Public Audit Committee

Meeting date: Thursday, September 23, 2021

Official Report 543KB pdf

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Scotland’s Colleges 2020

I welcome our guests—those online on computer link, and those who have joined us in the committee room. We are keen to get your perspective on the financial health of the further education sector and on issues such as governance arrangements, if you want to address those. Also, especially at this time, we are interested in how further education colleges have coped with the pandemic and what the experience has been for people who have been teaching and students. We also want to cover some ground looking at college performance. Our reference points are a blog that the Auditor General produced in May this year, and the more substantive report that came out in 2019, which gave a weather check on the state of further education colleges post-mergers and so on.

The panel members do not have to respond to every single question. There may be areas where you are enthusiastic to take part and other areas where you feel that others are better equipped to come in. We will have to manage the discussion tightly, given the time constraints. For those of you in the room, it would be helpful if you indicated to me or the clerks if you want to come in. Those on the videolink should put an R in the chat function if they want to come in on a particular part of the conversation. When you speak, your microphone will be automatically switched on.

I will begin by asking people to introduce themselves, starting with the MSPs who are in the room.

I am an MSP for South Scotland.

I am the member for Kilmarnock and Irvine Valley.

I am also an MSP for South Scotland.

I am the MSP for Midlothian North and Musselburgh.

Would the people who are on videolink introduce themselves?

I am the chief executive of Colleges Scotland, which is the representative body for all colleges in Scotland.

I am the principal at Edinburgh College, but I am also the chair of the college principals group.

I am strategic director for scrutiny and one of Her Majesty’s inspectors in Education Scotland. My remit includes the tertiary sector, which obviously includes colleges.

I ask the panel members in the room to introduce themselves.

I am the Auditor General for Scotland. I work with Audit Scotland and we oversee the financial performance of, and the use of public money in, Scotland’s colleges.

I am the chief executive of the Scottish Funding Council for further and higher education, which distributes about £2 billion of public investment in colleges and universities every year.

I am the president of the National Union of Students Scotland, the membership of which includes all the college student associations.

I am assistant secretary at the Educational Institute of Scotland. We are the sole union that is recognised for representing lecturers in the further education sector.

I thank everybody for being here.

Sharon Dowey will kick off with questions on the financial health and sustainability of the sector.

The Auditor General for Scotland’s blog reports that many colleges

“continue to face significant financial challenges.”

We have a strong sense from the committee papers as to what those are, but I ask the participants to share their experiences of the challenges on the ground.

You are absolutely right that colleges face a number of financial challenges. However, since the Auditor General’s blog, we have seen an improved position in the adjusted operating surplus. Across the college sector, we have a surplus for the academic year 2020-21 of about £7.6 million, and an improved cash position as well.

That is an important starting point for the conversation, because there are a number of reasons why the position has started to improve. One is that we have been able to put additional funding into the college sector. We have invested an extra £70 million, so it would be interesting to hear from colleges how they have been using that money. It has been an important part of how they have been able to get through the pandemic and ensure that students still experience the kind of learning and teaching that they require. The money has also been important in enabling colleges to play their full role in thinking about the needs of small and medium-sized enterprises.

We are seeing a more immediately improved situation, although it is not without its challenges for some individual colleges. By and large, it is a mixture of more funding and more flexibility for colleges, along with colleges’ actions to manage their financial position. It is looking more positive, but there are risks down the road. For example, there are the commitments that might be made to longer-term financial planning. The review that we published in June this year looked at longer-term sustainability, which I am comfortable to pick up on as we continue the discussion.

I will give some local examples from Edinburgh College on the back of what Karen Watt has just said is important. Financially, Edinburgh College and other colleges have experienced some stability. That sounds a bit odd in the middle of our response to Covid, which certainly was not stable. However, the college has had some financial stability, which has been directly linked to the Covid consequential additional moneys that were put in to support the young persons guarantee and the national training fund. As Karen Watt alluded to, both of those funding routes were very flexible, which was hugely positive for the college and allowed us to respond quickly to immediate need.

For example, there were 700 job vacancies in NHS Lothian and we were able to co-design fast-track programmes of only a few weeks to get people into guaranteed jobs, having gone through the programmes. The approach was hugely responsive, and has allowed us to almost pick up new models and new ways of delivering skills programmes. We have done things differently from the ways that we would normally have done them through our core funding. That has been hugely welcomed.

The challenge is that, as Karen Watt said, we are literally planning year by year, so we do not know whether the funds will continue beyond the short term. That is where the lack of stability comes in. It affects our ability to plan a bit more strategically, which has all sorts of implications for the staff who are needed to deliver the programmes. There is uncertainty around staffing and for the staff, due to the lack of sight on the long term. The flexibility is really important.

The college has undertaken its own actions, such as a voluntary severance scheme, which has impacted on staffing, and renegotiating contracts. We have done all the things that you would expect an organisation to do to try to balance the books.

The situation is stable for the moment but, working with the Funding Council, colleges are required to do longer-term financial forecasts based on assumptions, which is a hugely important part of financial planning. To use my college as an example, beyond this year, we are looking at savings of around £1.6 million next year. Thereafter, there is the issue of cost of living pay rises that are awarded to staff—a 1 per cent rise in Edinburgh College would mean that we would have to find another £0.5 million. Therefore, the longer-term outlook is more challenging.

I hope that that gives you some examples at the college level.

Audrey Cumberford gave a local flavour. At the sector level, we have seen very welcome additional funding this year but, as has been stated, a lot of the funding was one-off for one year. Although that has allowed stability for this year, it does not allow long-term strategic planning, because we do not know whether the funding will be mainstreamed or will be a one-off.

For example, we have only one-year funding for foundation apprenticeships, and it is a two-year programme. We do not know whether funding is coming for the next year, and that means that people have to make decisions that might displace other learners, for example. We have had really welcome funding on mental health, but again we do not know whether that will be mainstreamed or whether funding will continue. We set up services, but we do not know whether we can continue with them.

