Chamber and committees

I was not so much saying whether it was a good or a bad thing but, looking at my own area, we have Forth Valley College, and there is this potential dog-eat-dog approach where people are chasing student numbers because that is the basis of much of the income of both further and higher education institutions. Within a board area that has three different campuses, even if the two larger campuses decide that they want to be the ones to get the lion’s share of the numbers, it strikes me as odd that there seems to be substantial unmet demand. For example, lots of students want to go to the Forth Valley College Alloa campus in Clackmannanshire, yet it cannot afford to fulfil those places because of the grant that it gets. It seems to me that there is more of a general dog-eat-dog approach between the different institutions. I have not finished reading your previous report so I do not know whether you have covered that, but it would have important implications and lessons around the direction for the sector more generally if that was the case. Are we looking at fewer students? What is the effect of the income that has been lost from overseas students in particular, and how do we get a more equitable distribution?

I remember that, 20-odd years ago, Audit Scotland did a best-value report on local authorities, in which the council of which I was leader—Clackmannanshire Council—came top. We never heard any comment on that apart from the comments of Clackmannanshire Council and myself, who shouted about it for years afterwards. However, that kind of positive evidence is important, not just for its own sake or because it might make people feel good, but because it demonstrates what is being done right and can be used as an example to help others to improve.

Sometimes there is a lack of context. When an area of public life in Scotland is being looked at, comparisons with what is happening in similar areas in England and Wales—whether things are better or worse—are meaningful to people because there is a relatively similar financial environment in all three areas and people can see whether, for example, Brexit is impacting on an area. However, instead of that, we get told that, for example, there is underfunding, which is a loaded term that relies on a value judgment. Surely, there must be a case for saying that there are times when, if something has been done well, we should broadcast that. Similarly, if something has been done badly—especially in relation to other parts of the UK where it has been done better, given the similar environment—that would be meaningful information for the public.

I come back to the public because, by talking about your social media reach and your public relations, you are recognising that the public are interested in these issues, which might be expressed through the Parliament. However, by and large, beyond the headlines that are generated, how much does your work register with the public? I hope that you can make sense of that question.

I am delighted to hear what you say about SNIB, having had Cabinet responsibility for establishing it. Off the top of your head, could you mention one or two other examples where one of your reports on an area in which you have found good practice or excellent work has generated any kind of media response?

That last point is of interest to me. I am aware of some organisations—one in particular—that customarily receive lots of small donations of £10 or £15 but are not able to show receipts for those or individual accounts, and, for that reason, their accounts have been qualified. Here we have an organisation that failed to set a budget—which, as you have just said, is a breach of the financial regulations—yet got a clean bill of health from the auditor. How does that work?

I agree that independence is a good thing.

I was not aware of the extent to which deficit budgets are used in the further education sector or the frequency with which they are used. I realise that I am asking you to make a bit of a subjective judgment here, but is there a possibility that a culture might start to develop such that people are thinking to themselves, “Well, there is always the option of a deficit budget”? Could that have been part of the reason why, in this case, they got a bit more lax about even setting a budget at all?

It is a bit like the difference between a tightrope walker knowing that there is a safety net or that there is no safety net and how that might impact on their decisions.

Can you say anything more about the impact? Jamie Greene mentioned three factors but the factor that I am interested in is the pensions estimates and the extent to which they are quoted as an influence. My experience is that the actuarial evidence or guidance can oscillate hugely from one year to another, which can create huge problems for organisations. Is that the case here or was the impact fairly minimal?

It seems, from what you said earlier, that the internal audit function has been denuded over the years—its importance, or the cognisance given to it by external auditors and perhaps by the Auditor General—so that it is now diminished to being a kind of management tool and not something that external auditors can rely on to give them pointers as to the financial health and propriety of the organisation.

Is Deloitte involved only in performing an audit role for the public bodies for which the Auditor General is responsible, at the request of the Auditor General, or would Deloitte also do other work if those bodies directly requested it?

Pension estimates—and the way that they have varied and gone very high and very low—can have a major impact on jobs and on all sorts of things. The same is true in relation to the Office for Budget Responsibility estimates or the Scottish Fiscal Commission estimates. Their estimates are very important to how budgets are set. If they are wrong—as they invariably seem to be, because they are constantly being reviewed—I would have thought that they deserve more scrutiny.

The issue about student numbers seems quite central to this, and to the sector as a whole. It might be hard for you to say—you mentioned that Mr MacPherson might have an insight into this—but from looking at the audit report that you produced on Scotland’s colleges, is it possible that the well-publicised reduction in overseas and other students has meant that the higher education sector has looked much more into the pool of people who would be going on to either further education or to higher education in the further education sector and that such competition has meant that colleges are now struggling to get the numbers that they once had?

I would certainly find these reports easier to understand if they included that larger context—for example, whether Brexit has driven away lots of potential students from the European Union who would have come otherwise, or whether visa restrictions have reduced the number of overseas students. Rather than just always seeing this as a challenge for the sector or for ministers, I would like to see what the overall context is, but that is just one of my wee foibles. That is enough from me. Thanks, convener.