 Well, good morning and can I welcome everyone to this, the first meeting of the Public Audit Committee in 2024. The first item on the committee's agenda is for members of the committee to consider whether or not to take agenda items 3 and 4 in private this morning. Are we all agreed? We are agreed. Thank you very much. And the main item on our agenda this morning is further consideration of the Auditor General for Scotland's briefing on Scotland's colleges 2023. So, can I welcome our witnesses to the committee this morning who are all joining us in the parliament? First of all, Neil Renwick, who's the Director General for Education and Justice, and he is joined by Stuart Gregg, who's the Deputy Director of Governance and Assurance for Post-School Education in the Scottish Government. We're also joined this morning by the Chief Executive of the Scottish Funding Council, Karen Watt. Very welcome. And also from the Scottish Funding Council joining us this morning is Lynn Raeside, who's the Deputy Director of External Affairs at the Funding Council. We've got a number of questions which we would like to put to you this morning, but before we get to those, could I invite, first of all, Neil Renwick and then Karen Watt to make short opening statements beginning with you, Mr Renwick. Thank you. Thank you, convener. I welcome this opportunity to provide evidence on behalf of the Scottish Government in relation to Audit Scotland's report on Scotland's colleges. I would particularly like to take this opportunity to recognise the excellent work carried out across our colleges, the college sector, by the dedicated staff who work year on year out in supporting our learners, regardless of their backgrounds and previous learning experiences. The latest data shows that over 236,000 people enrolled in colleges in Scotland in 2122, with more than nine out of ten of those satisfied with their college experience, with very good outcomes from their time at college, with a vast majority going on to employment or further education. I am pleased that the Audit Scotland report recognises and endorses the high value of the college sector. I am also pleased that the report highlights the Scottish Government's role in setting the direction for reform across the education and skills landscape, and it recognises the opportunities that that can bring the college sector. However, I also recognise fully the financial challenges described in the Audit Scotland report. We are currently in a very difficult financial climate, and ministers have had to make many tough choices, both this year and going into the budget next year. The Audit Scotland report sets out important recommendations relating to improving college financial planning processes and making the best use of available funding across the sector. The Scottish Government, working with the Scottish Funding Council, will do everything we can to support the sector through this period of financial constraint and reform, including through the tripartite group that we have with the Funding Council and Colleges Scotland to try to ensure flexibility and support through this period. I look forward to answering the committee's questions. Thank you very much indeed. I will now invite Karen Watt to make a short opening statement too. Thank you very much for the opportunity to give evidence today. I would like to make a couple of points and then look forward to more detailed discussion. Colleges are vital to Scotland's prospects, creating a pipeline of skills, developing people from all walks of life, re-skilling workers for different jobs, enthusing local school pupils about future careers, providing opportunities for local communities, pushing innovation into local companies and nothing stands still. There will be significant change and opportunity over the next decade in terms of demography, regional development, digital and AI advances and meeting net zero responsibilities. When we think about financial sustainability in the sector today, it is equally important that we are setting the right context for colleges into the future, whether that is in our funding distribution, in our infrastructure plans and in our outcome agreements. This is likely to involve an ongoing process of adapting and adjusting now and in the near future, as well as working with the Government on longer-term, more fundamental reform. It is a challenge not just for colleges that have an excellent track record of delivering change over the last decade through regionalisation, through Covid, through variable funding streams and shifting student needs. However, it is a shared challenge with funding bodies and Government working together to respond to the current and future needs of students, staff, employers and local communities. Thank you very much indeed. Certainly one of the things that we will be picking up this morning is that one of financial sustainability. Just by way of opening up on that, so the evidence that we have taken both from the Auditor General and around table where we invited the kind of key stakeholders in the sector to give us their perspectives on things brought across some fairly clear points. First of all, in the Audit Scotland report, it identifies that 8.5 per cent of real terms cuts have been imposed on the sector over the last two years. We got a note from Collegy Scotland, which described in a pre-budget submission that the sector that they believed was, I think, to echo the words that James Withers had used on a burning platform. Their post-budget analysis suggests that, in their view, revenue funding for Scotland's colleges has been proposed to be cut by 8.4 per cent year on year. That is in cash terms. That is not in real terms. That is in cash terms, with, I think, the capital budget estimated to be rising by 3 per cent in cash terms. Karen Watt, in your note to the committee, you have described the situation as such that the financial position of colleges continues to deteriorate. What is the financial position of colleges, Mr Rennick? Thank you, convener. I mean, looking at over the longer term, there was a period following college reorganisation when colleges saw an increase in their budget in cash and in real terms, running up to the Covid pandemic and then additional support provided during that pandemic for understandable reasons. In the period as we have emerged from the pandemic, colleges have received flat cash allocations for two years. In the current year, given the financial context, ministers have had to make some difficult decisions, and those have been shared with the Parliament in terms of funding that we had hoped to provide to colleges having to be reallocated to other purposes, with savings in the region of £68 million in the current year in 2023-24, from a range of different budget lines. The budget in 2024-25 largely carries the majority of those savings forward into next year, not all, but the majority of those carried forward into next year. The budget position is after a period of growth, colleges have had a period of real terms, flat cash budgets, and then in the current year carrying forward into the next year a reduction in funding. That has increased the importance of us taking forward and working with the college sector in terms of delivering that reform and looking again at the way in which funding is allocated and how that is used to support the sector. It is not flat in real terms, in real terms, it has gone down, has it not? We have spoken about flat cash, so the amount of money given to the sector has been static, although there was an in-year cut in the amount of revenue funding available. Again, in the budget that was announced just before Christmas, and after the session that we had with the participants on the 30th of November, it was proposed that there will be an 8.4% cash cut this year, which is, if you like, worse than the situation in the previous two years. In terms of the 24-25 budget, it is a cash reduction compared to the draft budget that was published in it for 23-24. In reality, those savings have been taken in the current year during 23-24, and not all but the majority of those have been carried forward into 24-25, and that is a cash reduction compared to the position previously. OK. I do not know whether, Karen, what you have got any perspective on this? A perspective on the budget in the round, I would say that it is a really challenging time for colleges. When we look at the, if you take a step back and look at the long range over the decade, the budgets going into learning and teaching have seen a real-term increase of around 3% over that period of time. Clearly, when we are looking at the last couple of years, there has been additional funding for the college sector to deal with Covid and post-Covid issues, uplifts, for example, around foundation apprenticeships and so on, but that is not to take away from the fact that it is ultimately, when we look at financial sustainability indicators, a deteriorating financial health situation for the college, because there is a perfect storm of flat cash settlements or less, but rising costs, rising costs around staff costs, pensions, energy bills, and that is the real challenge for the college sector. It is how do they adapt and manage within variable levels of funding when the costs around them are shifting also. I think that is at the heart of why we are seeing colleges thinking very seriously about their future course curriculum provision around how many staff they will have ultimately over the next projected period. We have published information at the start of the year, which I hope is available to the committee, which gives a more in-depth picture of the finances and the financial health of the sector, and I am very happy to pick up any threads from that. On that note, I am going to invite Graham Simpson to put some questions to you. Graham. Thanks very much, convener. I will ask you about that report, but initially I am going to question for you, Karen, just to help me to understand what the role of the funding council is in respect of individual colleges. How involved are you at that sort of level? Do you attend board meetings? Our job is when the Government has decided what the budget settlement is, and what the overall envelope is, and when it has decided what the split is between colleges and universities. It is our job then to think about how do we distribute that funding. So our primary function is, as a funder, making best use of that public money to fulfil the Government's objectives, the missions that colleges have, and to make sure that people are receiving the learning and training that they need across their life. We have also got powers that are related to whether or not an institution is meeting their full duties around good governance, financial sustainability, so we put a number of conditions around the distribution of the money that we put in place. So our job is to make sure that money is well spent, institutions are fulfilling their brief, and in doing that we have a lot of interaction with institutions. So we ask them for returns and information. We will set guidance on good standards. We will have outcome agreements and we will monitor those. Our interactions are on a range of different levels. We have statutory powers, so we can address a board if we feel there are particular issues. We