 I welcome everybody to the 22nd meeting of the Public Audit Committee in 2022. The first item on our agenda is for members of the committee to agree or not to take agenda items 3 and 4 in private. Are we all agreed? We are agreed. The principal item on our agenda this morning is a consideration of the Auditor General for Scotland briefing on Scotland's colleges 2022. I welcome our witnesses in the committee room this morning. Auditor General Stephen Boyle, Carolyn McLeod, Audit Director, Performance Audit and Best Value at Audit Scotland, and Mark McCabe, who is Audit Manager at Audit Scotland. You are all very welcome here. Auditor General, as you know, feel free to bring in your supporting wing members to the points that you find most useful that would be most enlightening for the committee. I ask you to kick us off by giving us a short opening statement. Many thanks, convener. Good morning, committee. I welcome the opportunity to speak to you this morning about Scotland's college sector. Scotland's colleges play a vital role in helping people to learn new skills and fulfil their potential. They also make significant contributions to supporting economic development at a local and national level. In recent years, we have reported on the challenges that are faced by the college sector, including responding to risks of financial sustainability and focusing on improving outcomes for Scotland's students. Those pressures continue with anticipated challenging financial settlements in future for colleges. My latest briefing focuses on the 2020-21 academic year. It highlights that Scotland's colleges responded well to Covid-19 and that additional funding contributed to a better than expected financial outturn for the year. However, college's financial position is now expected to deteriorate with deficits forecast in 2021-22 and 2022-23. The Scottish Government's multi-year spending plans announced in May show a flat cash settlement, a real-terms reduction, for the Scottish Funding Council over the next four years, indicating some really challenging times for the sector. The Covid-19 pandemic had a detrimental impact on learning and student outcomes. The proportion of full-time further education students successfully completing their course and achieving the intended qualifications fell in 2021. On average, socially disadvantaged and vulnerable students are still less likely to complete their courses than their peers. The varied impact of the pandemic across different groups of students has exacerbated in existing inequalities. Changes are needed to ensure that the sector is financially sustainable in the long term and more students successfully complete their courses. The Scottish Funding Council made a series of wide-ranging recommendations to improve the further and higher education sector in 2021. The Scottish Government and the Funding Council are starting to take forward those recommendations. They have prioritised work to set out the future role of the college and university sector by May of next year and to develop their national impact framework to assess outcomes by August 2023. In the meantime, the Scottish Government and the Funding Council need to consider how best to support colleges to prepare and plan for those changes now. It is important that they clarify expectations and priorities for the sector over the medium and long term and the funding that is available to deliver them. My colleagues and I will do our utmost to answer the committee's questions this morning. Thank you very much indeed. We have questions that touch on all those areas that you have outlined in your opening statement, so that is very helpful in setting the scene. Two of the most striking expressions that are used in the report are that the finances are healthier than expected, but it is clear that there is still a precarious financial position in which Scotland's colleges are in. I wonder if you could say a little bit more about healthier than expected. Colleges are viewed by many people as public sector institutions. Most public sector institutions were not eligible to qualify for the job retention scheme, furlough monies, for example, or for other Covid grants that were available to businesses. Can you explain a little bit more about how it came to pass that Scotland's colleges drew down on that money, to such an extent that you offer this as an explanation about their financial position being rosier than might otherwise have been expected? I am happy to cover all those points. I will bring Mark in in a moment to say a bit more about the college sector and its status and how that allowed access to some of the UK Government's financial support arrangements. In terms of the overall conclusion that is healthier than expected, as I mentioned in the opening statement, we have seen some of the financial challenges that Scotland's colleges have been experiencing in previous years. Also, in the context of the impact that Covid was expected to have not just in colleges but in other public bodies and relating that in particular to their access to other sources of commercial income that Scotland's colleges has reduced further as a result of the pandemic. Weighing all those factors brought us to a point that it was expected that there would be a real squeeze in Scotland's colleges in the year in question. Covid monies, though, helped to secure their financial position. Mark, can you explain a bit more about the longer-term outlook? Scotland's colleges are well versed in preparing longer-term forecasts and have continued to do that, which is welcome to set out their medium-term expectations. The next two years, although the financial academic year just passed and next year, suggest that the sector is going to return to an operating deficit before returning to a small surplus. Looking at the scale of movement, it indicates that there are real financial stresses for Scotland's college sector that they will need to plan with the funding council and their organisations to think about options for how they might best respond and deliver their services. We have seen, as a touch on an opening statement, all that will be within the context of flat cash settlements for the funding council, real-terms cuts. There is a real preparedness required now for how they will be financially sustainable in the future. I will pause and bring Mark in, if I may, and then I will be happy to elaborate further, as you wish. In response to your question about how they are qualified