Scots colleges return to the black

December 12, 2003

Scottish colleges have seen a deficit of more than £14 million turn into a £2.3 million surplus in one year.

The financial watchdog Audit Scotland says the majority of Scotland's 42 colleges of education are on target to be financially secure by 2006. Only one, Lews Castle in the Western Isles, is predicted to be "very weak".

The report for 2001-02 shows that 24 institutions, 19 of which had financial deficits the previous year, achieved surpluses, and the number with operating deficits dropped from 34 to 18.

It shows that the turnaround was underpinned by a cash boost from the Scottish Executive, which increased the central grant by £26 million and gave a one-off £7 million to colleges in the most financial difficulty.

The report says colleges also raised more cash from education contracts and tuition fees. Some improved their finances through restructuring.

Just three colleges - West Lothian, Kilmarnock and Lews Castle - had higher deficits than forecast. The Scottish Further Education Funding Council is carrying out a financial security and efficiency review of Lews Castle.

West Lothian's premises costs rose because of private finance initiative charges, while Kilmarnock was hit by a drop in European funding and "exceptional restructuring costs".

Enterprise and lifelong learning minister Jim Wallace said: "The report highlights the fact that the additional funding we are putting into further education is making a real difference."

Robert Black, the auditor-general for Scotland, said the Sfefc needed to ensure that colleges used the extra funds to meet the 2006 target for financial security.

A Sfefc spokesperson said: "We welcome the report and its recognition of the progress made with regard to improving the financial health of colleges."

Download report from www.audit-scotland.gov.uk/publications/

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