College Funding in Scotland Revisted.

In 2024 I posted about the ongoing crisis around College funding. Things have not really got much better - so time for an update. 

Despite delivering essential vocational training and community social mobility, Scotland’s Further Education (FE) college sector is still facing an unprecedented financial crisis. While recent targeted, short-term funding streams (such as the New Flexible Workforce Development Fund and Defence Technical Excellence Colleges) provide welcome project opportunities, they do not close the sector’s core operational funding gap. Baseline funding cuts threaten the structural viability of local colleges across Scotland. Urgent policy rebalancing across tertiary funding is required.

Key Financial Realities

• 7%+ Real-Terms Cut this year  Audit Scotland reports that college sector funding has fallen by over 7% in real terms over the last five years. If you look over last 10 years there is  a greater funding collapse. Audit Scotland's briefing paper, Scotland's Colleges 2025 shows that Scottish Government revenue funding for colleges decreased by 20 per cent in real terms over the five-year period from 2021/22 to 2025/26.
• Widespread Operating Deficits: More than half of Scotland’s colleges operate in deficit, relying on emergency Scottish Funding Council (SFC) cash advances to maintain short-term liquidity. They can't plan ahead. 
• Diminishing Provision: Workforce contraction via voluntary severance has coincided with course credits and student headcounts dropping to 10-year lows. That basically means less places for prospective students.  Part time learning numbers have plummeted.  Evening provision for reskilling adults has almost entirely disappeared.  

The Policy Disparity: Colleges vs. Universities

• Fiscal Control & Governance: Colleges operate as direct instruments of government policy under SFC control. Unlike universities—which enjoy greater fiscal freedom and research autonomy college boards and leadership face direct Scottish Government intervention during fiscal distress. 

• Targeted Grants vs. Baseline Stability: Short-term, ring-fenced initiatives (e.g., £10m New FWDF or £20m DTECs) enable rapid, employer-led upskilling, but cannot cover permanent staff costs, rising energy bills, or essential campus maintenance.

• Equitable Distribution: The commitment to "free" higher education has created an unintended structural imbalance, diverting core tertiary resources away from lifelong vocational learning and local college pathways.

Key Action Recommendations for Policy Makers

• Equalise Core Tertiary Funding Rates : Establish rate parity per candidate across Further Education, Higher Education, and work-based learning to ensure public funds follow the learner fairly and make the system make full use of SCQF.  Track learners across life long learning by full adoption of the Scottish Candidate Number SCN.

• Re-evaluate Regional Governance & Autonomy : Re-evaluate Regional Governance & Learn from Glasgow’s De-regionalisation. The dissolution of the Glasgow Colleges Regional Board (GCRB) proved that adding an administrative "middle tier" above colleges creates unnecessary overhead without protecting frontline budgets. Remaining regional structures across Scotland must either be given genuine, ring-fenced budget autonomy to serve their local economies, or be streamlined to allow direct SFC funding to frontline college delivery. 

• Align University Funding to National Standards: Differentiate public university subsidies by tying funding formulas to national occupational standards and articulation pathways from regional colleges. Academic autonomy should not extend to ignoring national occupational standards and SCQF. 

• Mandate FE Inclusion in National Capital & Innovation Projects : Ensure major economic and innovation investments (e.g., NMIS, Data Lab, DTECs) structurally embed regional colleges as core funded partners, not secondary outputs

• Expand Open Educational Resources (OER): Drive cross-sector adoption of UNESCO open education principles to widen access across regional communities. Ensure that all Colleges and Universities share all learning materials through open respositories and practice. To foster mutual support and collaboration and ultimately to support learners and teachers - wherever they are. 

Joe Wilson has 40 years experience of the College sector and spent 15 years serving on three different College Boards of manaagement.