Although the one-off funding this year has been welcome and the Funding Council has provided many flexibilities—which shows good working between the sector and the council—that does not take away from the precarious financial situation in the college sector in the longer term.

While you are giving evidence on that, will you also address the wider point that you make in your written submission about the importance of multiyear financial settlements to allow planning to take place in the sector?

That is a really good point. I have been in post for several years and, every year, the organisation, on behalf of the sector, has submitted a draft budget, which has been a one-year budget. We really need multiyear funding and a programme that allows us to know where we will be this year, next year and the following year. We need at least a three-year programme, but we have not been afforded that. That means that colleges make lots of short-term decisions, which are often not the best financial decisions. If the sector could be afforded a multiyear funding settlement, that would go a long way to allowing us to be much more strategic and would be better use of the public purse.

That is helpful.

09:15  

We have been looking at the most recent accounts that have been published on the SFC website, and they show an underlying adjusted operating deficit for the whole sector. Although Colleges Scotland and the SFC have acknowledged that there are one-off moneys for 2020-21, they are Covid consequentials, not an inherent or underlying part of the further education sector’s funding.

It is difficult for us to accept that there is not an underlying funding issue for the college sector based on one year’s extraordinary events and funding streams that have gone on to support that extraordinary year. Lecturing staff in some colleges—not all—feel as though they are operating in a very tight financial environment.

In the long term, we would say that, structurally, there is a deficit position. The funding model is deficit if the one-off funding for consequentials for this, that and the other are stripped out. That supports what Shona Struthers has just said. We support multiyear funding, and that is one of the few positives the EIS saw in the phase 3 report of the SFC’s review, which supported multiyear funding. We hope that that will be able to create the conditions for stability in the medium to long term.

My blog touches on the conversation that we have had this morning already. The college sector continues to experience financial challenges. We also recognise the point that Karen Watt made that there has been some stability this year as a result of the additional funding that has been provided to the sector and also as a result of other measures, such as the use of furlough to bring some financial stability to the sector. As witnesses have mentioned this morning, the longer-term outlook remains challenging. We have yet to see the impact of the end of furlough, of the forthcoming increases in national insurance contributions, and of the remaining uncertainty about the inflationary environment that we are in and the impact that that will have on the cost base and future pay awards.

As you mentioned, convener, in our 2019 report we commented quite a lot on the maintenance obligations of Scotland’s colleges to address life cycle and significant maintenance backlogs. Who knows what Covid and a digital or hybrid learning environment might mean for Scotland’s college estate? It is one of the remaining challenges to be addressed. We have an on-going enthusiasm to see the plans of the Government and the sector for tackling those maintenance obligations and the wider suite of financial challenges that still face the sector.

I want to explore further the implications that insecure funding has on students on the ground. Shona Struthers made the point about the mental health funding that the Government provides to Scotland’s colleges and how it makes a massive difference to the lives of students. It means that there is support for them if they are struggling with their mental health and they might be able to access counselling services if they need them. However, as Shona Struthers said, that funding is not guaranteed. It is not certain; it is not secured going into the future. It is currently temporary.

Last year, we conducted the largest ever study into student mental health in Scotland. Of the more than 3,000 college and university students who took part in the research, 60 per cent had to wait to access support services at their institution, even with the public funding that was going in. Of those who had to wait, more than half waited for longer than a month, and a fifth waited for more than three months, to access the mental health support services that they needed. We conducted that research just before the pandemic. Since then, more than half of students are telling us that their mental health has got worse, as we would expect.

When we have these discussions about the funding of the college sector, we see that lack of investment means that students have to wait longer to access the support services that they need. The precarity of funding leads us to question whether those support services will even be there in the next couple of years, and we think that they are important.

Before I throw something in here, I will ask the Auditor General to remind me of something. I recall that, in past sessions, there was an issue with depreciation in colleges and the treatment of that depreciation. There was some peculiarity and I cannot quite remember what it was. I hope that the Auditor General can.

I will do my best to recall. I am sure that one of the other contributors will be able to remind us.

I think that you are right and I might need to refresh my memory in respect of the interaction with the funding environment and also the ability to use arm’s-length foundations as part of the funding of or meeting the costs of depreciation. I will be happy to come back with more detail, but depreciation is a significant component of the costs of the college sector. There is some analysis in both our 2019 and 2020 papers that outlines that aspect of the cost pressure, but it is also stripped out to move to the adjusted funding position. It is a factor, but I do not have enough detail to answer your question this morning.

Leading on from that, I will ask some questions about the updated medium-term financial forecasts from June 2021. I assume that those are where the figure of £7.6 million was extracted from, but other information must have come out of that. What significant information came out of the financials apart from the bare fact that there is a potential surplus? What else did you take from them?

We picked up that, although the overall position in the sector is healthy and strong for this academic year and the immediate future, a number of colleges have some particular issues below the line that we need to address. We are working with them very closely. At the close of 2019-20, I think that eight or nine colleges had some deficits. Our projections and what we are now seeing is that that number has reduced to about five colleges and we are working with them very closely below the surface.

We also picked up from the projections that some colleges were more exposed when they were engaged in commercial or international activity, for example. During the Covid period, those projections were affected by exposure to the pandemic situation that colleges found themselves in. As the Auditor General has picked up, there are on-going issues around how we can project the life cycle maintenance of particular estates and longer-term capital requirements. We are seeing a range of different issues coming out from the projections and we have pointed out a few.

We are due to get revised projections in mid-October, and they will give us a refreshed view of the medium term. I will be very happy to update the committee on our findings on those.

I am sure that others will want to come in but, to expand on what you said, the 2019 report refers to reduction in income from ALFs and from commercial income. That was pre-Covid, so I presume that that income died completely, or near enough, during Covid. In the projections that you have received in the updated medium-term financial forecast, is there any indication of a revival of that source of income?