do not regularly attend board meetings because that would be to interfere with the responsibility and accountability that individual institutions have, unless it is a high engagement institution or one that requires some particular attention. That is useful, but if an individual college came to you and said that we have some problems here, you would maybe step in as the wrong phrase, but you would help out. Yes. Along a spectrum of interventions, so if it was something fairly routine, we might ask for more information, more briefing. If it was something that required us to get under the skin of things, we would have a different level of engagement. So yes, we are in very regular and routine engagement with a number of institutions. Okay. I just want to ask you a quick question because it has come up in some of the evidence that we have taken and we just want to get this out of the way because unions were saying that their meetings with not you personally but the Scottish Funding Council have dried up essentially. Could you address that? Of course. So pre-pandemic, we had very regular and routine set-piece engagements. Through the Covid period, we had numerous forums where we were around a table with unions. Since then, it's been much more ad hoc. We heard the evidence from this committee. We've reached out. We're setting up routine engagement and unions have welcomed that, so we are responding to that desire to have. Just for the avoidance of doubt, we have had engagement with unions on ad hoc issues over the last couple of years, but those routine standing meetings we are now re-establishing. That's good. Some good has come of that session. I'm glad you watched it. If I can ask you about the report that you referred to, which has just come out, and has made for a very interesting, well, quite gloomy reading, to be frank. In it, you say the financial position of Scotland's colleges is deteriorating, you've said that already, and this was an interesting phrase, extremely fluid. What did you mean by that? This report, over the last few years, has been encouraged by the Auditor General and others to be more transparent and open about the information that we collect and to publish more of it. This is us putting more information into the public domain about the kind of material we get from colleges and universities. The reason we say fluid is because it is an absolute snapshot in time, and when we look at this snapshot in time, it's giving an accurate picture of not just what colleges have in their audit accounts, but also what they've projected forward. The bits that are most fluid and uncertain are the projections because variables and assumptions change and they shift. Sometimes colleges will provide us with projections without giving mitigating actions because they are going through a process of considering what those mitigations might be. It's fluid also because what we have found, and there's a section in the report which sets this out in clearer terms, is that projections are not always a faithful indicator of actual performance and outturn. In fact, we often find colleges making quite conservative estimates about what might happen, and then the actual position is improved. You'll see in the report that the projections were showing a certain level of deficit. The actual annual accounts show a slightly more, in some instances, quite significant improvement. In coming to the committee today, I was conscious we didn't have the most up-to-date actual accounts for 2022-23. Those are due in at the end of December, so we've literally had a couple of days to look at them. To your point on fluidity, we have had 15 college audited accounts in. Those 15 colleges in their projections were saying they would have an adjusted operating deficit of well over £13 million. The actual outturn is a deficit of 7.6 when we see the audited accounts, and several colleges that had forecast a deficit are now in surplus. That's what I mean by fluid and taking the caveats that we've put in our report, but it's still important because it gives us that opportunity to look at what risks the college sector is facing. It gives us the opportunity to do, as you were suggesting, the level of engagement that we have is defined by the kind of information that we're getting and reporting. I did look at the table that you referred to, which seems to list every college in Scotland. It does demonstrate that sometimes they can make forecasts that don't turn out to be quite accurate at the end of the day. The committee can look at this for themselves, but I've had the benefit of seeing the report. It also lists—it is gloomy. It says that the financial health of the sector colleges operate in an extremely tight fiscal environment. The sector is forecasting and operating deficit. The financial position of colleges is deteriorating. Then it goes on in the next session to outline the risks to colleges' financial health. Staff costs are one of them. That's come out in evidence. That's a big risk. There's a whole list. I won't go through them, but the forecast is pretty dire, isn't it? Maybe that's a question for Mr Rennick rather than yourself. It reflects well the risks and challenges that the sector is facing. To the credit of the funding council, one of the things that they have done over recent years, as the pressures have built up, is to prioritise learning for students in how money is allocated and how money is protected. It's been important to ensure that students continue to get a high-quality education. A lot of the risks that are reflected are not unique to the college sector. They apply across a lot of the public sector as well. It made me reflect how useful it was to have this report and that we didn't have something similar to many other parts of the public sector. As Karen Rennick says, it's a snapshot that provides a clear picture of what those risks are and emphasises the importance of us working with the funding council and with colleges to respond to that and find a longer-term future that is sustainable for the college sector and the important work that they do. One section of that, and we've referred to it already, is about staffing. It says in the report that there's an expected reduction of 2,300 full-time equivalent staff in the college sector—that's one in five. How can colleges continue with that level of staffing? I spotted that line in the report as well. Clearly, that's a reflection of the pressures that are on colleges. If other mitigating actions are not taken, what that would feed through in terms of staffing. Staffing is by far the largest element of cost for colleges, so it's by far the largest element of where savings pressures might come from. Over the past few years, there have been reductions in staffing within colleges, but they've done a good job of maintaining access to teaching by adjusting how they deliver that. Our expectation of working with colleges would be that they continue to do that, to look at different ways in which they provide their offer and deliver that in terms of how the education is provided, looking again at the courses that they offer and whether all of those are meeting the needs of learners and the local economy. There's a lot that we can do with colleges. I was heartened when I spoke to Colleges Scotland before the festive period. They were saying the same, that there was a lot that we could do to look again at how resources are currently used within the system to help to support them to ensure that they are prioritising teaching. I recognise those as very stark in terms of looking at the current snapshot, but equally there's a potential for us to work with colleges and with the sector to try and mitigate the impacts and reduce what impact that has in terms of staffing. Clearly our priority would be to ensure that there is a continuing offer for learners that matches their needs. If colleges are having to get rid of that number of people, which to me sounds that it could be unsustainable for some colleges, is there any extra support in terms of voluntary severance payments? Are they getting extra money for that? There is not direct money within the budget in terms of supporting that. A number of colleges have confirmed that they have already identified and factored into their budgets funding for voluntary severance schemes over the next two years. That is something that colleges are already factored into the numbers that are in there in terms of their budgets in making those voluntary severance schemes available for staff. They are doing that within the resources that they are currently receiving. I am going to switch back to you, Karen Watt, because I have raised in previous sessions the risk register that you keep at the Scottish Funding Council. I could be wrong about that, but there are five colleges that are listed as black, which is the worst position. What is the current position with that risk register? We have an engagement strategy, and that engagement strategy is based on a range of different factors. It is not always about the money, but sometimes it is. On an annual and regular basis through the year, we monitor financial sustainability, we get all this information in, and we assess the level of engagement that is needed with each institution. We do not talk about a risk register, but the nature of the engagement framework we have. We have said in our report just now that there are four colleges that we are working with very closely at the minute who do have what we would consider to be fairly significant cash flow issues. Those cash flow issues are the things that we are focusing on. The range of issues that we are discussing are things like whether this is a fundamental part of their underpinning business plan that needs to be looked at again, whether they are simply in a position where they need us to bring forward some of their learning and teaching grants from the year, if it is a simple cash flow issue or if it is something more significant. We are exploring with each what the strategy might be that would make that an easier position. I would say at the minute that it is a handful of colleges that are having very significant engagement with us about whether they need to implement a different kind of business plan to get themselves into a different position and what support we might give. At times, in extreme situations, we may give a loan, for example, to tide them over a particular period while they look at their operating plans and they think about their future situation. So there are four colleges that have very significant issues and I do not want to put words in your mouth but to summarise the government through you may have to bail them out. We are in a position now where we do not have significant amounts of strategic funds at our disposal and so every part of that conversation is not just about a range of options but it is about what can they do at their own hands. It is a mix of different things, I would suggest. I think it is about what is the best supportive strategy that we can deploy, whether it is cash flow support, loans, whether it is looking at their relationship with other institutions, to make sure that provision for students and provision in local communities, whether that is in rural areas, whether it is in other metropolitan areas, is still at the level and quality