College finances to deteriorate, says Audit Scotland

The finances of colleges in Scotland are expected to deteriorate in the coming years, Audit Scotland has said.

A report found that colleges will need to change to remain financially stable and ensure that more students graduate.

Audit Scotland said colleges had responded well to Covid pandemic, including the shift to online learning.

But the number of students completing their course had fallen - with disadvantaged and vulnerable students the most likely to drop out.

The public finance watchdog said coronavirus funding had contributed to a better than expected end-of-year finances in 2020-21.

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However, funding for the sector for the upcoming academic year is down 5% to £696m.

The proportion of students withdrawing from courses increased from 20.8% to 27.7% in 2020-21.

Audit Scotland urged the Scottish government to work with the Scottish Funding Council (SFC) to prepare for changes.

Auditor General for Scotland, Stephen Boyle, said: "The challenging financial situation facing colleges will make it difficult for the sector to balance the delivery of high-quality courses and Scottish government priorities.

"Changes are needed to ensure the sector is financially sustainable in the long term. Colleges need support to plan for those changes."

Stephen Boyle said change was needed to ensure the college sector is financially sustainable

The SFC made recommendations to improve the college sector last year. These were broadly accepted by the Scottish government, which is due to set out the future of the sector in 2023.

Minister for Higher and Further Education, Jamie Hepburn, said: "We welcome Audit Scotland's report and will consider its recommendations carefully.

"The Scottish government is investing nearly £2bn in Scotland's colleges and universities in 2022-23. We know some students' learning was inevitably disrupted as a result of Covid.

"However, more than 90% of those who were unable to complete their studies due to the pandemic returned to college by 2021-22. Work continues to re-engage the remaining students."

Colleges Scotland said the financial squeeze facing the sector will make it "difficult to continue to deliver the same volume of learning as in previous years".

A spokesperson added: "The sector has proven itself incredibly adaptive and resilient in recent times and will continue to do everything possible to provide the lifelong learning opportunities our students demand and deserve."