Our judgment is that some of the commercial income will still be affected by the on-going pandemic, which will ripple through. We have seen quite significant healthy commercial activity in some regional areas. In the north-east, for example, a college has generated a commercial surplus, which we understand it is thinking about putting into an ALF for the future, but that is unusual. The performance of the colleges around either commercial or additional income depends on their place in the region, how the regional economy is faring, and the other factors that come into play. The projections that we get are likely to show that that performance has not quite revived yet and we will look to the next three-year projections to see what the colleges themselves are projecting. We suspect that there will still be a dampening of that kind of activity during the Covid period.

Does anybody else want to contribute on this question?

No one is indicating that they do.

Interaction with the business community was mentioned, and I know that Audrey Cumberford is the co-author of a report that addressed the colleges’ relationship to the economy and which spoke about the extent to which more could be done to build better relationships with the small and medium-sized enterprises sector. Audrey Cumberford, do you want to come in briefly on that point?

I will give an example to quickly recap on commercial and international income. At Edinburgh College, the loss of income during the first year of Covid was around £3 million. That was predominantly international and commercial income. We are being very cautious about the forecasts because it is not like a tap that you can turn on to get that income to come back quickly. We have to be very cautious about forecasts. As Karen Watt said, do not expect an immediate resurgence of international and other commercial contracts.

On the point about working more closely with businesses, the best example of that was the flexible workforce development fund. That was a flexible fund—the clue is in the title—that was used specifically to bring businesses and colleges together so that colleges could give immediate business support to businesses, whether it was by upskilling or reskilling their staff or by supporting their business process improvements, close-to-market innovation and so on. The sector as a whole has absolutely grasped that opportunity and is maximising that fund to its max. The evidence suggests, however, that the demand for that type of support is not being met and that we could be doing more. In my own case in the Edinburgh region, which has a fairly buoyant economy, there is way more demand than can be provided for by the funding that we get to support that. That shows that there is some untapped potential and a real opportunity to do more.

It is not simply about the college supporting businesses. Those businesses are helping us to shape and plan the type of curriculum, qualifications and provision that we need to design and build into our portfolios to make sure that we continue to meet their needs for workforce skills.

The Auditor General’s 2019 report highlighted the question of some colleges having difficulties with financial sustainability. Karen Watt has indicated that there has been improvement in that regard and that the SFC is working closely with five colleges. However, the situation has been going on a long time now—the failure to reach sustainability has been going on for as long as I can remember. Leaving aside the overarching funding issue, is there anything holding the colleges back from reaching financial sustainability? What actions should they be taking that they are not taking?

09:30  

The list of colleges that face particular difficulties changes each year. By and large we get a snapshot, and the situation is fairly dynamic. Sometimes a deficit emerges because a college is in the middle of a transformation programme, and it is just taking a little longer to work through. Sometimes, as we have been talking about, there can be a sudden loss of some income, which puts the colleges into a deficit position, just because they are all operating within a very tight financial envelope.

The one area where we are looking at a list of colleges that have been regularly talking about being in deficit is the multicollege region of the Highlands and Islands. Part of our national review of tertiary education was to make some recommendations about how the University of the Highlands and Islands, as the regional strategic body, could look again at how colleges in that region were managing themselves and what the future might look like. They are going through an options appraisal process just now, and we are working very closely with them.

I suspect that my answer is not quite straightforward because the colleges that face these difficulties each year are slightly different, so it is not as though we have the same colleges appearing every year. There are, however, some areas where we are working very closely with colleges to address a more significant set of structural issues around size, scale, funding or curriculum content.

The critical issue for future sustainability is that of dealing with some of the recommendations that we have put to Government about multiyear funding settlements, about the continuance of some of the extremely important programmes that enable colleges to fulfil their role in regions, and probably about looking again at some of the ways in which we set targets. I know that we may come on to talk about that when we look at performance, but we could address some of the activity targets, which might not always enable a college to reshape itself to deliver what the students and businesses in that region need. That is a longer-term prescription for some of the challenges that we face.

I will bring in Shona Struthers, then I will move on because Craig Hoy has some questions to ask.

Karen Watt alluded to the diversity within the sector. It is not that colleges are standard units throughout the country. They are very different shapes and sizes, and they are in different regions, so they reach into different regions and into the small to medium-sized enterprises within those regions. Colleges have all those links. We are dealing with a set of quite different institutions.

Interestingly, about 26 per cent of all higher education is also delivered within colleges. Although some people describe them as FE colleges, they are also very active in the higher education sector and in providing higher education qualifications. The fundamental point that I would like to make, and do not I think that we have reached it today, is that there is an inequity of funding for college students.

In July this year, Michael Marra asked a parliamentary question on how much per head students were funded in pre-school, primary school, secondary school, colleges and universities. Colleges receive on average about £4,000 per head. It goes up in each category thereafter—for example, I think the figure for secondary schools is £8,000. There is an inequity there if a student who goes to college receives about half the amount that would be invested in him if he stayed at school. If investment in the college sector were to be levelled up, that could address some of the financial implications that we are talking about today.

That is a fascinating insight.

We have talked about the need for long-term financial planning and sustainability, and we have drawn some comfort from the Covid consequentials blip, which is obviously an operating surplus for this year. However, the Auditor General states in his blog that a significant number of colleges need to increase funding, cut costs, or do a combination of both in order to deliver balanced budgets. We know that non-government funding is reducing. How feasible is it for colleges to generate more funding, particularly as the sector seeks to recover from the Covid-related challenges?

You are clearly right that there is a balancing act that colleges do every year as they are thinking about their financial position. When we were looking at our national review overall, we were looking at how we enable colleges to project forward with confidence and clarity about some of the more fundamental underpinnings about resource and finances. Even just having financial planning assumptions clear for the next three years would enable us to work closely with colleges to make sure that we were planning properly for the kind of provision that is required.