for the coronavirus job retention scheme, I suppose that there is a bit of anomaly, although they are classed as public bodies, not all of their income is provided as public income, so they have other sources of income. Because of that technicality, they were entitled to apply through the scheme. They got funding to cover their staffing costs through that, but they also received additional Covid funding from the SFC, and that all contributed to that healthier balance that the Auditor General referred to. You mentioned real-terms cuts and so on. It struck me that that is presumably based on a multi-year forecast of what inflation is going to be, and that is a bit of a stab in the dark, isn't it? At the moment, the retail price index is over 12 per cent, so in the context of the multi-year funding award, we could potentially be looking at quite a drastic real-terms cut in funding. The resource spending review sets out from May, and events have moved on with real pace since then, but it indicates that that point would be a flat cash settlement for the funding council. What that means in terms of individual budget allocations for colleges will be derived over the course of the next few months through the Parliament's own scrutiny of the budget and the SFC's own determinations. However, inflation will be a real pressure for Scotland's colleges. Regardless of whether the retail price index or consumer price index is not necessarily the cost drivers that individual colleges are facing, we touch on in the report that 70 per cent of Scotland's colleges will be cost-based about the staff costs, so whatever pay award settlement they reach with their trade union representatives, they will inform and influence their overall spending arrangements. There are a number of variables at play that will indicate how Scotland's colleges individually will have to manage their resources next year. I will bring Colin Beattie in a second, but there is just one other area that I wanted to have a look at at the start, which is Brexit. There have been periods in the past where Scotland's colleges have been able to draw on European social funds and other streams of support from the European Union, which is clearly no longer available or at least has been tapered out of the system completely. In its place, we are offered the UK Shed Prosperity Fund. Is that going to find its way through to Scotland's colleges in the way that European Union funds did, or given that that is likely to be administered or going to local authorities? What is the expectation of that money reaching the further education sector? I will turn to colleagues to see if there is any support. We have not covered that in great detail in the paper today about the range of funding arrangements that colleges have used. I mentioned passing other income, and that being one of the sources that is no longer what it was. There are still opportunities, though, for colleges to review arrangements and recover where possible. You are right that European funding was also one of those sources. Colleges need to review their entire arrangements, whether it is European funding, commercial income or staff costs, to ensure their financial sustainability. Their access to the successor to European funding arrangements, the Shared Prosperity Fund or others, is just part of those arrangements. Undoubtedly, that and along those other cost pressures suggest that, as they have suggested in their forecast, it is going to be tough times. I am not sure that there is a lot that I can add to that, but in terms of the European social fund, it was in place for the year that we were looking at, so it has continued on post-Brexit. I think that 2021 was the last year that it was available to colleges. To access European social funding, colleges have to hit their core target allocation for students. Obviously, Covid has had an impact on how they have been able to do that. The European social fund is over and above on top of that, once they have reached the threshold of their core targets. I guess what we will have to see is what that looks like in the current academic year, once that social funding is no longer available and how they are achieving their current targets and how they are getting back up to speed post Covid and the flow of students through the system. I will move things on now and invite Colin Beattie to ask some questions about the financial sustainability of the sector. Colin Beattie asks the question of sustainability in the college sector. It goes back a very long way now. It is in various iterations over the years, particularly since 2014. You have said in a brief discussion on Covid-related funding that it is masking some of the problems in the financial situation. Can you quantify that at all? I am trying to get to the underlying financial situation as opposed to the Covid funding that is impacting it. Good morning, Mr Beattie. To agree with you, you are right that it is not news from or Scotland that Scotland's college sector has been dealing with financial sustainability issues for a number of years. Covid has played a significant contributor, as the convener mentioned, that it is healthier than expected, which speaks to your point that that additional money supported the sector in the academic financial year in question. I can say a bit more if he is able to tell us about the volume of Covid-related money that the sector has brought in. However, if I may draw the committee's attention to Exhibit 1 in the paper that refers to the challenges that the sector is anticipating by way of its financial sustainability in the 21, 22 and 22, 23. We have seen in the past year that the report relates to nearly a £20 million operating surplus position that is anticipated to change to deficits in the two subsequent years. As is set out in the paper, Mr Beattie, that Covid-related money were a significant contributor to supporting the financial position. As we speak in the paper, it matters now that there is that analysis review of financial plans positions of all the colleges but also the role that the funding council expects colleges to play through the delivery of their work. I will pause for a moment Mr Beattie and see if Mark can assure that precise number with you and then be happy to answer anything further. In terms of numbers, we have set out in the report that the sector received an additional £15 million from the funding council in terms of Covid funding during the last academic year 2021 and they also