Audit Scotland have published a new report which shows a 17% real terms cut in funding for Scotland’s colleges since 2021/22. The report calls for more clarity from ministers on what parts of their role to prioritise, as the sector’s financial challenges mount.

Cash balances held by colleges are also forecast to fall, with Scottish Government funding for colleges reducing by £32.7 million in cash terms in 2024/25.

Shona Struthers, CEO of Colleges Scotland, said: “A 17% reduction in real terms funding for colleges is dire, impacting colleges as organisations, students, and the wider economy. The reduction translates to colleges losing almost £1 in every £5 they should have received from the Scottish Government. 

“An increasing number of colleges are reporting financial deficits - college leaders are under enormous pressure to keep colleges solvent as well as performing successfully. Colleges are public bodies and could play a bigger part in helping the Scottish Government deliver its top priority of eradicating child poverty but there hasn’t been sustainable funding available to do this fully, a missed opportunity. College education gives people opportunities to gain qualifications, progress to university, and supports industry with upskilling and retraining, so clearly reducing funding at this scale can only harm that prospect.

“We agree with Audit Scotland that the reform of parts of the tertiary system should be moving at a faster pace, and that priorities for colleges should be clearly articulated by Ministers. 

“The report also highlights a range of infrastructure issues, including RAAC, and the slow delivery of an estates and digital plan from the Scottish Funding Council. An urgent funding solution has to come forward for RAAC repairs and more broadly to address the poor conditions of estates to benefit students and staff.” 

Stephen Boyle, Auditor General for Scotland, said: “The college sector is facing huge challenges. But to plan effectively for the future, colleges need a much stronger steer from the Scottish Government on what parts of their role to prioritise.

“The Scottish Government also needs to respond quickly to the results of its consultations on post-school reforms to provide the college sector with more certainty.”