There is not one single answer to the question that you have placed, so it is a mix of things. There has to be long-term financial planning. It has to be about enabling colleges to play their role in regions to fulfil the needs of students, working with schools and with industry and business, and some of our recommendations are also about how we think about curriculum planning and provision. There is a raft of things that would go into that situation. Because colleges are public bodies, this is essentially about how we look at a set of public bodies that have most of their resource tied up in the staff base. Around 77 per cent of the costs of a college are absorbed by soft costs, because it is a face-to-face business. It is about how we handle and teach students. There are a range of issues that we could put into that basket of longer-term sustainability, but I think that it starts with longer-term financial planning. I know that has been said before, but it is the heartbeat of how this is going to work in the future.

As a trade union, the EIS looks at things slightly differently. Although the Auditor General may have said that, if a college is facing financial sustainability issues, cutting costs or increasing funding is the way forward, clearly we would not support cutting costs. Making staff redundant is not something that we would support. As Karen Watt said, colleges are public bodies and they deliver a public service. They serve communities, and together all those communities make up Scotland. FE is a public service and, ultimately, it is for the Government to fund. Therefore, we believe that the Government needs to fund FE to a greater extent than it does. I recognise what Audrey Cumberford was saying earlier about supporting business. We are not against colleges working with local businesses and supporting their needs, but colleges cannot be driven by local businesses. They should be driven by the students and the students’ needs. There is a balance there.

Although additional funding can come in via businesses, and indeed the national health service and other public sector employers that send students to colleges and benefit from the training that happens there—that is a potential revenue stream—the fundament reliance is on the state and the Government and, therefore, the funding has to come from it. Ultimately, colleges and the public sector are not businesses. They should not be diversifying and looking for their own business streams. They should reflect their core mission, which is to serve the students.

That is a very clear point.

I have a quick supplementary to that. In the Auditor General’s blog, he looks at income by college. Just to compare and contrast two colleges that have roughly the same total income—Ayrshire College at £51 million, and Glasgow Clyde College at just short of £50 million—Ayrshire College gets 5 per cent of its total income from other income, but Glasgow Clyde College gets 10 per cent of its income in that way. Is there any more work that can be done in the sector to engage in knowledge transfer or share best practice in order to maximise that other income? Obviously, we are aware that there are significant cost pressures coming through the Government funding route.

The Auditor General wishes to pick that up.

Actually, it is probably more one for Shona Struthers to express a view on, but I think that we would support the point that Mr Hoy makes. Although we should recognise that, as colleagues have mentioned, there will undoubtedly be regional variations and individual connections with the business community that will afford opportunities to some colleges and not others, this is a very well connected sector and, undoubtedly, the principle of learning from one another holds very strong. We would be very supportive of that.

I will move on to Willie Coffey, because I know that he has a whole suite of questions he wants to go through.

Good morning to the panel. I am hoping to ask for your views on the response to the pandemic in broader terms, and the student experience and so on. I will come to that, but first, before I forget, I will ask a question relating to Colleges Scotland’s submission on the potential impact of the shared prosperity fund. It is probably for Shona Struthers to respond to. What are the concerns about that fund not matching up to the previous European Union funding? Could you give us a flavour of what your concerns are in that area?

Having the shared prosperity fund as an alternative is new for us, so we have concerns that it will not have a similar level of funding to what we had previously with European funding. For us, it is about making sure that the new fund matches at least what we used to have under European structural funding, so that the student is not disadvantaged. I think that it is a case of watch and see, and, where we need to, we will influence to get the best for our students.

Has there been any clarification of what we might be looking at in the near future?

It is unclear at the moment. The Scottish Funding Council still has European social funds that we are investing. Between 2020 and 2023, we have about £37 million that we are distributing. Of course, that goes into specific programmes to support young people into employment, into training and into the skills that they might need. The big issue is whether it will be a like-for-like replacement and, at this point in time, although we have some commitments about the broad amounts of money, we have yet to understand how that money might be disbursed, and who will co-ordinate and lead. I guess that, for colleges, that is a little ripple of uncertainty into future spend.

It would be good to hear from Matt Crilly to begin with on the broader issue of the response to the pandemic. What was the student experience during the pandemic and now, particularly with remote learning and the digital side? Did that throw up more gaps in opportunity and access for students and lecturers alike? Could you give us a flavour of what the experience has been?

The experience of students through the last year was incredibly difficult, particularly in Scotland’s colleges, which deliver so many practical courses that require hands-on learning and being there in person. The pandemic made it really difficult to do that. I think that colleges have done a good job in catching students up in the end, to try to get them to their qualification.

09:45  

From a student perspective, it was an incredibly difficult year with the isolation that came with it. I think that all of society has struggled with the isolation that has come from the last year, but students are a demographic and a population that tend to struggle more with their mental health at that stage in life. Being a student is often about more than just switching on a laptop and doing a piece of course work. It is a social experience as well. You get to meet classmates and lecturers. It is a time when you build confidence and skills that lead you to go out into the world. This year was particularly challenging. A striking moment this year was the realisation of just how many students were in digital poverty, particularly early in the pandemic, and struggled to access the laptops, equipment and internet connection that they needed to take part in their studies.

The Government made some investment in the sector last year, which helped incredibly. It was not necessarily enough money, in that colleges were often topping up that investment from the Government. However, we still see digital poverty as an issue that is facing students this year. Students’ learning has mostly been back in person, but there is still blended learning in certain circumstances and there are students and lecturers who have to self-isolate. Learning still takes place online in certain circumstances, and some students are still struggling to get the access to the equipment that they need to take part in their learning.

A wider issue for us to pick up is whether that hybrid model will continue—it may well do—and whether we are equipping the students and lecturers with the right technology to enable them to take part in that.

