THE revelations in the confidential report prepared by Edinburgh accountants Scott-Moncrieff are as complex as they are eye-opening.
The paper highlights significant confusion within the Scottish Funding Council (SFC) about where £50m “reserve” came from and what to do with it.
It also shows that, for more than a year, the SFC and Scottish Government were completely at odds over the destination of the sum, but didn’t realise it.
Read more: Scottish universities left short after catalogue of blunders at funding body
There are significant questions for the Scottish Government over why they decided to claw back money given to the sector as a result of concerns in 2011 that they were falling behind their competitors in England because of tuition fees.
The Scott-Moncrieff report states: “As a result, additional funding was awarded in the 2011 spending review which was not fully spent in the 2012/13 financial year.
“In February 2014 the Scottish Government advised the SFC not to take action to apply these funds.”
In addition, John Swinney, the Education Secretary, told the Scottish Parliament’s education committee on 21st December that he was satisfied “every financial commitment to every institution” had been met in full.
However, the Scottish-Moncrieff report shows the SFC had been discussing the use of the funds with the sector and, in particular, had discussed projects to redevelop the Hamilton campus of the University of the West of Scotland and the Crichton campus of the Scottish Rural University College, in Dumfries.
Read more: Scottish universities left short after catalogue of blunders at funding body
The fact the government knew about these discussions before clawing back the money is highlighted in an email in October 2014 from the SFC which advised government: “It is important to recognise the implications that flow from your request to give up the £50m of reprofiling.
“This means we will be unable to support potential developments at Hamilton and Crichton.”
But at the heart of the report is a detailed account of a complete breakdown in communication both within the SFC and between the SFC and Scottish Government.
That meant SFC officials in one part of the organisation were discussing how to spend the money at the same time as colleagues were talking to the government about how to return it. These contradictions were sometimes apparent in the same meeting.
It was only in October of 2014 when the Scottish Government emailed the SFC asking it to protect the funds until “extraction” in 2015/16, that the SFC fully realised the government’s intention.
But the matter was further complicated in subsequent months when the SFC began using the £50m to cover other commitments such as a £25m overspend.
In addition, the SFC also decided to use part of the £50m to meet a requirement from the government to make savings of £20m, but did not inform them.
Read more: Scottish universities left short after catalogue of blunders at funding body
The Scott-Moncrieff report states: “The cumulative effect of the savings and additional commitments funded was that £34.9m of the re-profiling reserve was distributed to the higher education sector over 2013/14 and 2014/15.
“The emails exchanged... over this period show Scottish Government specifically queried the impact that returning £20m might have and was given explicit reassurance that the funds were not committed or earmarked.”
By June 2015 the SFC reported that the university budget was in the red, but by then it was impossible to both return the £50m and fund the over-commitment.
It is notable during this period that SFC’s chief executive Laurence Howells and its finance director Riona Bell left the organisation.
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