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Delay in informing colleges of new rules on cash reserves is attacked

MINISTERS have been accused of a damaging delay in informing Scottish colleges of UK-wide policy changes that could impact on millions of pounds of their reserves.

LIZ SMITH: Said colleges were told of the changes two and a half years after the decision was announced.
LIZ SMITH: Said colleges were told of the changes two and a half years after the decision was announced.

The reclassification of colleges as public bodies, which means they can no longer keep surpluses, was announced by the Office for National Statistics (ONS) in 2010.

However, Freedom of Information requests by the Scottish Conservative Party to colleges shows some of them did not receive notification until 2013.

Liz Smith, education spokeswoman for the Scottish Conservatives, hit out at the delay.

"Given the English and Welsh managed to take action quickly and pass legislation aimed at mitigating the impact of these changes, why didn't Scotland?

"Mike Russell cannot shy away from this and the fact that the impact of the changes is providing additional pressures for a sector already under severe budgetary strain.

"Colleges only received confirmation that the changes were coming into force last May - two and a half years after the initial decision was announced and less than a year before the new rules were due to come into force."

However, a Scottish Government spokesman said: "When the ONS decision to reclassify colleges came to light, our priority was to work closely with the Treasury to try to mitigate the effects or indeed to reverse some or all of them.

"When that proved to be impossible, we moved as quickly as we could to help colleges safeguard their finances with the help of the SFC (Scottish Funding Council)."

The reclassification of public bodies from next month will require them to operate within the same budget constraints as other public bodiess.

They can still spend money they generate from private sources, but they cannot create a surplus or deficit.

In England and Wales legislation was passed to ensure the reclassification did not have an impact on reserves.

But the Scottish Government chose a different route, with the setting up of charitable trusts to administer surpluses.

However, last week the Scottish Parliament's public audit committee called for safeguards over the way such trusts would operate.

Committee convener Hugh Henry, a Labour MSP, said: "In Scotland, colleges will be able to create arms length foundations.

"They can transfer any current accumulated cash reserves and any future annual surpluses to the foundation, for use in future years, without it counting against Scottish Government budget limits."

Contextual targeting label: 
Local government

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