I am interested in the skills issue as well, and maybe Audrey Cumberford and Shona Struthers could tell us a wee bit about that. You mentioned a good example where, I think, Edinburgh College managed to adapt very quickly to refocus students into the NHS sector, where there are many vacancies available. I am hearing that other members are hearing of vacancies in a number of sectors, particularly hospitality. Are the colleges adapting fast enough to the changing circumstances that have been brought about by a combination of Brexit and Covid to ensure that students are getting the opportunities that they need? Shona and Audrey, could you offer a comment or two about that, please?

Can I just interject and say that Gillian Ritchie has not had an opportunity to come in yet. I know that Education Scotland has done some work on digital poverty and the inequality of access to digital software, hardware and so on. I will invite Gillian to come in on that first, and then if Shona Struthers and Audrey Cumberford want to come in as well, I will invite them afterwards.

We undertook an overview of remote learning in colleges in March and April of this year, which was good timing in the sense that we were a year into the response to the pandemic, so we could tell the story of the journey that colleges have been on. You are absolutely correct that one of the key factors facing colleges, staff and learners alike was digital poverty in all its forms. Often people think that digital poverty means lack of access to a device or lack of access to connectivity, but digital poverty is much broader. It can mean lack of access to a suitable space in the home to learn, having to compete for resources in the home environment—perhaps having to compete to access a single computer or laptop—or intermittent access to broadband. Rurality and remoteness also bring challenges. Even with the significant investment in the sector, in terms of the disbursement of equipment and the pace at which the college sector responded, we still heard from learners and staff alike about the challenges that are faced by learners who are in digital poverty in all its forms.

That will absolutely continue to be a challenge, and colleges will continue to have to address that if a blended model continues over the course of the pandemic and perhaps even beyond. However, it is fair to say that we certainly find in our conversations with the sector that colleges collectively have responded at pace and with creativity and agility to pivot the curriculum online and provide continuity of learning where that has been possible.

I guess that the overriding challenge is that challenges remain in terms of equity and outcomes for learners, because blended and online learning does not fully meet the needs of all groups of learners. There are some groups for whom it is still a challenge, and we see that coming through in learner outcomes.

There is still work to be done to address that and to level the playing field, but we certainly found that colleges had put their shoulder to the wheel and worked incredibly hard in a very short space of time to maximise their input and minimise the impact on learners. I take Matt Crilly’s point; we also found that in our work. Addressing mental health and supporting learners in a different way was also challenging for colleges, which rose to the challenge and moved their services online. In some ways and in some cases, colleges described how, by delivering those services remotely, they have reached more learners than previously.

There are lots of positives in there for the sector, but it is fair to say that there are still some underlying challenges, particularly around the learning experience, access to practical activities, the ability to complete programmes in-year when specialist technical equipment cannot be replicated at home, and the on-going impact of learners who were unable to complete within the year and have had to come back in the subsequent year—deferred learners, as they are known—to complete the programmes, which is an additional headache for colleges when they have a new intake at the same time. There is still work to be done, and there is still a challenging set of circumstances for colleges when it comes to that learning experience.

That was a helpful contribution, Gillian. Thank you very much for that perspective.

To return to the question that I asked previously, do you think that the colleges are geared up for the changes in the economy that are being demanded at the moment? Other members must be hearing locally that there are a number of vacancies in a number of sectors, and the question is whether the colleges are adapting quickly enough to those circumstances. Audrey Cumberford gave us a good example of adapting very quickly to respond to vacancies in the NHS sector. Can you give us a flavour of how that is going around the country?

Who would like to come in on that? Audrey Cumberford’s name was mentioned, but as Shona Struthers was quickest to put her hand up, I will go to her first.

What I hear across the sector is pretty much what Gillian Ritchie has described. She picked up a lot of the points that I wanted to make. There has been a pivot not only in adapting how we teach our students—the staff have changed the way in which they teach the students—but in how we interact with industry and the changes that have taken place there. There is movement between sectors—people are coming out of jobs in, for example, retail, but areas such as the NHS and social care are looking for people. We see colleges moving at pace on that.

The one point that I would make, which goes back to our earlier discussion about having the financial ability to make such changes, is that organisations need to have the capacity to switch and change curriculum, and to get people to come in as students to study for the new qualifications. If organisations do not have that capacity, that makes things very difficult.

During the pandemic, the colleges have absolutely stepped up. The issue of practical work has been so important. Being Covid safe, we sent equipment to students that they could practise on at home, because they could not come into college to do it in person. We have tried really hard and been quite innovative with regard to how we have progressed students’ education in a less-than-perfect situation.

Last year, we worked very hard across multiple agencies to minimise the number of deferrals. There was a ministerial task force, which many of the people who have given evidence today were part of, and we worked together to provide all sorts of mitigations to bring down what would have been a significant number of deferrals to a relatively small number that was much more manageable. We averted disaster by working together.

Audrey Cumberford, do you have any additional points that you want to make?

Probably just one. There is no question but that the situation we are in at the moment has driven change quite substantially and required a huge amount of innovation and adaptation of how we would normally do things, and that has been done in an extremely positive way.

I will give another example. It is clear that some sectors are under huge pressure. Hospitality, which you mentioned, is one such sector. On Friday last week, I had a conversation with a local authority chief executive about the deep concerns that exist about social care and the lack of people in social care environments to do the jobs that need to be done. The result of that has been to open up some new and interesting conversations about how we might use students who are studying social care-related disciplines and whether they could be exposed to work a bit earlier than they would normally be—in other words, rather than just doing their studies, they would do a mixture of studies, skills development and work-based opportunities.

We are also looking at creating dual qualifications. That would mean that although someone might be qualified to work in the childcare sector, they could very quickly move to where they were needed, which might be in care homes for elderly people, for example. It is an interesting time, because it is requiring everyone in the system—not just the colleges, but the Funding Council, local authorities, businesses, the NHS and so on—to start to think a wee bit differently.

