen to be doing more, in developing facilities jointly. There was some resistance at first, but it seems that people are now taking the idea on board.
We have an opportunity. The institutions are expected to produce updated estate strategies by the end of this year. A key part of preparing those strategies will be assessing estate needs and considering their costs. Those costs will have to be benchmarked against those of other institutions, and that may encourage people to think about rationalisation and sharing services, for example.
I thank the witnesses for their answers. We will reflect on them.