received almost £10 million through the furlough scheme for a better word. I do not think that it is necessarily appropriate to say that if you add those two figures together then that shows the difference in terms of the impact that it has had because obviously colleges have been adjusting to the situation they have found themselves in. They have been trying to cut their cloth accordingly. They are trying to continuously make efficiencies. They have changed their provision. There are a lot of things in there and as the Auditor General said earlier they have lost commercial income over that period. It is a straight linear calculation to say that this is what they have in terms of the additional funding and that has been the impact on that position. It is a slightly more complex picture than that. Just looking at the SFC funding, it is alarming that it has gone up since 2017-18 from 75 to now 79 per cent in the period that we are looking at. It was never intended that that should be the case, that colleges should be generating some of their own income and indeed they do, but it does not appear to be at the level that was anticipated pre Covid. I think that in terms of the percentage of the sector funding that comes through the Scottish Funding Council grant, you are right that it has gone up. If you look back at the reports that we have produced over many years, that number has crept up each year. If you go back to something like 2013-14, it was about 71 per cent. As you say, it is now up to 79 per cent. We did see an increase whereby through national bargaining, where we saw the increase in staff costs associated with that, the funding council agreed to fund that increase through Scottish Government funding. That invariably put the costs up. They have lost things like commercial income through Covid and trying to generate additional commercial income in the current environment is incredibly difficult. I think that that is where the percentage figure shifts and it has been a noticeable shift. Previously, there was a wide variety of financial situations among the individual colleges, particular issues around the Highland runs and issues with some of the Glasgow ones and so on. Is that still prevailing to that without much change? In other words, if we looked at 2018-19 and backwards and looked at it now, would we see the same pattern with the same colleges or has there been any significant improvement with any of the colleges? You are right. Mark is saying a bit more about the detail behind that, but the overall picture you describe remains the case. There is a wide variation in the individual financial sustainability of some colleges compared to others. Some colleges are producing million-pound surpluses. Some of the Glasgow colleges in particular still have access to reducing funds nonetheless, but for the arms-length foundations that they are able to draw on, not to the extent that it would have been at the start, as you said, a decreasing level of resource therein. At the other end of the spectrum, there are some Scotland's colleges that have produced deficits. That speaks to a real variety of challenges. Some of it will be informed by the nature of their student base, their ability to attract courses or students to attend courses and so forth, but that picture is not one of uniformity across the sector, Mr Beattie. Mark might have some examples that he wants to share with the committee. No specific examples on individual colleges off the top of my head, I have to say, but what we see is colleges operating to tight margins. What we might see is that within any particular year there will be a fluctuation where a college might find itself in a deficit one year, but then return to a small surplus next year, and it can bounce around along that line. There are some colleges that are predicting surpluses over the next three to five years. There are some colleges that are predicting deficits over the next three to five years, so there is variation. What we have done is, alongside this report on our website, we have produced a suite of interactive data. That allows people to interrogate by individual college to see the position that each college is in and where it is predicted to be in the next year. Back in 2014, when the alfs were formed, the theory was that, probably optimistic in those days, that the commercial income would be parked in the alfs and drawn down against specific contracts as time went on. There does not seem to be much evidence that that has been a terribly successful strategy. It seems to me—please confirm or otherwise—that the alfs are a dying breed. As the current funding that they got in 2014 dies, they will become no support for the colleges. I think that I would recognise that characterisation, yes. Again, much of the conversation on your last question was not a universal picture across Scotland, the scale of alfs. Some colleges are very significant reserves that they were able to put into alfs in the first place, others not so. However, yes, they have dwindled. There is not the scale of resource available to colleges now to support their activities. As we have mentioned already, commercial income is also dropping in Scotland's colleges, particularly exacerbated by the pandemic. Not to say, Mr Beattie, that, especially with the scale of financial challenges set out in the resource spending review, that is not an avenue that colleges can return to and bring new dynamism opportunity to support their funding that they receive from the funding council. However, yes, it is not the scale of resource that they once had. Why is it that with three of the Glasgow colleges, two thirds of the money in alfs relate to them? Is that just historical or is there something behind it? Why are they more successful? It is typically a legacy issue. As you will be aware, alfs were created in 2014 when incorporated colleges achieved their new status and were no longer allowed to hold reserves. All the reserves that the previous colleges had went into alfs, so it depended on the level of reserves that each institution had at that time. It just so happens that, as you have seen, we expected the level of alf pot to deteriorate over time, as institutions drew on those legacy reserves. It has gone down from that initial £99 million to £19 million. However, we have seen that steady drop each year. The legacy issue is the fact that the bulk of that is within those Glasgow colleges because they had the bulk of that at the start. I will