I think that I am right in saying that, under the recruitment process for the NHS in Edinburgh, it would normally take about 12 weeks to get somebody on the books. That has now changed so that the process takes about three to four weeks. The internal processes have been changed to make it easier and quicker to get the people that we are skilling up into those jobs. We cannot lose that. We need to keep looking for opportunities to adapt and change.

That is really encouraging to hear—thank you.

Convener, if there is a chance near the end, I would like to ask another couple of questions.

Yes, I will bring you back in before we finish. Sharon Dowey has a directly related question on the Scottish Qualifications Authority situation.

I have a couple of questions, so I will group them all together, and you can answer them all at the same time.

With major reform of the SQA and Education Scotland planned, how well do those Government agencies currently serve the needs of colleges? There seems to be a perception that they are very school focused. Do you feel that you get something of value from them? Do they really understand the challenges that you face? Have they supported the sector to respond flexibly to Covid? What changes, if any, would you like to be made?

Who wants to pick that up, whether from a college, a lecturer or a student perspective?

Those were like the exam questions, were they not? [Laughter.] You have asked some big questions.

I think that it is fair to say that the SQA’s current approach and model is aligned far more with school provision and how school provision is delivered, which is clearly not the same as how provision is delivered in colleges.

I will give you an example. At Edinburgh College, we use more than 27 different awarding bodies to meet the needs that we have, many of which could be industry bodies that provide standards. Increasingly, we are working more closely with our university colleagues, who can develop and shape their own provision. Therefore, we are looking to university partners to work with us in designing very specific programmes that we know will meet student demand and the demands of the economy, the qualifications for which they can then accredit and award. Colleges have been quite creative in looking at other options, and they will unquestionably continue to do so.

10:00  

The only other point that I would add is that, in the Cumberford-Little report, we spent a fair bit of time looking at the importance of micro-credentials and how those bespoke, bite-sized opportunities can often meet students’ needs, and the needs of industry, need far better. I know that the Funding Council has picked up and identified that issue, and we strongly support the recommendation in the Funding Council’s report on that. There is work in progress on micro-credentials that is being led by Edinburgh College and City of Glasgow College, and we are very keen to see that work continue. Obviously, the sector as a whole is working very hard to input into the work that Ken Muir is doing to look at the SQA.

Does David Belsey or Matt Crilly want to come in on that question?

I think that it has been felt among the lecturing profession that the SQA and Education Scotland are predominantly focused on the school sector, and I think that that has caused frustrations in the past. One of the good things to have emerged from the pandemic is that the SQA created a multistakeholder group that worked with a range of stakeholders, including us. That helped to plan out the qualifications that were delivered and the way in which they were assessed over the past year. That working was welcome, and we hope that it will continue in the future.

With regard to the future, the SQA has a sword hanging over its neck, as does Education Scotland. For the FE sector, there are parts of the SFC’s review that talk about quality assurance frameworks and how that may be done in conjunction with the HE sector. We are concerned about that. Wherever we go in the future, whether in overseeing, delivering or supporting the qualifications, we would like the approach to be as FE-centric as possible and for it not to be part of a university sector framework, because, as Audrey Cumberford said, universities are degree-awarding bodies. They deliver their own qualifications to their own standards, whereas colleges deliver not only the qualifications of the SQA, but City and Guilds qualifications and a wide range of vocational qualifications. The FE sector would welcome a less school-focused approach.

The point about the SQA being very school focused has already been made. We will work with Professor Muir in his review to make sure that the college sector is understood vis-à-vis the SQA, which I think has been very school focused. David Belsey alluded to the good work that was done with the SQA during the year around the assessments for national qualifications, higher national qualifications and so on. I add that we have been working with the SQA for many years to look at the next generation of HNs. That has been a bit of a slow burn that could have been much faster.

Audrey Cumberford said that Edinburgh College deals with 30 awarding bodies. Right across the sector, we work with just over 100 awarding bodies. That gives you an idea of the breadth and depth of the qualifications and awarding bodies that the sector deals with.

Sharon, do you want to come back on any of that?

No, that is fine.

I will try to move us on in our final minutes of looking into college performance. The Auditor General’s blog did not have a deep dive, audit style, into some of the criteria that I think are important for us to at least discuss. I am thinking for example about student numbers, the goals to widen access, completion rates or dropout rates and what is going on there, what has been going on during the pandemic and what the challenges are beyond the pandemic. I wonder whether anybody wants to start with their observations on those issues.

I am really worried about access. The pandemic has been incredibly difficult for Scotland’s students. I know a lot of today’s discussion has been about the financial health of colleges, but the financial health of the students within the colleges has taken a massive hit over the last year. Our research showed that 12 per cent of Scotland’s students used food banks during the pandemic. Nearly half of Scotland’s students have relied on credit cards or other credit schemes to get by. That is a real shame.

Colleges have a real part to play in equipping us with skills for the future, including the upskilling that will be needed in society to face the challenges of climate change. Colleges need investment to bring students in the door and to facilitate that learning, but investment also needs to be made in students. Students need to be well supported so that they can get on in their studies. They need to not just get in the door of their education establishment, but be supported when they are there. The pandemic was incredibly difficult, and the student support system in Scotland just does not meet students’ cost of living.

We have explored the funding situation in Scotland’s colleges, which is obviously challenging. The National Union of Students liked many parts of the Scottish Funding Council’s report, but on page 130 it said:

“We expect institutions to explore internal efficiency measures, for example, increasing class sizes, reducing the percentage of income spent on staffing, ensuring support staff arrangements are appropriate to the size of the institution and what it can afford.”

In terms of the student experience, it is not in our interests or in the interests of our education for us to be in larger class sizes or for there to be fewer staff to support us when we need help. Those are some of the major challenges that Scotland’s students experience at college and public investment is required. On that, I support what David Belsey from the EIS said earlier.

Would it be helpful for the committee if I gave a couple of performance points? While the Auditor General’s blog may not have picked up on the performance aspects, we publish performance statistics and reports on an on-going basis. I can provide some headlines for the committee and do a bit of scene-setting.

