Colleges urged to act on finances

More than half Scotland's colleges are in the red

Almost a quarter of Scotland's further education colleges have deficits of more than £1m, according to new figures.

The second annual report into the institutions' finances has been published by auditor general Robert Black - accompanied by a call for those in the red to do more to balance their books.

The Audit Scotland report found that at the end of July last year, 22 FE colleges reported deficits totalling more than £30m.

It is important now that realistic and plausible deadlines are set to achieve financial improvement

Robert Black
Auditor general

Ten colleges had deficits exceeding £1m, with Inverness College reporting the largest - a figure of £5.177m.

However, the financial performance of the other 21 colleges reduced the sector's total deficit to £17.5m.

Last year 12 colleges were asked to prepare financial recovery plans after Audit Scotland found that 34 out of the 43 in Scotland had reported deficits totalling £18m in 1999-2000.

Some institutions have now put together such plans, but have warned it could take up to 10 years for them to balance their books.

However, Mr Black said they had to work harder to give specific timetables.

Additional funds

"While I am pleased to see action on a range of initiatives designed to improve the management of colleges, I would like to see a clearer picture of the expected impact of these changes and a timescale for these," he said.

"Core funding has been increased and some colleges have been granted additional funds specifically to tackle their difficulties.

"It is important now that realistic and plausible deadlines are set to achieve financial improvement."

Most of the colleges' cash comes through grants

The Audit Scotland report found that slightly more than 50% of the country's 43 FE colleges were in the red.

The more profitable institutions included the Glasgow College of Building and Printing, which reported a surplus of more than £2.5m.

However, only 2% of the colleges' financial performances were rated as good in the report.

While 19% were said to be stable, 33% were poor and 36% were unsatisfactory.

About 70% of the colleges' £458.3m income came in the form of Scottish Executive grants.

Ministers also approved a one-off £7m payment last year to help those colleges facing the greatest financial difficulties.

Value for money

It is expected that the colleges will report a net deficit of £12m for 2000/2001 - but that this will be converted into a £4m surplus by the end of 2003/04.

Scottish National Party lifelong learning spokesman Adam Ingram said: "The executive continually trumpet the importance of lifelong learning and vocational training but this report begs the question whether we are getting value for money.

"What we should and could be doing is cutting out wasteful expenditure a lot of which is generated by unnecessary and counterproductive competition between FE colleges."