WHILE principals of Scottish universities continue to battle against the poor financial settlement awarded to them, their college counterparts are breathing a sigh of relief.
An Audit Scotland report has shown that despite a shaky financial situat
ion five years ago, colleges across the country now have healthy bank balances.
In 39 of Scotland's colleges, the situation has improved from an overall operating deficit of £6 million in 2002/03, to an overall surplus of £16.9m in 2006/07. The report also revealed that colleges in the Lothians are doing particularly well. Edinburgh's Telford College has the second highest surplus of £32.8m, next to Aberdeen College.
Telford has recently made significant investment through its involvement in a training academy to help fill 3000 city job vacancies over the next five years.
The academy – run in conjunction with the St James Shopping Centre, the city council, Scottish Enterprise, Job Centre Plus, Careers Scotland and the Capital City Partnership – provides people with the practical skills to help them find jobs in retail, hospitality and catering.
Stevenson is also amongst the highest financial performers, with a surplus of just over £21m, while Jewel & Esk and Oatridge Agricultural College are holding their own, with figures of £6.7m and £7.5m respectively.
Audit Scotland says colleges have moved out of a position of overall deficit through increased funding, better management, peer support and learning lessons from the past difficulties.
Howard McKenzie, principal of Jewel & Esk, says: "Every single college in Edinburgh and the Lothians has had a major building project that focuses you heavily on financial management. The more money you have, the more you have to be careful with it." But unlike the financial success of most Lothians colleges, there is one which still has a dark cloud hanging over it.
West Lothian College recorded the worst financial situation in the country, with a huge deficit of almost £10.7m.
The college is still recovering from the effects of a badly drawn-up private finance deal, almost two years after its controversial termination.
Scottish ministers were forced to intervene in 2006 when the college – then £4m in debt – was unable to make its payments on the PFI contract.
Despite being £10.7m in the red, West Lothian College's principal, Mhairi Laughlin, says she is "delighted" with the decision to pull out of the PFI contract, adding that the deficit hadn't made any difference to education delivery.
In fact, she says the termination of the contract has led to the college being able to make "significant" improvements since its withdrawal. It has developed new programmes for the launch of the 2008 portfolio, including interactive multimedia creation, digital media and computing, multi-engineering and a new contemporary art practice higher national award.
Since August last year, the college has created Spectrum – a student information and advice service – redeveloped its cafe to provide informal learning spaces and refurbished its library, including upgrading computers and providing laptops and wireless technology.
Ms Laughlin said: "Whilst the college has financial commitments to meet in terms of loan arrangements following the buyout of the PFI, these are well budgeted and planned, to ensure that the college continues to grow and develop to meet the needs of the ever-increasing West Lothian economy."
The publication of the financial results of Scotland's colleges comes at a time when universities are struggling to make ends meet.
A joint future thinking taskforce has been created in reaction to the poor financial settlement for universities in the recent budget. Made up of university principals and vice-chancellors, together with representatives from the Scottish Government, the taskforce is due to report in the summer.
Despite last year's positive financial outcomes, colleges are being warned not to become complacent, as there are greater challenges ahead, including changes in funding from both the Government and the European Union.
Mr McKenzie says that while colleges should be getting more funding, the sector cannot expect it in the same way that universities can, and has to work hard for it.
He believes the main problem facing colleges in Edinburgh and the Lothians is the fact that the local economy is "booming". He said: "It's very, very tempting to expand your business without having the income to go with it.
"The Edinburgh and Lothians economy is booming, meaning there's more and more demand put on colleges nationally, and particularly locally, for people who want to up-skill in order to have better jobs.
"We should be given more funding for more activity, which is not necessarily the same as what the universities are saying. We are saying we need to expand and grow with the economy and the population."
The Association of Scotland's Colleges (ASC) welcomes the financial improvements across the board, but it also warns of future issues such as changing demographics and relatively small surplus targets.
Sue Pinder, convener of the ASC's principal's forum, said: "Although Audit Scotland's report is positive, we must not become complacent. There is still much work to be done.
"We recognise there are specific areas of the report that need to be addressed so that the sector's financial stability can be maintained and improved upon."
The full article contains 906 words and appears in Edinburgh Evening News newspaper.