that we would expect and that is part of our engagement with them. Are you able to say what these four colleges are? Would you mind if I didn't in the sense that it is a reason why we give sector-wide information and public information partly because what we are dealing with is also quite sensitive staffing issues that may play out in different ways and I feel at this point it might be difficult for those colleges to maintain the kind of engagement they have with us if we are putting that information into the public domain. I didn't think you'd tell me but I had to ask but just to pursue this because I think this is really serious so if those colleges, those four colleges don't get the extra money that they need, are they at risk of closing? I would suggest that our job is to ensure that provision continues and that there is a continuing ability for students to get the provision that they need and that staff in those colleges are looked after in the sense of fair work and in the nature of the colleges having those responsibilities and being able to fulfil those obligations. At this point, I am not concerned about closure. I am more interested in how we construct the strategy with the colleges that will get them into a better position. That may mean for a very small number that we are thinking over the next year of structural options that they might need to consider. Right. What do you mean by structural options? I mean whether they are thinking about more collaboration, different arrangements in terms of shared services, in terms of how they can look at their cost base in a different way. Sometimes what we are finding or some colleges don't always understand their cost base. They might be quite small therefore they may not always have the resource and the capability to think about their businesses for the future if they are very small. The other thing that we are looking at is where they are part of a regional strategic body and where they are perhaps in a region with many other colleges. We are looking at what options there might be for that kind of collaboration and sharing. That is what I mean by those structural and partnership options. I have just got one other area that I just want to quickly ask about. That is about arm's length foundations. Again, I mentioned it in this recent report that there is probably a question for you again, Karen Watt. I mentioned in a previous session that we have seen quite a large transfer of money to the arm's length foundation in South Lanarkshire in 2022. It is half a million pounds, which is extremely unusual. Without getting into the details of that, I don't really want to ask about that particular college. What can those funds be useful and what can't they be useful? The balance is in ELFs. Those are arm's length foundations. We encourage colleges if they have a surplus from their commercial activity, they can put it into these arm's length bodies. It is interesting that you say that there is an unusualness about one college. We found that about four colleges made donations to ELFs in 2021-22. The year before that there was only one. Those colleges can apply to their ELFs for a range of different purposes, so they can be around particular buildings and projects. Increasingly, we are seeing those being used for more day-to-day, more revenue support issues. We are seeing a range of mixes for that use. I would be very clear, though, that those ELF balances are going down. That is not an inexhaustible stream of money. It is also quite difficult for colleges that are essentially public bodies to generate the kind of surpluses that you can then put into an ELF. You have to spend it within a certain timescale as well. There is no guarantee that an ELF will give the college that money, but, by and large, our experience is that it is for educational purposes and most colleges are successful when they put their requests to the ELF for particular purposes. You could not use it for the kind of employment matters that we have been discussing. We have occasionally seen that, but it is not the prime purpose of an ELF. It would be for other educational purposes. It is very often for supporting particular projects, community projects, sometimes buildings and support for other services that go around those sort of things. I feel that I have hoped things rather that other members will want in. No, that is your prerogative. I am going back to an earlier line of questioning. I have got correspondence in front of me from 2018 when the committee wrote to the then Minister for Further and Higher Education seeking clarity about the respective role of the Government and the funding council and colleges. One of the terms of phrase that is in the letter that struck me is that it is in reference to the financial memorandum at that time. It says that, importantly, the memorandum recognises that colleges are autonomous bodies. So what happens then if a college does run out of money before the end of the year? I think, Karen, what you described that the funding council is in a much tougher financial position and maybe does not have the strategic funds it would have had a few years ago to help them get over that. What happened? Do they become technically insolvent? We will work with a college before it gets to the point that they are in that sort of situation. Now, in effect, I think it is our job to make sure that we work with a college to get a solution that puts them into balance or at least has a plan to get them over a number of years into a better position. We have not had a situation where a college has run out of money or where we have had an unmanaged failure of a college. I think that our prime interest has got to be to make sure provision continues, students are secure and that the learning and teaching that is so important for local communities continues. It is getting harder to find money, but I think that our job is to make best use and to make sure that there are contingencies that we have available to use when we get to these kinds of discussions with individual colleges. Okay, thank you. I am going to move things along now and invite Colin Beattie to put some questions to you. Colin. Thank you, convener. There are a couple of areas that I would like to cover, one of which my colleague Graham Simpson touched on. That is in connection with potential staff reductions. It is clear that the biggest expense that a college has got is staff. That is not a surprise given the nature of the business that colleges are in. However, some colleges are seeing that they potentially need to make significant staffing reductions, some fairly extreme. I have a couple of questions to ask you. I do not know whether you will have an answer to the first one. Part of the increase in staff costs is through the cost of living negotiations with the union and so on, which are not insignificant. However, there is a more fixed element, as I understand, of staff increments every year. Unless you are at the top of your grade, you would receive a certain increment every year. I do not know how much that would be typically elsewhere. I have seen three or five per cent depending. What element of the increase in staff costs are those sort of fixed costs that come every year? I realise that there will be a slight difference every year, but roughly, what sort of proportion is that in comparison to the cost of living increases? Secondly, I think that it has been touched on already about trying to maintain a quality curriculum. Given the sheer depth of some of those potential staff cuts, even if they are, to an extent, mitigated, there is still going to be an impact on the curriculum. How are you going to prioritise which part of the curriculum to retain and to cease? I do not know who would want to come in on that. If I come in on your second question, decisions about the curriculum and the staffing and how that is organised are taken by individual colleges, so we would not dictate which courses they should prioritise over others. They will clearly do that in engagement with local businesses, with the regional boards and so on, in terms of looking at that. The Scottish Government certainly would not be involved in taking those decisions on what to prioritise. What our expectation and I assume that Karen's expectation would be is that each college has a plan for how it would prioritise and how it would take those decisions in terms of prioritising and arranging its curriculum. I would expect the colleges to be doing that in all occasions, but, obviously, particularly now, when budgets are prioritised. On that particular point, you say that each college does that mean that there is not a common approach that there could be differences in the formula that they use to determine which courses they are going to retain and not retain? Again, I will bring Karen in this, but my assumption is that I know that different colleges provide different curricula and meet different offers, so they will need to ensure that they have a plan for their own local college that is different from other colleges that reflect what their local and regional needs are. They would reflect that in the decisions that they are taking. Is that fair, Karen? The mix of provision in a college is particular to that college's region. It will have been based on historically what a college has provided, but also as they have developed relationships with local employers, with local schools, they will have shifted some of their provision to make sure that that adapts and adjusts to the regional needs that they find. There is not a set course curriculum across all colleges. Having said that, clearly there are kernels of common provision that you will see coming through in terms of subject areas across colleges, but course provision shifts on a very regular basis. Every year, in fact, we have some pathfinders on tertiary education provision just now in the north-east and the south of Scotland. What we are seeing, because we are trying to get under the skin of how does a college or a university respond to different needs and plan for their courses and curriculum. We have some lessons coming out this year on what we are finding. Every year, a college will look at its curriculum, it will amalgamate courses, it will change courses, it will think about what courses have come with low enrolments, they have fallen out of favour or possibly some of their modes of teaching have become slightly out of date. They will change that on a regular basis. The question that the report that the auditor general and that we are posing and government also is how will this shift over time to respond not just to the financial sustainability issues that we are seeing in the sector, but to different needs that are coming up through digital blended learning, other kinds of things like that. I think that there is a question for us about how well we track how course provision is being affected by the financial situation that colleges are facing. One of the things that we would like to do this year is change some of our guidance around voluntary and other severance agreements because when a college thinks about its staff base and it may put in place voluntary exit schemes, they must come to us to discuss those schemes and to get approval and we will set conditions and guidance about how college thinks about that. We