Even through the pandemic, we were seeing colleges exceeding their student activity targets. Through the pandemic, we had set a target of about 116 full-time equivalent students going through the colleges and they exceeded that. We have also seen colleges reach out into the most disadvantaged communities on an on-going basis. Reaching people from communities who may not have experienced tertiary education is an on-going mission for the colleges. The majority of colleges are doing higher as well as further education—Shona Struthers was talking about higher education courses—and we are seeing them recruit about a quarter of their higher education students from the most deprived communities. We are also seeing, as you can imagine, entrance into universities coming through the college routes. A very important part of the college mission of helping students fulfil their ambitions has been an on-going contribution to widening access and opportunity over time.

Matt Crilly is quite right that performance is not just about the number of students that go through the door, but about how many successfully complete their course, how many fall out of the system and how many go on to a positive destination. Around 95 per cent of the college students who come out with a qualification go on to work, further study and other schemes. It is a good, positive set of destinations.

About 66 per cent of full-time, further education students successfully complete their courses. Again, that varies across the college system and I think that you will hear from panellists why some of those figures are that way. Sometimes, it is about the individual student and what they want to do: they may change courses or they may choose other options. As part of their course develops, they may find employment and choose other destinations. It is still an area of further work for us to understand entirely what is going on behind all those figures in each of the colleges. That is why we work with Education Scotland to look behind some of those performance statistics.

The last point that I want to make is that I think that some of those targets need to be revisited. One of the recommendations that we make in our national review is that we start looking at a national impact framework. Rather than look at some of the data that we have collected in the past, we should look at where the real impacts might lie and how colleges are meeting a range of different missions.

Behind the figures, there are different performances across the colleges. I am sure that Colleges Scotland, Audrey Cumberford and others will want to talk about that, but those headline facts and figures might give the committee an opening gambit.

What are the trends, for example, on the early retention and the overall retention rates? Are they going up? Are they plateauing? Are they going down?

They have largely been quite consistent for a number of years. We are not seeing big peaks and troughs. The picture has been fairly consistent across the sector. For full-time, further education students, we have seen a little bit of an improvement over the last very short while, which is interesting—even through the Covid period. It shows the enduring appeal of being in some form of productive learning and the appeal of colleges and that students want to be in a learning environment even where, as Matt Crilly explained, it may not be the experience that students might have had in previous years. The question is whether that is the level of success that we want and whether there are specific issues lying behind some of those performance data in some colleges’ performance across the piece.

I will come back to Matt Crilly shortly, but Gillian Ritchie wanted to come in on these questions.

I will pick up on some of the points that have been made, particularly by Karen Watt. As you and my colleagues know, Education Scotland has a team of expert post-16 inspectors who work with all colleges, and we know our colleges well. We work very closely with individual colleges to provide that support and challenge. You asked about data on trends. In recent years, particularly for full-time FE and particularly last year, there has been an improvement in retention rates, so more learners have completed their programmes. Correspondingly, however, we have seen more learners who complete with what we call partial success, so they do not quite complete the full programme and do not actually pass the qualification or get over the line, as it were. That may be a consequence of deferral and the impact of the pandemic.

The bigger trend that is worth noting is the 10-year trend in full-time further education, which is pretty static in terms of outcomes. There are key elements and underpinning factors that contribute to that. Education Scotland published a report in 2015 on the senior phase in Scotland’s colleges, looking at younger learners at SQA levels 4, 5 and 6 on full-time FE programmes; it was a particularly challenging group in terms of both retention and attainment, and that remains the case. The Auditor General’s 2019 report mentioned the attainment gap and looked at trends in terms of the most and least deprived students and the gap in attainment there. Recent data suggest that that gap has not narrowed and that there are still challenges around deprivation and its impact on attainment.

10:15  

A success story of the pandemic period has been that the attainment of higher education learners has improved over time. More HE learners, certainly in the 2019 data, have attained a programme than did previously. As I said earlier, there are certain groups of learners for whom remote and blended learning has been a challenge, and I suggest that the data corroborates that, for full-time FE and younger full-time FE learners, engaging them in their learning, retaining them, and their attainment, remain a challenge for the sector.

My final point is that the buzzword around performance for colleges is variability. We see variability within and between colleges. We see variability in attainment in subject areas. We also see variability in attainment at Scottish credit and qualification framework level. The challenge is to address that variability in the learner experience and in learner outcomes.

Does anybody else want to come in on that before I go back to Matt Crilly?

The programme for government contains a commitment to look at a range of substantial reforms to student support. I want to start with you, Matt, but I am sure that other people will have a view on what those reforms might look like, what some of the consequences might be and how important they are. In your last contribution, you spoke about the financial precariousness in which many students find themselves. I will ask you to go first, but I am sure that some of the other witnesses will want to comment on that bigger reform programme.

The National Union of Students has been asking for reform of the student support system for many years. There are commitments within the programme for government to look at such reform of the student support system, although it seems that it will be a couple of years down the line, so students who are struggling now will probably continue to struggle. We really want student support to be based around the real living wage so that students receive an income that allows them to live happy and fulfilled lives and to engage in their studies.

Part of the issue is the term-time nature of most student support. A lot of students lose access to their support come the summer months because their bursary or loan payments often finish at the start of the summer, and they are left to fend for themselves for the summer months. Some students will be entitled to universal credit and will seek access to that.

Of course, all students will probably also seek employment during those times. Many of those who do not manage to find employment, or who cannot work for whatever reason, are left without the student support system as a back-up to carry them over the line. It is a fundamental challenge that students face, and the pandemic has made it worse. We know that 72 per cent of students are worried about managing financially. It is not just a small issue that is confined to a small number of students—almost three-quarters of students were worried about managing financially through this past year.

