Three Scottish colleges warned about financial weaknesses

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Three Scottish colleges have been warned about financial weaknesses by the Auditor General for Scotland.

Annual audits from 2015/16 showed Moray College UHI in Elgin having "weak financial planning and management".

A declining performance against student activity targets was identified at Lews Castle College UHI in Stornoway, Lewis.

Edinburgh College has improved its performance, but the report said it needed to review its curriculum and save money through redundancies.

Moray College UHI and Lews Castle College UHI are part of the University of the Highlands and Islands (UHI) network of colleges and research centres.

The financial sustainability of the three colleges has been set out in a report from the Auditor General to the Scottish Parliament.

Highlighted in the report were:

  • Moray College UHI's weak financial planning and management arrangements, which are expected to leave it with a funding gap of £472,000 in 2016/17 and shortfalls until 2019. Also, a need for the college to "urgently agree" a recovery plan with the Scottish Funding Council (SFC). The report said it was also important that UHI "ensures that the college can deliver on its priorities within the resources available"
  • Lews Castle College UHI's financial risks from its declining performance against student activity targets. The report said this situation leaves the college open to financial penalties and funding reductions. The college only achieved 80.5% of its target for 2015/16. Delays in appointing board members have had a significant impact on governance arrangements and committee meetings
  • Edinburgh College's improvement to its performance in some areas. However, the college's financial position remains "challenging" and continued progress depends on a number of factors, including a curriculum review and savings from a voluntary severance scheme

According to the report, Moray College UHI received 72% of its 2015/16 income from SFC.

Lews Castle College UHI receives 66% of its income from the SFC, which also provides 75% of Edinburgh College's annual income.

Ms Gardner said: "These colleges play an important role in their communities, delivering education for thousands of students every year and providing hundreds of jobs.

"They are also heavily reliant on public funding which can have major implications for how they manage their finances.

"Each college faces different issues but all need to take steps now to get on a firmer financial footing and strengthen their governance arrangements."

'Very positive'

UHI said it will work with Moray College and SFC to address the issues raised and implement "robust solutions".

Lews Castle College is not in immediate financial difficulty, but UHI said it hoped to agree a revised activity target with the college proportional to its operating costs.

Edinburgh College Principal Annette Bruton said the colleg has a plan to help it resolve its issues and welcomed the report's recognition of its "significant progress".

She said: "This report is clear that the changes we've made, including to governance, monitoring and management structure, have led to major improvements.

"Improving recruitment and retention means we're on schedule to achieve our credits target for 2016/17, which is the most important factor in our success and financial stability.

"We do still have financial challenges but our Transformation Plan didn't set out to solve these overnight.

"By continuing to hit our credits target, redeveloping our curriculum and making savings, we're very positive about our plan to achieve sustainability over the next few years."

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