would like to put and work with the college sector to renew our guidance on voluntary severance schemes to make it clearer that boards and executive teams will have to assure us much more about what the effect on course provision will be for the range of changes that they are making on their staff base. That is a quite important part of us getting closer to how some of those changes in the college sector will affect front line provision. You asked another question about what is the fixed and the other nature, if you like, of staff costs. I do not have easy figures to give you on that. When we look at the underpinning assumptions that a college puts into their business plans, we look at ballpark staff figures and we look at the biggest variable will be the national bargaining situation and the arrangement that they come to with unions. In some ways we are looking at ballpark figures rather than that dimension of how much is variable and how much is at is based on the nature of the staff base in terms of the maturity of the staff base where individuals are on a pay spine. We do not get into that level of detail, I am afraid. I would have thought to understanding the level of fixed commitment every year would be quite an important element in terms of increases in staff costs. We monitor it in the sense of how much do the staff costs, what is the proportion of the staff costs in terms of their overall income. You will have seen from our figures that those are the biggest cost element in a college and that has been increasing over time, so that proportion of income that equates to staff costs is high. That is why, when a college is looking at its future and its ability to balance its books, it will be looking at those staff costs. Of course, well-paid staff in local communities really matter, so it is a very difficult challenge for a lot of colleges who are trying to balance their books but also have capable, well-paid professional staff delivering excellence for their students. The first portion of your answer is quite logical that colleges all the time should be reviewing their courses and what they are offering in terms of the market. We are talking about something quite different here. We are talking about a forced reduction in the courses that are being offered. Do they raise the bar so that the criteria in which a course might be offered is changed so that there are not enough people applying for it instead of having an X number applying? That would have been fine previously. Now the bar is raised and only the more popular courses are being offered. Gradually, you will see the shrinkage in that. I guess that both the Auditor General's report and the Government are aware that this is an area that we will need to look at. I think that it is too early to say what the impact might be. We have certainly spent some time recently, particularly with the Glasgow colleges, looking at the impact of redundancies in that area and how they have been dealing with it. We have been assured that they have looked in the round at course provision, so sometimes it is not just about an individual colleges provision. If they are in a multicollege region, we would expect them to be looking across the piece collectively and together at how that provision would work. We would expect them to make sure—this is part of our outcome agreements with individual colleges—that we expect them to be making sure that no essential provision is lost through this. They need to plan together. That is what we are seeing to be fair in quite difficult circumstances, but it is one to monitor and one to look at. It is too early to say how some of those impacts will play out. Just to move to a slightly different aspect, the SFC has introduced a new funding distribution model and new guidance and so on, which supposedly gives the college a better flexibility and a greater opportunity as to how to respond to local needs. I believe that the Scottish Government is looking at the possibility of further changes in the college's funding arrangements. First, maybe you can just summarise where you are on that at this moment. Are the Scottish Government and the SFC giving colleges enough clarity on their priorities within the funding available to them? We try best to provide that clarity, but alongside that, flexibility in terms of how those resources are user-at-least supporting the funding council in providing that flexibility. In the more immediate term, ministers have established a tripartite group involving the Scottish Government, the SFC in College Scotland, specifically to look at those areas of potential flexibility or potential adjustment within the existing arrangements. Obviously, over the longer term, the Wither's review was very helpful in highlighting the potential to look again at how we support skills across the whole of the education and skills network and look again at how we are funding that, how we are delivering that, how decisions are taken around prioritisation and regional and national decisions. There is wider work as part of that reform work to look at what we can do differently in terms of supporting skills, including those vital skills that are delivered by colleges. The minister spoke to the education committee about that yesterday to update on the work that has been done and committed to provide a further update by March. Stuart, I do not know if you wanted to say any more about that. I want to give an example of what that shift in flexibility and funding could look like in practice. Apprenticeships is a really good one to think about. At the moment, we have an apprenticeship landscape that is largely delivered through third-party agents. What the minister has been looking very carefully at, and he spoke to the committee yesterday about it, is can we help strengthen the role of colleges in that? It is moving to a position where colleges are the first call for delivery of apprenticeships rather than just supporting the existing arrangements. It is areas like that that we can really get into through things like the tripartite group to understand right. If that is going to be a new model and there is a new role here for colleges, how do we adapt the funding system to support that? How do we adapt? Who is responsible for channeling the funding in the right way? How do we support SFC and the other organisations to do that? It is in that space. It is a mix of things that I am sure Karen will take us through very immediate things about how you support colleges right now, have the right level of flexibility to make those right financial choices with the strategic things that will open up a new avenue for colleges to explore and get into. I will ask a little bit about the funding model, because we have made some very big changes to the way that we distribute money, and it should help colleges. First of all, we have put more realistic levels of activity into colleges to deliver while keeping the same amount of money. We have lowered the activity thresholds, the credit thresholds, but kept the same level of funding for learning and teaching as last year. We have introduced a buffer as well, so that if there is under-delivery in a college, there is a 2 per cent tolerance before they have engagement with us about recovering funds. Our previous model was very much predicated on meeting national activity target levels around the 116,000 full-time equivalent students in a college. As a result of that, that meant that we were putting money into the college sector where there was under-delivery, we were recovering it. We now have more realistic activity thresholds. That reduces significantly the amount of recovery that a college is risking. More importantly, it also significantly increases the price per credit that we are now paying. That affects how much we are funding for each place at a college. Over the past five years, that has meant that there is now a much more significant reduction in the differential gap between what we pay for a college place and a university place. We have also recognised that colleges have semi and other fixed costs, so when we recover money, we are only now recovering 80 per cent of the value of the credits that we have chosen to recover for under-delivery. The other very important change is that we now count differently when a college can claim credits for a student. In the past, a student would need to be on a course for a certain period of time. We have reduced that to five weeks so that a college has much greater clarity about their ability to—because they have paid for the curriculum, they have paid for that student to start. We have changed the way that we count that. It brings it into line with universities, and it is more generous to colleges. We have also changed our guidance, so there is much greater parity now in what a college can claim for a part-time student and a full-time student, recognising again the shifts in how students want to study and the growth in part-time students and bite-sized modules and different kinds of learning patterns. Our funding model is, I would say, more realistic about what activity colleges need. It is much, much better at de-risking recovery for colleges at the minute, and it is increasing the price that we are paying for college places. Those are quite significant changes. They will matter. It helps us to get on to a more forward-looking funding distribution pattern. Our funding model over the next year is probably going to change and evolve again from this so that we can take more account of demographic patterns and changes so that we can be fairer in our distribution across colleges. Those are some of the changes that should help significantly. You must have projected what the practical financial implications of this will be for colleges. What is the financial impact going to be? Of course, we are still working within the envelope of the overall budget that we have from government. We are still in a position where colleges have a difficult funding settlement in slightly below-flat cash terms. This year, we have got about 10 weeks to look at the budget that has been settled and distribute it in particular ways. It is a little bit early to know how this year's and next academic year's distribution will work. Right now, we should see an ability for colleges to plan better. We may see better projections and better business plans coming into us because there is better certainty about the activity levels that colleges will be funded for. More importantly, we will see colleges having great uncertainty about how much we will recover from them. We will see some of the amounts that colleges might have set aside for recovery. In this year, colleges will probably be in a better position. There must be a practical situation with colleges where their financial position is going to improve because of that, because that is the purpose of that, to give them the flexibility and give them the ability to improve their situation. You must have done a projection as to what those changes will achieve. We have done some modelling of each of those changes and what it might mean. For example, when a full-time equivalent student place can be counted to receive funding, that change alone, notionally, is worth about £13 million to the sector. That is one element of that equation. Each of the other elements will depend on