look again at Exhibit 1. It shows that the SFC is forecasting that the adjusted operating position of colleges is that, in 2021-22, there was a deficit of £5.8 million, deficit again in 2022-23 projected, and then it moves into surplus in 2023-24, which seems positive. However, how realistic is that? Is it achievable? We are not able to give you assurance one way or the other on those numbers. Those are forecasts that the college sector has worked with the SFC to prepare. Looking back at the trend, if I may, it is still a very low projected surplus compared to the three years prior to the pandemic and, historically, a much thinner margin that the sector is operating to than it would have done. Of course, margins of that scale spread across all of Scotland's colleges suggest that more will be experiencing really tight financial challenges, even if it is suggesting a surplus. Back to the convener's earlier point, with the number of variables that public bodies will be dealing with—inflationary pressures, funding environment, pay awards, requirements—all of that would suggest that an overall £2 million surplus is thin to be spread across the sector. Welcome return to surplus, but I am not sure that we can say with confidence at this stage that that will be the figure that the sector will be dealing with. Again, final area to look at, expenditure 2021 shows staff costs at 71 per cent of the total, which is high. Of course, it is very much a staff-driven environment. People have to be able to present the courses and so on, so 71 per cent, although it is high compared to other areas, is possibly justified there. However, it means that there is very limited manoeuvrability to save money elsewhere, and staff numbers fell in 2021 by 1.2 per cent. Now, how sustainable are those staff numbers, given the financial pressures against the colleges when the colleges really only have staff numbers to play with to save money? You are right. The nature of the services that Scotland's colleges provide are a staff resource intensive operation. There is no surprise that it hovers around that number. Even looking back at the trend to the middle of the last decade, I suggest that there has not been a great deal of movement in staff numbers. It is there around the 70 per cent number of staffing. However, as you described, Mr Beattie, with staffing numbers of that level, it means that there are less options available to colleges to manage their financial position. We have already mentioned this morning that staff cost pressures will be a factor that colleges will have to deal with in balancing their budgets. It means, therefore, all the more reason where they are able to look at other sources of income, whether it is European funding, successor arrangements or their own commercial activities. Also, looking at their cost as well, are there efficiencies that Scotland's colleges can generate? Are there arrangements that they can share services with one another that will deliver efficiencies? Not for me to suggest particular things that they could focus on, but it is inevitable that all Scotland's colleges will be looking ever more closely at their financial position, even more so than they are already doing. We have been talking about shared resources now for as long as I can remember. I am not sure to the extent to which that has been successful. Are you aware of any examples of colleges that have found alternative ways to reduce cost or increase income? Is there a success story out there that might lead to other colleges? I will ask colleagues if there are any examples that we want to share with the committee. However, it is not just colleges that have not moved in terms of sharing services quickly enough. That would be a representation across many parts of the public sector. Particularly if I am referencing back to the resource spending review that the Government produced in May, there are references to efficiencies that we needed, digitalisation that is anticipated, that will deliver some of the efficiencies that are required to support Scotland's fiscal position. The estates that Scotland's public bodies operate are also part of that factor. There is a real need for looking at all aspects of the cost base, the asset base and income generation arrangements to support financial position, including sharing of services where appropriate for bodies within the same sector and beyond the boundaries of the sector. I do not think that it is just a case of Scotland's colleges that we want to share with one another where appropriate, and it makes sense whether on a local or regional basis there would be opportunities to do so as well. Carolyn, you have an example to support your question, Mr Beattie. I do not have a specific example, but I am just thinking about the broader context in which the colleges are operating and the purpose and principles that the Scottish Government is going to be developing. That will support colleges, I suppose, to think about prioritisation, which inevitably is going to be a critical factor in their future planning. Likewise, the national impact framework, once it is produced by the SFC, will be a helpful tool, hopefully, in assessing the effect of changes that colleges have made. Both of those strategic developments will hopefully help colleges when they are thinking about their future planning and support them to assess whether what they are doing is having the desired effect in terms of cost cutting, but also maintaining the volume, quality and breadth of learning that they are delivering. The figures around the financial sustainability of the sector ring some alarm bells and we have heard that already. One of the other areas covered in the briefing, which I think is also a cause for concern, are some of the figures that you have produced around student outcomes. Sharon Dow is going to ask some questions on that subject. It is noted that the number of students successfully completing their course and achieving a qualification has fallen. According to surveys carried out by the Scottish Government and NUS Scotland, student poverty could be a contributing factor. You have also highlighted that that represents a risk not only for individual students but also for public investment and value for money. Do we have enough information to rigorously assess the reasons why students are not completing their courses? I will bring Carolyn in a second, Ms Dow. The paper today looks to explore not just the spending but what is being