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£5m in payouts as colleges meet huge cost of mergers

A CONTROVERSIAL policy to merge Scottish colleges has cost more than £5 million in payoffs to senior managers.

About £4m was spent on compensation and additional pension payments to principals, deputy principals and other senior staff who lost their jobs because of the mergers in 2012/13, with about £1.2m spent the previous year, figures from college accounts show.

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The final figure is likely to be much higher because the severance payments refer only to eight mergers, with the details of a further six not currently available in college accounts.

Union leaders attacked the scale of the payouts, saying the money would have been better spent on jobs or creating courses.

The accounts show £1.2m was spent over the past two years on payments for senior staff at the three colleges that merged to form Edinburgh College - Telford, Jewel and Esk and Stevenson.

Just more than £1m was paid to senior staff at the former James Watt College in Greenock between 2011 and 2013, with total severance payouts for senior staff at the newly merged West College Glasgow amounting to £1.5m.

Some £850,000 was paid to seven members of the senior management teams who lost their jobs as a result of the merger to form the new Glasgow Kelvin College.

Larry Flanagan, general secretary of the Educational Institute of Scotland teaching union which incorporates the Further Education Lecturers Association, criticised the payouts.

He said: "Given the backdrop of cuts to college budgets and the decline in student numbers and lecturers' posts, the sums of money being quoted here will be of serious concern to our members. It is also an indication of how bloated the management structures have become in the last few years that this level of severance is necessary as part of the restructuring.

"While it is reasonable that individuals get a fair deal if they are being made redundant, the sums of money involved would have been better spent on creating jobs or expanding course provision."

However, the Scottish Funding Council (SFC), which distributes public money to colleges on behalf of the Scottish Government, said the payments were a necessary part of a process of reorganisation that would save £50m by 2015-16.

Laurence Howells, chief executive of the SFC, said: "In the last two years we've made great progress towards a more modern and efficient college system in Scotland.

"Colleges are now better able to provide life-changing opportunities for students and to support businesses and communities.

"Young people leaving school this summer can look forward to an even more rewarding time at college. We estimate around £50m of efficiencies each year in real terms as a result of this programme of reform."

The Scottish Government announced plans to restructure the country's colleges into 10 regional groupings in September 2012.

A consultation paper by Education Secretary Michael Russell said the move would create opportunities for colleges to work more cost-efficiently and remove "wasteful duplication" during the tough economic climate.

The use of severance payments in the merger process was seen as an essential short-term measure as overall numbers of executive staff were cut - with savings expected in the long term.

However, there was a backlash, with claims mergers were being forced on colleges to save money at a time when funding was being cut.

Unison claimed regionalisation of colleges could exacerbate the impact of funding cuts and warned there was little evidence shared services led to substantial savings - with the model leading to a period of disruption taking "five years at best" to make a positive impact on finances.

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