the college's situation. We have done some rough calculations but, quite frankly, it is all still within the funding envelope. Each individual college will have a different impact on them. I have given you an example there of just one element of that and a notional sense of what that might mean for the sector. We have talked about potential further changes. Do we have any time scale on that? In terms of the wider reforms to the school's landscape, the minister confirmed yesterday that he would provide a further update in terms of March. Obviously, we have already published the purpose and principles of those reforms and that he would provide a further update in March on some more immediate actions. In terms of the longer-term changes, for example, in looking at how we fund the school's landscape overall, the minister made clear yesterday that that was something that was going to take time to deliver and had to be managed carefully over time, so it is not a short-term approach. Is that fair, Stuart? Yes, absolutely. There will be things that can be built upon in the steps that Karen has been describing. Part of the role of the tripartite group is to get those issues and ideas on the table early and then work through them together. We will continue to do that. It is not that we would be, in any sense, pausing anything that can be done in the short term while we are looking at those wider strategic choices as well. Can I go back on a couple of the answers that Karen Watt gave? In particular, you described, I think, big changes that had taken place as regards the funding arrangements. When we had Derek Smeal from the college principles group, this is what he said about the new model of distribution. He said, there is no new funding model. There have been adjustments to an existing funding model and they have been very minor. How do you answer that? I was very disappointed that they were seen as minor, but I completely understand that. Every evolution of our funding model has a footprint in the past. It is an evolution of some of the elements that are already there, but those are big changes. They will make a difference. We have also been working through this tripartite group that the Government has set up, and we have received very positive feedback from the people who have been around that work in the tripartite meeting. Colleges are starting to see the differences. They are also understanding what the potential is because, effectively, the colleges will each need to work through what these changes mean for them. For example, this issue about lowering the credit threshold levels but still keeping the same level of funding in the college will mean that, for some colleges, they will have a choice about whether they choose to use that additional 10-20 per cent of funding that is there for additional provision or for other purposes. We have not been directive about how they use that funding. We are having very positive feedback from the tripartite group meeting. Those are changes that colleges have worked with us on. We are very comfortable that they will be positive and that they will make a difference to colleges, and they are a direction of travel. They are big changes. They will have positive impact, and colleges are working through what they might mean for them individually. We have spoken already this morning about a student-centred approach and about the importance of the outcomes here. It is not just about the inputs financial and otherwise, is it? When you have changed the rules about the thresholds for non-retention or drop-out rates of students, does that not disincentivise attempts by colleges to retain students? I mean, if somebody drops out as long as they have been there for five weeks but if they drop out in week six and the college still gets the financial payment as if they were there for the whole of that academic year, won't that lead to an increased level of student drop-out non-retention? So there are different rules for our funding model and there are rules for how we report on performance in colleges and how well they retain and support their students. So the funding rule is actually bringing it into pretty much into line with universities. So colleges have been saying for quite some time, why do we have a different rule? Why do we have to have students in place until the first of November whereas in our up till Christmas whereas universities have a shorter period by which time they can claim a fully funded place? So we have brought this into line in our funding approach with universities and it feels fairer to colleges. When we gather performance information we are reporting on how well colleges over time are retaining students, when the drop-out rates are and we have increasingly asked for additional information about why students are dropping out from colleges. So we publicly report on those performance indicators so there are real incentives for colleges to do well and to manage this. So there are no colleges that are trying to do other than best for their students so they are keen to keep them, they want to improve their life chances and actually the way we report on performance is still fairly clear about how well colleges are doing in retaining and keeping their students. Okay but this is something I think the committee would certainly expect this to be something that will be very carefully scrutinised because it is a change that could have a negative rather than a positive effect from the student perspective so we may come back to you on that at some point. I'm going to move things on to one of the other elements of the report which was the the college estate and I've got the topical question of reinforced autoclaved aerated concrete. What's the extent of RAC in Scotland's colleges? Do we know that? Yes and I'm really grateful for the work that the colleges have done to monitor that, identify that and then obviously to take any necessary mitigating action in response to that. My understanding of the position is that seven colleges across Scotland have identified buildings with RAC and that's in 12 buildings across the whole of the the college estate. Those are not all teaching facilities, it includes at least a couple of storage facilities, some circulation areas but clearly regardless of that what is important is that both staff and students within colleges and whatever space they are in are safe and protected. We've been reassured by colleges that they are continuing to follow the guidance from the institute of engineers that is there in terms of any mitigating action. As I understand it, two buildings have been closed because of RAC, three have been partially closed because of RAC although as I say those aren't all teaching facilities and that for the other buildings mitigating measures have been put in place to ensure that those are safe to be used in the immediate term. Obviously work is continuing in terms of monitoring those buildings and considering the longer term future within the wider context of infrastructure investment within the college estate. The question of the infrastructure of the college estate has been an issue for quite some time. I remember the Auditor General brought a report out in 2018 and certainly I remember raising it in Parliament with the then First Minister has been a matter of some public interest and public concern. Why has it taken so long to address this issue? We have some fantastic college facilities across Scotland, really modern facilities that provide the best environment for teaching. There are other facilities that clearly would benefit from modernisation. Equally this needs to be looked at in the round. It is not purely about saying what is the current estate and how could you modernise, that is what is the current need, what are the future needs taking account of the different ways in which education is being delivered digitally and in other ways, changes in terms of the demands for different programmes. It is not a static picture in terms of what estate we need for the future for our colleges, which is why I commend the work that the funding council has done in terms of their college infrastructure investment strategy of setting out how they would develop that strategy and engagement with colleges in setting out last month in December the delivery plan for that and then committing to updating on what the current state of the college sector is, but also what their future requirements are and reflecting that in the infrastructure investment plan later in 2024. I do not know if you are happy for Karen to update on that work. All colleges receive less funding than they need to maintain and improve their estates, so it is a difficult situation. The budget just now we have is around 31 million for core maintenance work and about 4.7 million for very high priority maintenance work, but as Neil is saying, we are no longer looking at like for like replacements. Neither can we think about the college estate without thinking about digital infrastructure, about net zero and about a range of other requirements. So the important thing at the minute, we have got the estate survey from 2017 and that still guides how we think about our investment. Right now what we are doing is by the spring of 2024 we should have a much more comprehensive understanding of the college estate working very closely with colleges in terms of the status of their buildings, the suitability of the current estate and that will include the use of buildings, digital capability and the expected estate use for the future. Because right now what we need is an infrastructure investment plan which we are hoping to bring together for autumn 24, which brings all of these elements together and it works with colleges to know how do they envisage their future estates. Issues like RAC and I guess digital and probably the Covid period have made colleges reevaluate what they need in their estates. So partly our strategy and our planning with colleges for an investment plan for the next decade is trying to look at these things in the round and bring them into a useful plan for the future. And can I just again sorry Mr Rennick pick you up on your choice of language because you described it as about current need and future need but the infrastructure plan talks about urgent need and I think that that sense of urgency is something I think that was spelt out very clearly to us when we had the stakeholders in the sector saying you know that there is a huge maintenance backlog, there are health and safety issues not just with RAC but in a broader sense there are some health and safety issues. There are those net zero targets which are an important part of the Scottish Government's vision for the future and I guess the questions are around what is being done now and what is being done urgently to address some of those challenges. Yeah and clearly something in the region well over £800 million has been invested in the college estate over the last 15 years and further capital funding was confirmed in the budget that you mentioned earlier on so we are continuing to invest in the estate but clearly the message that we've had from colleges is that we need to look both at what that level of investment is and ensuring that it's matching with their needs but also is looking to the longer term demands on the sector so there is