achieved from it and is consistent with many of our reports and what outcomes are being delivered for public investment. The pandemic has had an impact on the experience that students have had and a contributing factor to those students who are completing their courses. A headline that we report has exacerbated inequalities and has also impacted on the number of students who are completing their courses. Referring to Exhibit 4, if I may, just looking at some of the analysis of different students, you can see from the trend—particularly folk are singing on the last two years—between 2019-20 and 2020-21, we have seen a reduction in the rates of students completing their courses across different groups of society. That is perhaps not unexpected but still troubling nonetheless and a real focus, therefore, for Scotland's colleges to think about how they are supporting their students if it is in a hybrid setting or a return to class-based learning, so that people get the outcomes that they want and that public investment gets the intended return for better outcomes for Scotland's students. I will pause for a moment and bring Carolyn in. I think that she wants to say a bit more of this. In terms of specific data about students who are not successfully completing their courses, the challenge with that and understanding the reasons for the failure to complete courses is that where students go after they leave or after they withdraw is not tracked, therefore understanding the reasons for leaving is not something that there is a lot of evidence about. More broadly, there is information and feedback that, certainly, the introduction of remote learning did bring some positives in terms of flexibility and that could be particularly helpful for students who had additional responsibilities such as caring responsibilities. There have been some advantages that have potentially arisen as a result of the pandemic but, on the other hand, there have been challenges in terms of digital poverty, for example, and that does not just extend to the technical equipment, but somebody might not have a quiet space at home where they can study in peace and might not have great connectivity, for example. There are lots of factors that fall under that umbrella and the SFC has invested money to support students who might be experiencing digital poverty. We are also aware that particular courses are obviously challenges around practical courses and the completion of those given the social distancing requirements that were in place. However, there are other factors that would have arisen as a result of the pandemic, for example, medical issues if people were suffering from Covid, if they had caring responsibilities for relatives or for others who had issues due to Covid. Mental health would have been another risk that might have been exacerbated in those circumstances. There are lots of factors in the mix but, in terms of definitive information about the withdrawal rate, we do not have that. Do you think that we are doing enough to support students that are thinking of withdrawing from courses? Certainly, there are examples in the report of what colleges have tried to do to offer support. For example, one of the case studies outlines the food poverty initiative by one college to provide hot meals to students to try and encourage them to draw them into the campus and make sure that they were not going hungry. There are other examples about efforts to involve students and include students in a way that we would encourage them to continue with their studies. As I said, there is anecdotal evidence there but I am not sure how much further detail I can provide in terms of the extent of the support across the board in colleges. I have a supplementary question about the analysis of positive destinations that colleges have. It is just over 15 per cent of people who left a college course rather unemployed or unavailable for work. The reasons behind that matter, as I know the committee's long-standing interest in data, is a very relevant factor here. Colleges have a pastoral role for students that they understand how they are performing so that they can anticipate people not completing their course and what the reasons behind that are. It is data that allows them to make amendments, whether it is pastoral support, course content or overall access arrangements. It is a real encouragement that we would make for colleges to look further at this and to better understand the reasons behind why students have not completed their course or moved on to positive destinations. In Exhibit 3, it shows college lever destinations in 2019-20, highlights a growing number of college levers going to university, a 10 per cent reduction in college levers going into work, and, in addition, 15.6 per cent of college levers, just as you have mentioned, are unemployed or unavailable to work, a 3 per cent increase from 2018-19. What is the assessment of the value for money that is delivered by Scotland's colleges in light of lever destinations? In lever destinations, we have one factor that would inform our overall value for money judgment on Scotland's colleges. It is not something that we have attempted to do in this paper today, but, clearly, for public investment for the outcomes for individual students, we can assume that not all of those, and it is an assumption, I should say, not all of what 15 per cent embarked on a college course with the expectation that they would be unemployed. Given that we have talked about the colleges play a vital role in supporting students acquiring new skills, supporting employability, aspirations or further learning, that number feels too high to have embarked on a college course and then not complete it. It goes back to the earlier discussion, therefore, that colleges need to get better data behind why that is happening, to support what you rightly say about public investment but also the individual experience and the subsequent life chances for people who have embarked on a college course. I am going to bring in Willie Coffey shortly, but can I just compare and contrast two of the statistics that are in your briefing on that subject? On the one hand, we have a student satisfaction rate among full-time students at a very high of 88 per cent, but the line above that tells us that 27 per cent of full-time FE students withdrew, dropped out. I can only assume that the students' survey under the satisfaction survey did not include those who had withdrawn. Unless colleagues