Chamber and committees

You can only cut so far. There must come a point when you suddenly cannot pay your bills—when you cannot operate the buildings, pay your staff, buy anything or replace anything that is broken. If that was a business, it would go bankrupt and close. I am trying to understand what happens in a public sector environment. Would the Funding Council simply loan a college cash if it had no reserves? Could a college borrow money, or would it simply have to close altogether?

That message is loud and clear, and it has been widely reported as such off the back of your briefing. However, there is a false economy to trying to make ends meet on an annual basis simply to make your accounts fit for purpose. Redundancies come at a cost. We have talked about the educational, social and even moral impact of making redundancies, but there is also a financial cost. You are hoping that it will save money down the line, but it costs money up front to pay people off. It seems like a short-term fix to a longer-term problem. Is that a correct assertion?

I point members and the Auditor General to my written question S6W-30005, to which I received a response late yesterday afternoon. Ahead of today’s evidence session, I asked the Scottish Government to comment on the Auditor General’s report. The reply from minister Graeme Dey is quite illuminating with regard to the Government’s thinking on issues that we have just talked about. In the second paragraph of the answer, the minister writes that

“It is the responsibility of each college to manage its operations in line with”

its funding and that the Government expects colleges to “reassess” their models

“and explore avenues for cost reduction”.

However, in the first paragraph, he also says that ministers recognise the role of colleges with regard to students’ development but also with regard to Scotland’s economic growth. Those two statements do not exactly seem to match up, shall we say? Perhaps that is more of a comment than a question.

I might come back in later to talk about wider reform, but I am sure that other members have questions in the meantime.

Good morning, Auditor General and guests. The college sector is very important to the experience of young people in Scotland, workers and the general wider economy. You highlighted that very well in your report.

I want to drill into the meat and bones of the numbers and the state of the funding. I will use the word “crisis”, but I will leave it to others to use their own language.

In your opening statement, Auditor General, you mentioned that we have had three years of cash freeze and, this year, a reduction in funding, which equates to an overall reduction of 17 per cent in real terms. I want to tease out what you think the effect of that has been. I have not been on the committee for long, but that issue has been raised by Audit Scotland for a number of years. My impression is that it is not a new problem and that it seems to be getting worse.

Finally, in my research for today’s evidence session, I came across an article in The Herald from the principal of Edinburgh College, Audrey Cumberford. I am not sure whether you have read the editorial, but it is an interesting and eye-opening piece that touches the issues that we have been discussing of the role of colleges and the funding situation that you refer to in your briefing. I hope that she will not mind my quoting the article, which says:

“The potential of the Scottish college sector is often misunderstood, undervalued and, as a result ... suffers from underinvestment. ... it’s vital that”

we understand

“colleges for what they are: a cornerstone in the country’s future prosperity.”

I think that that nicely sums up our conversation this morning. I presume that you agree with everything that Audrey Cumberford has said.

Shona Struthers actually used the word “dire” in her editorial, which I think perhaps sums up the situation better.

Does Audit Scotland charge fees for that work?

Do any local authorities in Scotland not participate in the NFI?

I was particularly struck by the second of the key messages on page 3 of your report. Perhaps I can draw your attention to the last sentence of that and ask you to explain or clarify a little bit what it means and why you have said it. In summary, you say:

“Overall, it is not clear whether underlying levels of fraud have increased since 2020/21.”

That flags up a point of concern for me, but I will give you an opportunity to clarify what you mean by that.

Do you add value to the work that in-house fraud teams do? I presume that the DWP has a massive fraud team, as does His Majesty’s Revenue and Customs and other big bodies across the UK that manage large sums of money for large numbers of people. I presume that they have many people who sit in an office and look at fraud. What value does your small team add to any of that?