investment going in but as Karen says that is not at the moment reflecting what colleges say they need I think the work that the infrastructure investment strategy will do will help us see that picture in the round and help us make those choices in terms of prioritisation because capital funding is always about prioritisation and sequencing where are the priority areas we will put resources and how can we make sure that that is managed over over time so that's absolutely the approach that we are taking but I don't deny the pressures that you are you're referring to within the sector. Okay so I could just add something so just on that point of urgency so one of the areas where we're working very closely with the colleges and with SFC at the moment is the buildings and parts of the estate that are available to be disposed of so buildings that are no longer used and such like and that's been a really big focus for the tripartite work and the stage it's at just now is colleges bringing together a register an asset register of all the different buildings and when we could expect those buildings to be released into the market and then for us what we're looking at within government is ensuring that we get to a place where that money can be distributed in a different way so at the moment it's centrally prioritised and we want to get to a place where colleges can take more ownership of those funds locally and have a different proportion of it being managed strategically and that's a reflection of the really urgent need in the college sector at the moment for their infrastructure so that's just a really practical thing that's on the cards right now active piece of work to help free up some resource and capital into the college sector okay but do you have any sense of the timeline for that when a decision will be taken about the extent to which that can be put in the hands of these autonomous bodies it's it's at the stage of the the sector bringing together that picture of all of the asset base just now and as soon as we have that by the end of the year yeah i mean i think it's it's it's by summer is is certainly something that we would be able to to work to on that um yeah even your ministerial direction or anything i don't have that authority but i'm just to i'm just trying to get a sense of how long it's going to be um i'm going to now move things on and invite willy coffee to put some questions to you thanks very much convener and good morning to you in the panel i hope to ask you two or three questions really about the college's reliance and Scottish Government funding that overall kind of picture but i'd like to pick up initially on the budget question that the convener opened with in the potential impact of the proposed budget settlement for the colleges but with the reduction that we mentioned now we always focus in on budget proposals and we rarely give any attention to what happened during the course of a year the out term perhaps of what happened and caron you you led i think with some examples of what's actually happening compared to the predictions and projections of what might have happened at the start of the year could you give us a wee flavour of what the impacts of previous budget cuts actually had and what you're seeing emerging it might not be the end of the financial year i know that but could you give us a clue how the out term is actually looking and respecter of a number of those areas that you mentioned earlier um would it be useful to say a little bit about um what we're seeing colleges thinking about in terms of strategies that are emerging to deal with the situation is that the kind of thing or what just say a little bit more about what would be helpful probably more interested the committee's probably more interested in the impact of what these cuts actually do how they make the college behaviour change what happens with staffing and so on and so forth what happens with programs and courses and skills and so on what impacts they're having so there's always a prediction at the start of the year with a proposed budget cut it's going to mean this does it actually mean that does that actually happen in your experience and what is the out term emerging like in your opinion so a couple of things then um i would say that very often um the level of staff reductions sometimes that doesn't come to pass so what we are seeing are some projections that that um through the year colleges find other income they find other avenues to explore and their initial predictions on what they might need and how they might need to do that can shift and change um not always so some colleges have very clear plans and because things like redundancy schemes need to be well planned well managed well executed those are very much plans that a college will will work through but because very often those are voluntary schemes they will not always result in the kind of outcomes that a college might have initially predicted they they can be relatively unpredictable in terms of unless they're very targeted where um those staff changes might might lie um i think we are seeing colleges looking more radically at the nature of provision we're seeing a lot of appetite just now for exploring digital changes within colleges looking to the sort of modes of learning that have shifted and changed over the covid period so more blended learning um more ability to look at how the curriculum has shifted in that regard and how students are are coming to things what we are seeing i think is a different a long tail end of covid in terms of how that has affected a certain cohort of either school pupils coming through into college or what nature of support colleges are having to to suggest for their their student populations and i think that's very difficult for a college to plan um our student support funds are demand led uh so colleges are sometimes not able to accurately predict what they will need in funding terms to support the students so in year we have the ability to adjust our student support budgets if they're finding a particularly they want to use their discretionary funds in particular ways to support either particularly disadvantaged students students who have lost learning through particular periods of time or generally what we're seeing in terms of mental health issues that we're seeing now in the student populations that colleges are needing to respond to in a different way so in quite practical terms colleges are needing to think about their discretionary money in a slightly different way i think to support those those students through and to succeed okay you mentioned digital layer um i visited Ayrshire college recently and spoke to the principal and so on and we shared the view i think committee's aware of the digital um digital solutions to some of the training during covid was really beneficial but the but she also said the students prefer to be in college see that that balance between digital online and in person being present at the college that wouldn't be used would as a way to reduce costs i don't think so and we're not seeing that at all i think the other thing is a lot of college subjects are quite practical you you will need to be in a college setting whether that's construction engineering stem subjects catering um and we are seeing a lot of students wanting to be in a community setting one of the findings from our student satisfaction survey and as neil has said a lot of college students are extremely satisfied with the the education they got at get at colleges is that sense of wanting to be part of a community and um we see that distinction between part time and full time students where one of the dips in satisfaction levels come from part time students because they don't always feel connected in the way that you might see from students who are coming through the door on a more regular basis i think the issue is how do you get the right balance and blend because a lot of students do want to be able to study in the wrong time but we we still are facing i would say disadvantage in digital access and in um the way particularly students who are coming from particular communities and families may not have access in the same way and i think there is an issue for us in the infrastructure strategy to bake in that understanding that colleges are dealing with people who are very often furthest away from the labour market dealing in disadvantaged communities and needing to overcome those access issues on a quite basic level i think the digital infrastructure and um planning for this it could enhance the learning experience very significantly and i know colleges are extremely keen to to look at how they can accelerate the pace of that sort of digital change good to hear that can i ask about the college's ability to pursue non-scotland funding council revenue streams for example we all know that colleges used to benefit from EU funding that's gone we know that universities can pursue external associations with sponsors and companies and firms and so on to conduct research and so on are there any barriers preventing colleges doing that reaching out to local businesses regional businesses or anyone else or even back to europe to seek partnership arrangements working arrangements to help them fund the kind of courses that we want to deliver well we are seeing other income a very small proportion so it's about eight percent of the income that colleges generally have coming from beyond sfc funds and generating it from alfs it used to be european social fund i would say on the european social funds even though that has changed we were and i think the last part of that strand was 2021-22 we did bake in the amount that colleges were getting in that last branch of european social fund in our mainstream funding so that they wouldn't see a a drop off in that so there's nothing we we basically i think we were spending we continued the funding but without the how can i say this without all the many many conditions and practical issues that came with european social funding there were a lot there's a lot of bureaucracy about it so they we we kept the money in the system and we we were providing that money for about four thousand students benefited from that and colleges still have that but no i think there is a huge appetite in the college sector to be very active in engaging with employers there is i mean we were pump priming some of that ability to engage with employers and get additional income in through flexible workforce development funds through the apprenticeship programmes these all enhance the engagement with employers and those opportunities for other funding streams to open up there's no prohibition on colleges looking at other european funding strands the biggest issue well the biggest issue is um how competitive a college can be when they're looking at potentially other providers of contract services whether that's bespoke training that employers might work with um who may have a lower cost base who may be paying their staff less so it's it's a tricky one where um a college may not always be well positioned to pursue commercial income and then when they get it and this is why um Stuart's point about the work of the tripartite group are there other flexibilities that colleges could have to look at how they could retain some of that income rather