tell me differently, I am not sure that we know the precise scope of the various surveys, but those numbers look at odds with one another as to overall satisfaction and withdrawal rates. I think that there is real merit in getting beneath some of that, but I am not sure that we have that information today. I think that it might be in part as a result of the timing that different surveys are carried out as well. Mark McCabe nodding at that point. I am going to now ask Willie Coffey to come in, who has more questions in this area. Thank you very much, convener, and good morning everyone again. One of the few good things that emerged from Covid was how quickly the colleges, in particular Learshire College, adapted to the circumstances that they found themselves in. It was really a credit to the staff and to the students about how quickly they responded and adapted to the new world that they lived in, the online world in effect, which almost sprang on us overnight. There were some fantastic examples, Auditor General, in which you mentioned a couple in your briefing. You also talked about the impact, the equalities impact that Sharon had mentioned. Would you kindly tell us a little bit about that experience, the positive way that the colleges embraced the online world to try to address the clear impact that it was having on making inequalities even worse? Good morning, Mr Coffey. It is all of those things, the pandemic. We have spoken on a number of occasions with the committee about the drive for innovation that the pandemic brought. Some organisations responded better than others in changing the way that they delivered services, and that is true of Scotland's colleges as well. Caroline can come in at the moment and support the committee with some of the examples that we have in the report. Perhaps we might just foresight one of the references that we make about the assessment that not us, but HMI inspectors from Education Scotland made of Scotland's colleges that, particularly around remote and digital learning, were developed at pace and in a number of different practical ways. There is validated evidence out there to say that colleges responded to support students. That is really welcome. I remember that the round table that the committee held last year, where you took evidence from this and contributed from the national union of students, gave some examples where it worked well and others where it had remained really challenging. That, of course, is influenced by people's individual circumstances, the support that they are receiving from their colleges, what their home environments are like and how all that is. So, inevitably, that will bring a real degree of variability. However, it is welcome nonetheless to the validation that Education Scotland has just about the pace with which change took place. You mentioned inequalities and some of the variability, so I am going to pause at the moment and invite Caroline to cover that point. In terms of inequalities, I have already touched on some of those points in my earlier response, but I focus on funding to ensure that digital poverty was not an inhibitor to students' engaging. That was a key step that was taken by the SFC in those circumstances. As well, the pandemic has shone a light on mental health issues and the importance of their appropriate support in that area. You can see from one of the case studies in the report that most colleges have tried to introduce some sort of mental health support for their students, so, although that does not necessarily link with digital innovation as such, it is a reflection on the importance and recognition of the importance of supporting students in that way to help them to continue with their studies at college. You said that we all agreed that the digital platforms that were available were a huge boost to everyone in the sector, particularly to the students. Can I ask as a follow-up to the previous discussion why there was such a follow-up in completion rates? If the remote learning element was embedded and in place in working successfully, were there other factors clearly behind that, do you think? I think that it is hard to say that was the case everywhere. Even the representative from national union students said that it really depended on the experience and the environment that people were in, whether they were able to adapt to remote learning and even echo some of the points that Carolyn makes. It would kind of depend on the circumstances that your household was in, whether, even if you had remote learning access from your college, whether you were able to access it, whether you had care and responsibilities, health issues, all of those factors would have contributed to some of the drop-off rates for course completion. Maybe I will go back to the earlier point that hence the reason for colleges individually to know more to a better analysis of why people are not completing their courses, that quality of data allows them to inform the choices that they make about how they will deliver in future. We recognise and touched on the report that this was not an unknown issue in terms of digital access and digital exclusion. We talk about the investment that the SFC made in supporting digital access, £5.7 million, and then further £2.9 million to come to support digital access and learning. So there is funding there. I think that it is to marry that up now with that analysis of what are the factors behind students that have challenges completing courses. Do you think that colleges will keep the door open, Stephen, to continue to deploy online in their environment? Those are important lessons, I think, for us to learn and to hear about, because it is quite worrying that, because of inclusion and exclusion issues, that students perhaps are not able to exploit the capabilities of their digital world. So that is a big worry, and that will inevitably mean that more of them might leave, or there will be a greater demand for them to return to the in-college setting to complete their courses. We do not know which way it will go, but do you think that colleges will keep the door open to the online world and get the best of it that we can perhaps retain as we move forward? I will speculate for me. Maybe the college sector will be better placed to share with the committee what their intentions are around that. For me, it would depend on what kind of course there will be many practical courses that will be delivered by Scotland's colleges that