There needs to be substantial reform of the student support system if we are going to do things such as widening access to education and supporting working-class students into further education and higher education. Half of university degree entrants from postcodes in the top 20 per cent most deprived areas in the Scottish index of multiple deprivation come via colleges. Colleges are the vehicle for widening access to further and higher education.

Does anybody else want to come in on student support and its consequences for the health and performance of the sector?

I was one of the members of the student support review that was led by Jayne-Anne Gadhia in 2017. At that point, we talked about giving students a living wage so that they could complete their studies. We also looked at what we might do for them during the summer months. It is slightly disappointing that we are still talking about that years later. Matt Crilly is right to say that if a student comes to college on a secure financial footing, they are much more likely to learn and to have better outcomes. That is a much better investment for the public purse than students worrying about their financial situation, not being able to focus on their studies and perhaps not getting their best outcomes. I wholly support what is said in the programme for government about an equivalent living wage for the student.

Perhaps it should be introduced more rapidly, Shona—is that what you are saying?

If nobody else wants to come in on student support, does any member of the committee have any final, lingering questions that they want to ask of the witnesses while they are here?

I have a question for Karen Watt. It is probably two years almost to the day since I asked you this same question about Ayrshire College and the recurring private finance initiative obligation of about £1.4 million each year that the college has hanging around its neck. Is there any possibility of a review of that situation so that Ayrshire College could perhaps enter a level playing field with all the other colleges, especially given the particularly difficult times that we are in post-Covid and post-Brexit?

What we do with every single college, and Ayrshire is no different, is run very close to them. At the moment, it is managing with the income and expenditure that it has to deal with. I completely get the point that you are making. Some colleges have quite anomalous situations to deal with. Ayrshire has managed well on a number of fronts, having had to face other challenges from cost base rises and other issues, but we are not currently sitting with a request from the college to look at the situation more substantially.

We will always run close and look at the issues in the round. My answer is probably similar to the one that I gave you two years ago: we will work with the college. We think that what is in the college’s business plan is manageable. If that changes, we will look at the circumstances again.

Every college has an odd anomaly—a historic thing that it lives with, a different relationship with an arm’s-length foundation or whatever. I can reassure you that we run very close to Ayrshire College, and if circumstances change, either in our policy or in the college’s financial situation, we will look at things in the round.

We are focusing on a digital future and equipping students with the skills and knowledge that they need in this new world that we are entering. However, I have heard comments from people involved in the digital world that one of the difficulties is that the tutors in colleges and universities are not up to speed with the most advanced technology and have difficulty keeping up. The result is that students do not always leave with the skills that they need to get into that industry. How do the colleges tackle that? How do they keep up to date with a sector that is moving at such speed? Audrey Cumberford might be able to comment on that, just to give Karen Watt a rest.

I can see Audrey champing at the bit, so I will bring her in on that. If anybody else wants to comment, they are more than welcome.

It is an important point that reinforces how important it is for curriculum areas that staff work directly with industry partners in trying to co-deliver. For example, in Edinburgh, we work closely with companies such as Skyscanner and companies that are into space tech. Those companies are working with groups of students as we speak, helping to design projects and assessments. In that sense, both students and staff are being exposed to that state-of-the-art technology.

It is fair to say that pivoting towards remote learning and using technology because we had to use has hugely accelerated skill levels and digital infrastructure and equipment in a way that would not have happened had Covid not come along. Again, that is an example of where we need to keep the momentum going and keep upskilling and reskilling our staff in digital skills as well as the students. That is an important point.

Craig Hoy has a final question to ask.

We have not really touched on the state of the college estate. The 2019 report identified quite significant capital expenditure challenges with that. I have two related questions about Covid and digital learning. Do those challenges mean that we might see a shift in the landscape of the college estate as more learning goes digital, if that indeed is what is happening? The report also identified a significant backlog of major capital investment in the college estate. Around the country, we can see that the cost of materials has surged, so does that mean that a problem that existed pre-Covid with the capital investment challenge could be a more significant problem after Covid?

I will pick that up; others might want to comment, too. The 2017 college estate condition surveys that we looked at are now absolutely overdue a revamp. In this calendar year, we are developing a new and refreshed college estate strategy for the medium term. That is important because it is a dynamic situation. Every campus will have shifted, which will have changed its ability to look at priority work—we have funded that work over the past three years—and on-going life cycle maintenance work.

How do we think again about the infrastructure that we need as well as the capital investment that we need, not just in the physical estate but in the nature of learning and teaching? How have students’ expectations shifted around the digital environment? This is a really good opportunity now to look at all of that again.

We have been able to fund high priority capital investment in the college estate, but it is time now to look at the issue again. I am happy to update the committee as that strategy develops with the sector and in consultation during the next short period. There will be a revamped estate strategy that takes on board not just the digital challenge but the net zero and climate emergency challenges.

We have to look in the round at what is required regionally and, in some areas, through collaborating, in terms of not just the college estate but some of our more imaginative campus developments, which have had significant funds. I am thinking about the Dunfermline learning campus, where two schools, a college, a local authority and some business partners are all working together to look at that space for students, for industry and for the college’s future. A new strategy will be coming.

Shona Struthers wants to come in on this question as well.

To reinforce what Karen Watt was saying, we are no longer looking at just bricks and mortar for our estates. We are looking at the digital need and net zero. Along with the SFC and the sector, we are looking to develop open and transparent criteria for our estates’ investment. In the past, it might have been a little bit vague as to which development happened, and sometimes which campuses were developed came as a surprise to some people. We would like to be a little bit more open and transparent with the criteria to which we work.

10:30  

That brings an end to our session. I thank all the witnesses very much, both those who are in the committee room with us and those who joined us by videolink. The quality of evidence that you have given us has been outstanding, so I place on the record my thanks for the time that you have given and the thought that you have put into the evidence that you have presented to us. It really is appreciated.

I will draw to an end the public part of the meeting. We now move into private session.

10:31 Meeting continued in private until 11:00.