than give them to alfs but look at other mechanisms to uh to to work with if they generate a surplus from that if they are generating a surplus just now from that activity they're using it for their day-to-day operations and i think it's a minimal part of their business at the minute okay can i give you a local example um a firm in Beershire came to me and said your college doesn't do any roofing courses so i'll ask the principal about that and she confirmed that they don't do any roofing courses but the firm needs this because the demand wasn't there there's only a few inquiries over two years that's bound to be a common story across Scotland where a company says to a college why don't you do this or that can we get better at this to try and regionalise this or something like that can we help support employers by putting on a course that they want do we have to ask the employer to pay for it i remember we've never done that i think but how do we get smarter in that whole area where an employer says i need these skills and the college doesn't deliver them how do we solve that neil yeah and that's certainly part of what the finding of the the weather's report was that there was that need for both national looking at skills on a national basis but also a regional basis and involving employers and identifying what the needs are and clearly not just individual employers but groups of employers who might create a sustainable demand for that sort of training stewart i don't know if you want to say any more about that so absolutely no i don't think there's there's significant barriers to that i think that there's a kind of practical one in the most of the students in the college sector from the kind of the local catchment area so trying to set something up which is requiring people to travel and to have maybe accommodation and so forth that's a shift one of the things that i know the college sector are discussing and it's something you know if they bring it to the table we'd absolutely react to is um are there different types of institutions specialist institutions which are more of a hybrid between a college and a university it can provide that that technical capability into into the economy and in that sense they could be you kind of geographically tailored to the needs and areas and they could actually draw students in nationally as well but that needs to kind of come forward from the college sector and then we can have a look at how we can enable that and whatever it needs in terms of legislation or a new policy direction and so forth i think it's a great model potentially and and we're just keen to work with with the sector on it at the moment it just wasn't available to put the course on that's where it's going to stop there's not going to be that course is there anything we can do to to overcome that kind of things that i think worked very well in the in the college sector recently was the flexible workforce development fund because that did allow and support colleges to put maybe more bespoke local solutions in for particular employers very popular with with employers and it enabled them to upskill and reskill their their workforce now governments had to make some difficult decisions in this budget year but we're still discussing with the government whether even if the flexible workforce development fund in its current guise is difficult are there other opportunities to look at employer related schemes that might be useful i can't say at the minute how our budget distribution will work this year but it's certainly pretty much on the top of our list to look at are there particular aspects of our funding which could could enable that kind of local responsiveness to happen on an ongoing basis not just through the regular routine curriculum development that you see so let's see how the budget distribution goes but things like the flexible workforce development fund were exactly designed to tailor particular courses for for particular employers thank you for that last question convener um as you know um Ayrshire college is the only college in scotland that continues to pay pfi debts a rate of two million pounds a year i think has a year to go um can you give myself colleagues in the the college an assurance that when that comes to an end that wouldn't impact on the future budget settlement for the college so uh i think you may have asked me this uh and about this on a number of occasions so i i think that um the college is well placed to deal with the situation that it's got on the contract that it's got i think it also has a balloon payment at the end which it needs to make to actually own the asset and we're very well aware that um Ayrshire is an ambitious college it has got a fabulous opportunity in the growth deal there with the Prestwick cluster with lots of opportunities around aerospace so we are very um aware of how our distribution our funding distribution can maximize those opportunities for for the college going forward i think that's the best i'll get thanks very much for that thank you yes nice try willy um i'm now going to invite the deputy convener Sharon dowey to put a final series of questions to you Sharon thank you good morning um there's an announcement by the Scottish Government in June 2023 that it planned to take over national responsibility for skills planning and that there will be a new national model of public funding for all colleges universities apprenticeships and training um could you tell us more about your plans for that yeah that that obviously followed directly from the recommendations in in James with us with us review that provided a really helpful description of the the skills landscape but also the potential for us to to look again at how that is delivered and meets the sort of demands that that mr coffey was was describing there as i said the minister provided an update to the different committee yesterday morning on that work made clear that you a lot of engagement has happened including by the minister himself over the past six months just discussing that and how that might be taken forward the minister confirmed that the vast majority of James with us recommendations will be accepted and will move forward including looking at that model of that different model of funding but also as well that balance between national skills planning and regional skills planning to ensure that we get that right balance right between what is needed within each regional area and what is needed at a national level as i've said previously the minister has said that you'll provide a further update in in march on that that work that is progressing progressing forward but i think from my point of view certainly the weather's report provides a good basis for us moving forward and working with the funding council with colleges and with other interested parties including businesses to try and strengthen our our skills offer across scotland the minister for higher education also announced in the fifth of december he confirmed that arrangements to deliver funding support for learners beyond school are to be simplified confirmed the scotland government intends to streamline funding for colleges universities and apprenticeships and announced that an independent review of community learning and development will run until june 2024 to examine the extent to which cld is delivering positive outcomes to some of scotland's most vulnerable learners in marginalized groups so and you said in your statement there that you know he's accepted everything he's moving forward there's been lots of reports but when are we going to actually see firm plans on a piece of paper with timelines when everything's going to be implemented because we're obviously hearing the pressure that colleges universities for the higher education are under so they're having to go in and do everything in a yearly basis with budget constraints so what's the government doing to try and get something on paper so that they're moving forward and getting the reforms that they need timely and i think we've always been clear james whether this has been been clear in terms of in his report and commenting subsequent to his report that it will take time to deliver that and he was supportive of us taking the time to actually progress forward his recommendations in a managed way i think is as we've described earlier on there are immediate things that we are doing around providing that flexibility and that review of community learning development will be is short term so as you say that will will run through into June what's now June this year so that that's a shorter term piece of work that we are are taking forward there are other reforms that we think we'll be able to make progress on in the short term and the minister will confirm those in March in terms of developing a new funding model that's going to require consultation and legislation so that's partly a longer term a longer term timescale but part of the work that we're doing just now and that Stuart and his team are doing just now is around ensuring that we have that timeline so that we can match the longer term reforms that we need to take forward through legislation with the shorter term actions that we're taking forward Stuart i don't know if you wanted to say any more about that so the only thing might be helpful to add is that in addition to the report from james withers we also we publish purpose and principles kind of reasonably shortly after the start of summer last year and since then we've been doing updates to that so there is already quite a significant response to withers review already set out where we and ministers have been quite clear about the range of areas that they see as being the most urgent priorities and we will just continue to add to that so this isn't something that we can kind of deliver in one year there is being clear right from the off that you know some of these could be decade log changes but each of these will will will have a set of milestones that we'll aim to as a minister said aim to set out in around about the march time so that there is that clarity across the sector of exactly what the delivery plan looks like okay i think it's just one thing accepting the response putting the response out that you accept the recommendations but what we want to see is the timeline of when we're actually going to get it implemented within that to what extent will the various plan to changes address the sectors challenges and potential impacts on college staff college students particular disadvantaged ones and communities particularly rural communities and ones with high levels of deprivation i mean in terms of that colleges already have a really good record in terms of providing opportunity and using widening access to education in terms for example of students with disabilities of students from poorer backgrounds of students with care experience so actually you know one of the strengths of our college sector is that that breadth of access that they provide to people who might otherwise not have benefited from education through different routes so that's already a strength of the the sector in terms of going forward both with us and colleges scotland have said there is potential for us to look again at the resources that we are currently allocating to make better use of those in terms of