College Merger Savings 'Unclear'

It is unclear what savings have been achieved by college mergers beyond staff cuts or what the full costs of the mergers have been, the public spending watchdog has said.

Colleges have coped well with the significant reforms and maintained sound finances and learning but still face challenges, according to Audit Scotland.

The Scottish Government and the Scottish Funding Council (SFC) expect the mergers to reduced duplication, improve engagement with employers and outcomes for students.

It also predicts financial savings of about £50 million a year from 2015-16.

Audit Scotland said: "A large proportion of the savings have come from reductions in staff, with the biggest reduction being teaching staff costs.

"However, it is unclear what savings have been achieved in addition to reduced staffing costs and what the full costs of the merger process are as there are no systems in place either at individual colleges or centrally to collect this information.

"It is also unclear what progress there has been in achieving some of the wider benefits expected from the mergers.''

It added: "The Scottish Government and the SFC have not specified the measures they will use to assess progress in delivering all of the expected benefits of the mergers.

"Neither could they provide us with details of the expected level of change required for mergers to be considered successful.

"The lack of baseline information for some of the expected benefits will also make it difficult to fully assess and report on improvement.

"The Scottish Government indicated that it will draw on existing data sources, including financial data and college performance indicators, to assess progress.

"While it should be possible to extract information on savings and student outcomes from existing data sources, it is not clear how the Scottish Government and the SFC will measure the wider benefits, such as reduced duplication and improved engagement with employers.''

Reducing the number of incorporated colleges to 20 and creating 13 new college regions has had implications for funding, learning provision and how colleges are managed and scrutinised, Audit Scotland said.

Colleges' planning for mergers was generally good and carried out on time, with the changes to date having little negative impact on students.

Reductions in staff costs were achieved mainly through voluntary severances and auditors found weaknesses in how a small number of colleges had managed severance payments for senior staff.

Caroline Gardner, Auditor General for Scotland, said: "The last few years have placed significant demands on colleges in Scotland as they managed a complex programme of reform.

"Our report is intended to support them in learning from how these reforms were delivered and addressing areas that need to improve.

"In the main, colleges coped well with substantial changes to the way they work, maintaining sound finances and completing mergers on time, without negatively affecting students during the process.

"Many of the effects of the mergers are still taking place, however, and there are continuing challenges for the sector.

"It's important that the Scottish Government and the SFC work with colleges to measure and publicly report on whether the reforms have delivered all of the intended benefits.''

A spokesman for further education umbrella body Colleges Scotland said the report underlines that colleges in Scotland have succeeded in delivering what has been asked of them on time, whilst maintaining sound finances and protecting the learner''.

It is our understanding that no other sector has been re-classified from private to public sector - it has been unique for the college sector, and therefore there has been no precedent,'' he said.

On reported weaknesses in staff severance payments, he said: It is important to stress that the decisions that were taken on severance issues were made by some pre-merger colleges, and not by existing colleges.

The new guidelines and governance arrangements that are now in place provide a more robust system which should ensure that a similar situation does not arise in the future.''

Students have called on colleges to account for the missing millions'' Audit Scotland found from colleges that have transferred £99 million into arms-length foundations.

Gordon Maloney, president of NUS Scotland, said: There needs to be serious questions asked about the extent of money that colleges stashed away while students have struggled to access vital bursaries.

All the good work our colleges do, particularly for those from our most disadvantaged communities, stands at risk as a result of budget shortages.

That's why it's unbelievable to discover that colleges built up, then squirrelled away, reserves of £99 million which are now sitting in arms-length bodies.''

Labour education spokesman Iain Gray said: Angela Constance should be ashamed to call herself the Cabinet Secretary for Education and Lifelong Learning because she is driving lifelong learning out of our colleges.

Fewer students, fewer staff, less money, this is the stark reality of the SNP's record on colleges.''

Conservative young people spokeswoman Liz Smith said: The Scottish Government's severe cuts to college budgets are having a detrimental impact on the ability of colleges to maintain employee numbers, on staff morale and on their ability to support students to develop the skills they most need in the workplace.

This is not a happy story for the SNP and it raises serious questions about the Scottish Government's priorities within further and higher education.''