will require an in-person arrangement, but others will be less so. Therefore, there are all those competing variables around the restate and some of the financial pressures that will be facing income opportunities for colleges. We have to marry up all of those things, but fundamentally it is about the student experience the outcomes that they get. Therefore, that leads me to the final point on this matter. It is vital that colleges are talking to their students about what experience they want from learning that data, that understanding of reasons for successful completion of courses and those that have not completed the courses successfully to inform future strategy learning environments. The final point from me, convener, is a follow-through to Sharon's question. There is a knock-on effect on the skills pool, is not there? If there is more of the students heading for university and less completing their courses, we are bound to have an impact. There is bound to be an impact on the skills pool that is available to us. We have heard about that throughout Covid, convener, that there are still opportunities in certain sectors that are really struggling to recruit, particularly in the hospitality sector. That is a huge problem that predated Covid, but it got worse during the year. Are we looking at a skills issue again, Auditor General, that should worry us and concern us? What would your advice be for the sector to try to address that? You are right, Mr Cofi. I have heard about that. I am again thinking back to the round table to hear from the Scotland colleges about the role that some colleges are playing, particularly those that you mentioned. Social care was the one that stuck in my mind about the acute pressures in that sector and how some colleges are responding to that and tailoring their courses to support that real skills gap that exists in the economy. That goes back to the overall role of the funding council and its prioritisation. Government's response to the funding council's recommendations is therefore about what are the principles and priorities for the sector. Yes, it is about academic learning in and of itself, but it is also really about the contribution to economic requirements and those that are changing depending on the skills in different sectors. We make the point in the paper that we are keen to see progress in 2023 about what the Scotland's colleges sector will look like and what its priorities will be. That will be an important milestone. Do I discern from the briefing what you have just said that there is a sufficient level of urgency on the part of the Scottish funding council and the Scottish Government to implement the recommendations that were made publicly in June 2021? You can see from the paper that we are looking to see that move at pace so that the sector is clear on its role and its purpose priorities. Some of that will get in May of next year and then later on at the end of the summer about the connections that the work that Scotland's colleges do to the overall national outcomes through the national impact framework. Those are really important milestones. That thread exists between public expenditure and the role of individual public bodies. We are looking to see progress on that over the course of the consultation that takes place for the rest of this year through to the completion of those documents during 2023. Good morning, Mr Boyle. I would just like to take up perhaps the convenience point in relation to the improvement plan and the expectations placed upon colleges. Let me just look at forward capital expenditure plans and then just tie up a couple of loose ends in relation to the estate maintenance. First and foremost, your briefing highlights a number of actions that the Scottish Government and the SFC must take to provide clarity and support for the long-term improvement plan in the sector. In your view at this stage, has the Scottish Government and the SFC provided enough guidance to ensure that colleges are fully aware of the expectations that are placed upon them and that are going to be placed upon them? As I mentioned to the convener, we are keen for that to move at pace. Last year, the SFC undertook its review of the college sector and made a number of recommendations to Government. We will now see the consultation over the course of the remainder of 2022, with the expectation that the Scottish Government's long-term purpose and principles for both the further education and higher education sector by May of next year, and then the prioritisation through the national impact framework. Clearly, the absence of those will influence the choices that individual colleges will make. You can see that the language that we use about pace, the need for clarity, is evident in the paper. We look forward to those documents in that process being completed. They feel really important. Touching on, as we referred to in the report, some of the progress around other aspects that have been looked at is regionalisation, being one of the components of Scotland's colleges. We know that there is a work of one of your fellow parliamentary committees, the Education Skills Committee, is also looking at the success of regionalisation, but we are seeing some of that progress stalling, where there have been regional boards. Glasgow, in particular, is still grappling with an alternative model, so that is not helpful in the current context. We are looking to see clarity about successor arrangements, both in terms of effective governance and clarity about outcomes impacting that connection to the national performance framework. I think that it is just a case of trying to move forward with that as swiftly as possible. Of course, having clarity about the operating context, the structure and the framework will all help with planning for the future and ensuring sustainability whilst continuing to deliver, but I am not sure that there is much more to add to that. Obviously, your own evidence suggests the very tight financial arrangements that colleges will face. Are those expectations going to be realistic, or are we just going to add more pressure on to an already overstretched resource allocation? The expectations have to marry up to a degree with the financial realities that Scotland's colleges are facing. We have talked already this morning about what the sector anticipated its overall financial sustainability. Position will be deficits before returning to a smaller operating surplus. We have real variables