Colleges Scotland is calling for the reversal of years of underinvestment in the college sector before the end of this Parliament and a commitment to the sustainable funding of colleges in the 2026/27 draft Budget. 

The pdf budget submission from Colleges Scotland(850 KB) is in line with recent reports from the Scottish Funding Council (SFC) and Audit Scotland which have each highlighted the dire financial circumstances colleges are operating in.

In the worst-case scenario outlined in its draft Budget submission, Colleges Scotland lays out the likely consequences of continued flat-cash funding next year, including:

• 11 colleges may run out of cash in 2026/27
• a forecasted reduction of £37.9m in cash held by colleges, leading to a sector with deficit of £5.5m in 2026/27
• significant job losses in 2026/27, including potential compulsory redundancies. 

Colleges Scotland’s draft Budget submission outlines four funding scenarios ranging from colleges receiving flat-cash funding – a real-terms cut because of inflation – to a much more sustainable level of investment which would allow colleges to thrive, offer more opportunities to more students, and secure jobs and campuses.

Gavin Donoghue, CEO of Colleges Scotland, said: 

"Scotland’s colleges are at a fork in the road. Chronic underinvestment over a number of years, as evidenced by the recent Audit Scotland report, has left institutions struggling to meet the needs of learners and local employers. 

“If flat-cash funding continues, 11 colleges may be at risk of effective insolvency in the next academic year.

“That is why colleges are calling on government and parliament to ensure the 2026/27 Budget restores funding, supports staff and students, and unlocks the full potential of these valued community anchor institutions. 

“Colleges are the skills engines of our economy and are already widely engaged in the collaborative effort to eradicate poverty. Any additional money would not just be an investment in college education – it would be an investment in Scotland’s sustainable economic future. 

“The Independent Review of the Skills Delivery Landscape in Scotland, led by James Withers, showed the clear need to reform Scotland’s skills delivery to better support economic growth. With campuses in every community, and a diverse range of learning opportunities, colleges are uniquely positioned to support this transformation.”

Notes to Editors 
 
Colleges Scotland’s draft budget submission is based on data gathered and analysed by the College Sector Finance Development Network Group.
 
The recent SFC report, Financial sustainability of colleges in Scotland 2022-23 to 2027-28, notes that “there is an imminent risk of some colleges becoming insolvent by the end of the 2025-26” and that four colleges are forecasting a cash deficit by the end 2025-26, increasing to 12 colleges by the end of 2027-28.