New College chiefs to face audit committee

Concerns over finance at education centre

Senior figures from New College Lanarkshire are to answer questions about its finances before a future meeting of the Scottish Parliament’s public audit committee.

It comes after Scotland’s auditor general, Caroline Gardner, this week presented a report to the Holyrood body on the college’s 2016- 2017 accounts, which “highlighted concerns about [its] financial sustainability”.

The audit identified a £ 560,000 deficit for that year, attributed to “poor financial planning” for nationallyagreed increases in pay, pensions and national insurance, and “overoptimism” regarding tuition fee income.

MSPs have now asked to hear from the college’s board chair, principal and financial director, as well as from representatives of the Scottish Funding Council (SFC).

Audit committee convener Jenny Marra said: “We have invited senior managers at New College Lanarkshire to come to our committee to tell us about the action they are taking to address the issues raised in the recent Audit Scotland report.

“We will be looking for reassurances that students and staff will not suffer as a result of poor financial planning.”

New College – formed in 2013-2014 from the merger of three colleges including Coatbridge – had 16,385 students and 1007 staff during the last financial year, in which its income was £55.1 million.

The auditors’ report notes that its “financial difficulties became apparent in 2015-2016”, including fee income totalling £5.2m, which was £900,000 short of its target; and that “despite the college taking steps to address these pressures, these continued during 2016-2017”.

It also had costs arising from the reintroduction of national staff pay bargaining. The report states: “The college could not have predicted a precise cost for this. However, it did not include any cost in its budget and the final additional cost was £400,000.”

With a deficit being forecast in December 2016 for that financial year, the college received £1.9m in advance funding from the SFC. It is working with the organisation to develop a business plan, with the funding body having provided £1.1m for a voluntary severance scheme.

The college made £2m of savings last year, on its estate and its ICT costs, and has improved its financial reporting. Deficits are expected for each of the next two years before returning to a forecast surplus in 2019-20.

Ms Gardner said of her report : “Colleges operate on narrow margins and relatively small changes in income or expenditure can push a college from a surplus into a deficit position.

“New College’s financial problems were caused partly by overly optimistic assumptions around tuition fee income, and partly by poor financial planning around cost pressures such as national pay bargaining.

“The college is continuing to work with the SFC to stabilise its financial position and I will be keeping its position under review.”

Responding to the college’s accounts figures, SFC interim chief executive John Kemp said: “The Scottish Funding Council has been providing support to the college to ensure the right outcomes for people it serves.

“New College Lanarkshire is working hard to address the issues described in the auditor general’s report. ”

A spokesperson for New College Lanarkshire told the Advertiser this week: “In 2015, the college was immersed in a challenging and complex merger as well as dealing with financial pressures.

“The college worked hard to improve its financial position and will continue to work closely with the Scottish Funding Council to deliver a sustainable business model for the future.

“Since merger, New College Lanarkshire has been named best college at WorldSkills UK three times, showing our ongoing dedication to skills development and our students.”