about the inflationary pressures that the economy is facing, as well as the wider fiscal context that Scotland is operating. All that has to be taken into account, of course, with the expectations or individual colleges. Ultimately, it is about the experience and the outcomes that Scotland's students, who are attending college, get. There is a real evolving picture, but those competing factors, of course, have to be married up. In your 2019 report, you recommended that the SFC and the Scottish Government agree and publish a medium-term capital investment strategy that sets out sector-wide priorities. Is that yet to be published? Are you confident that the work on this strategy is on track? To your knowledge, when can we expect to see a finalised plan? Mark Whiting, I want to say a bit more about this in a moment or two. As we note in the paper, there is an infrastructure strategy planned for the autumn of this year. It is our understanding that that is in progress and will be published over the course of the next few months. Of course, we will wait with interest and take a keen view on its context as it relates to the overall structure, strategy and plans for the sector. Mark, we wish to say a bit more. We made that recommendation back in 2019. That was primarily on the back of some concerns that we had about the under-investment in the college estate. You can see from exhibit six of our report that we have quoted the estate survey that the funding council commissioned across the sector in 2017, which showed that there was a backlog maintenance issue of just over £360 million across a five-year period. That was just for backlog. You have obviously got the on-going life cycle maintenance on top of that. Capital funding was falling well short of that. We made that recommendation to make sure that there was clarity about what the priorities were for the sector and what was needed. Obviously, there has been a delay in reaching that. The past couple of years have impacted on progress with that. The past couple of years will have invariably changed the priorities for some of that, as we see different models of learning and different demands. We have seen some new campuses being built, but there is still a real shortfall in terms of the capital funding that has been made available to maintain the estate. We hope that the infrastructure strategy that the Auditor General referred to is due shortly. We will set out exactly how the estate is going to be developed and how that will fit with the ambitions and expectations of the sector and the models of delivery that will be expected to be in place. Obviously, there will be an issue of prioritisation, but it is evident that, in terms of backlog maintenance, there is a significant shortfall. Also moving forward, there is the requirement to deal with net zero to make sure that the estate is meeting those targets. Are you concerned that the capital funding shortfall presently, both historically and moving forward, could, to some extent, undermine the delivery of education to the safety of the estate? How concerned would you be that those big capex expenditures that are required to meet the net zero target may not be achievable given the on-going tight framework that we see throughout the sector? I think that we need to wait to see the contents of the strategy. The autumn before passing any judgment and we have not had any insight into it clearly, we would absolutely expect both backlog maintenance, net zero expectations and also to refer again to the resource spending review. It is very clear that the future of the estate across all public bodies is part of the Government's thinking about their contribution to net zero and fiscal sustainability across the piece, so we expect that all of that will be covered in the infrastructure strategy and, at that point, as part of our work on colleges in the year ahead and individual colleges for that matter to take a view on what that means for their operations. I have one final question to put to you. It is something that you have already alluded to, which is the fact that the Parliament's education children and young people committee is conducting its own inquiry into the regionalisation and restructuring of the college sector. It was merely to ask whether you have or you will be giving evidence to that committee. We understand that the committee's evidence-taking has now concluded, convener, at the beginning of May. We are awaiting its conclusion and its findings, and I think that it will be a very helpful contribution, especially as we have mentioned already. The Government itself is looking at the role of the sector, priorities, principles and how that connects with the national outcomes. We look forward to reading that and, of course, we will factor that into our work for the year ahead. Thank you. We have had discussions before in the context of the section 22 report into South Lanarkshire College about, for example, what is the point of regional boards? Is the structure in the sector maybe too top-heavy with the Scottish Funding Council, regional boards, college boards, principles, now principles, CEOs, as many of them describe themselves, vice-principles, assistant principles and so on? There are some, I think, quite big questions there, aren't there, around whether the management governance of the sector is as effective as it could be. There are real fundamentals there, convener, absolutely. As we mentioned in the reports, some of the college regional boards themselves have struggled to come up with alternatives, whilst recognising that the status quo is less than satisfactory in dealing with all those issues. From our perspective, it is helpful that the Education and Skills Committee has embarked on the review of regionalisation. I have keenly await the recommendations from that report and anticipate that that will inform some of the Government's own plans for the future of the sector. Thank you very much indeed. That concludes our questions for this morning, but it raises some quite important issues, as I said earlier, both about the financial state of the college sector in Scotland in 2022 and whether or not it is delivering the outcomes. We all want to see for the students that are entering it. Auditor General, I thank you, Mark McCabe and Carolyn McLeod for your evidence this morning. It has been very helpful and we shall consider our next steps. At that point, I would like to close the public part of this morning's committee meeting.