dealing with some of those issues that you've you've described there in terms of improving access improve it in terms of improving the offer ensuring that a greater proportion of resources are going to the the sorts of offer that colleges colleges make so i take a lot of reassurance from that consistent response both from the sector and from from from Mr Withers independent review that there is potential for us to look again at how we use the current resources let alone any additional resources we're able to secure that there's potential for us to to reallocate those in a more effective way just on that point the resources i've just got one budget question so in december 22 when the budget was first announced for 23 24 the budget for higher and further educations had been cut by 102 million so there was 20 million cut for universities and 26 million cut for colleges initially and more recently i think there was 26 million cut to pay for pay rises for teachers but there was another 56 million cut for demand-led courses so 56 million for an underspend is quite a significant figure as well when we're talking about how we're struggling for money so what are demand-led courses what was the impact on that yeah and it links in with with mr coffee's question as well in terms of what the impact of that has been so the 26 million and 20 million for universities the 26 million for colleges was it was targeted for transition funding to assist colleges in making some of the the changes that we've been describing today because of the nature of the pressures that arose during 23 24 it wasn't possible to continue that funding and that had to be taken and reallocated to to other purposes so that didn't have a direct impact in terms of of teaching or capacity because it was money that had not been allocated yet but it did take away an opportunity that would have been there for us to invest in in some of that reform within colleges that we would like to have taken forward and again as i said earlier on part of our priority has been to try and as much as possible preserve the funding for core teaching and student support within within colleges so part of the reason why with regret we've had to withdraw funding from the flexible workforce development fund and that's that's another part of that demand led savings that we've identified was to try and draw the money from there rather than from some of the the reduce the core offer that colleges provide so i think in other circumstances different decisions would have been taken around that but because of the nature and the scale of the pressures we've had to withdraw that money in the current year and then not continue it into next year and that it's other similar individual demand led budgets that we've taken savings from the full detail of that because some of them are demand led will be finalised by the end of this year we're obviously getting very close to to that so there are other elements of funding that we are that are demand led that we've managed to draw resources from so it's a range of different smaller budgets but the bigger elements in terms of that transition funding and the flexible workforce development funds are two examples of where we've drawn that money money from i'm still not quite understanding what demand led programmes are yeah it's a mix of different smaller sources of funding for different elements and as i say part of that has been to try and make sure that we preserve as much as possible the core college the core college offer thanks i think graham simpson's got a very short question to put here it is short we've heard in previous evidence about it's really around the timescales of budgets and the Scottish government budget runs on the you know the the normal financial year colleges have funded that during their academic year is that something that you've you've looked at mr reneg is something we're aware of obviously we recognise that the overall budget process is a much wider process as you know better than i do across the parliament but colleges need the assurance in terms of that when someone joins a course or someone continues with a course that that funding will be available so for for colleges the benefit isn't having an academic year over the period in which they are teaching and supporting students so we recognise that that flexibility and that variability has to be in there between our annual budgets and providing assurance to to colleges that they will have the money when someone starts that they will continue to have that money when they finish the course in hopefully in summer summer of the following year can or or lennard of those yes an academic year bridges two financial years and that's a complexity but it protects students and their ability to apply and be accepted for a course and know that there will be funding for that for that course it provides the sector with some planning assurance because otherwise we would be we would be offshoring the risk if there's a hard cut-off point at the end of march into the college sector whereas actually what we're doing is we are bringing stability and certainty into their planning by being able to say okay we're taking these two financial years we're projecting into an academic year so we are converting this into an august to july budget for you and i think the other thing is at the end of a financial year it provides us with a little bit of flexibility as a funding council to look at elements of funding over over that bridge over into the some of our programs do still year work on a financial year basis like our financial transactions so we actually have a complex pot of funding some on financial years but most of the bulk we work out trying to span the financial years so that we're protecting the interests of students and their continuing studies and also giving colleges some planning certainty so we our budget settlement we now have 10 weeks to convert into an academic year settlement and we give draft allocations out hopefully at the end of march so that colleges can plan with some certainty for the curriculum for the next academic year okay thank you i've got two very final questions to put to you which i hope will be fairly straightforward the first is when we had the Auditor General in before us talking about the briefing back in october he reminded us of the fact that i think the Scottish funding council's position is to review the regional board structure and i think there are you know we've had some concerns about for example the Lanarkshire regional board and its usefulness and so on and i think mentioned was made by the auditor general of the arrangements in Glasgow what so what is the current thinking of the future of and the purpose of the regional board structure maybe start with mr rehnick certainly the current regions are being reviewed but they fit within the wider context of the reform work whether it's recommended that there was still a requirement to look at regional structures and what exactly those structures are as part of the the ongoing work that we are doing in terms of what the the longer term future we're aware obviously that that canon colleagues are looking at the current arrangements in terms of the the boards but canon yes three multi college regions we recommended in our review of Lanarkshire that the two colleges come apart and they have a direct relationship with us we have made that recommendation to government the Glasgow colleges is a more complex situation we asked the colleges to look at options for their future when we were reviewing it and we have subsequently provided advice and recommendations to the government and i think the government is now considering those and i think are hopefully coming to a decision soon that can be implemented thereafter the other multi college region is the university of the highlands and islands much more complex and will require more time to work through and just for the record could you tell us Karen when you made those recommendations on the Lanarkshire position and the Glasgow position to the Scottish government and just get a sense of how long this deliberation is taking it and when a decision is going to be made we provided advice to the government on Glasgow at the end of March last year and with Lanarkshire fairly recently because the two colleges were going through a range of other issues and wanted to have time with us to consider that recommendation again so that's before the end of last year we put our recommendation in about Lanarkshire thanks that's helpful and mr anke do you have any views about when you expect a decision to be made and i don't know steward have you got 10 so i think the decision around this will be reasonably soon so i think we're talking in the next few months but the decision i mean there'll be steps to go through these are boards with people involved and you know there's significant implications if there is if there is changes there the only thing to add is that there is a the reason that it's taken some more time around the Glasgow one is partly because the there's an interaction between that and the Lanarkshire so geographically these are reasonably close in close and whatever decisions are taken around the Lanarkshire's could have implications more widely in that area so there is an interaction between those two areas that we just are exploring just now with with our ministers okay and my final question is just about the component parts of that which is the the mergers that we've seen in Glasgow for example i mean what somebody said to me that pre-merger i mean if you take the Glasgow Clyde College and his land um Caddonald and Langside colleges uh brought together when there were separate i think they had almost 40 000 students and now the cater for just 15 000 is that mean is are those figures right i'd certainly to unless others know i'd certainly need to to double check double check that that part of it i know that the parliament has looked at the the the college reorganisation and what impact that has that has had and we've seen benefits of of reorganisation in terms of how some of the colleges are are organised and what they're able to deliver in terms of of students but i will commit to come back on that specific question because i don't know the answer immediately okay well look thank you very much indeed and thank you for the time and the evidence that you've given us this morning it's been it's been very helpful i think as willy coffey reminded of us that there is no such thing as a job for life anymore and retraining reskilling is absolutely a hugely important role that's fulfilled very well by the college sector in scotland and in this era of just transition i suspect that's going to become even more acute and and more important and i also note that one of the papers that we were given in advance of today's meeting pointed out a finding i think from the Sutton trust that 90 percent of learners from the most socially deprived background that went to university did so through colleges and that's not the only thing that colleges do but that's a really important thing that they they do so can i thank neil ranwick stewart greg karan watt and lin racide for your input this morning it's been as i say very useful to us and i'll now bring the public part of this morning's committee to a close thank you