College funding in Scotland is in a perilous state. Two recent reports – one from Audit Scotland, another from the Scottish Funding Council (SFC) – underscore the urgency of bringing forward investment in these valuable public institutions. The draft Budget for 2026/27, coming to the Scottish Parliament in January, will be an inflection point for the government and parliament.
The shrinking investment in the college sector in real-terms is stark. We are a quarter of the way into a new century, where the desire for upskilling and reskilling has never been greater, and the projections of skills need are only increasing. But colleges – Scotland’s skills engines – have faced a 20% real terms cut in funding since 2021/22, according to Audit Scotland, and are having to turn away potential students.
This situation seems non-sensical when employers regularly cite skills shortages as holding back economic productivity. Skills Development Scotland projects needing 344,000 skilled people to fill roles in 14 key industries in the next nine years, and inter-generational poverty continues to stalk some our most deprived communities.
Colleges bring great value for money for the public purse. The Fraser of Allander Institute found that the Scottish economy is £52 billion better off cumulatively over the 40-year working life of college graduates and that every college graduate creates an additional £72,000 boost to productivity for the Scottish economy
Colleges also produce strong pass rates, and very high positive destination and student satisfaction scores. Even in this challenging funding climate, student satisfaction remains very high – 92% – a resilient statement from learners on their positive experience at college and a testament to dedicated college staff.
The draft Budget brought to the Scottish Parliament in January next year will undoubtedly have many competing pressures, but there must be an optimistic commitment to invest in Scotland’s colleges if we are to have any hope of driving sustainable economic growth and eradicating child poverty.
What Colleges Need
Colleges Scotland’s draft Budget submission sets out four scenarios – from flat cash to sustainable funding – and shows the impact on colleges from the potential choices due to be made by our politicians early next year.
- The worst-case scenario for colleges would be another flat-cash settlement, which ignores the inflationary pressures on college bills and historic cuts. This would likely lead to 11 colleges running out of cash and being unable to cover their operational costs in the 2026/27 academic year. In these conditions, most colleges would have to move to significant cost saving programmes including job losses (with potential compulsory redundancies), campus consolidation, and further shrinking student numbers.
The next scenario Colleges Scotland sets out asks for recognition of inflation, and seeks a £60m increase in funding that would cover the additional costs colleges have faced recently. This level of investment significantly reduces the risk of college closures in academic year 2026/27. So, an improved picture, but not a scenario where colleges are thriving.
The final two scenarios would normalise investment in colleges as Scotland’s skills engines; substantially reducing the risk of colleges closing or becoming insolvent, and allowing for an improved level of support for staff and students, including seeking increase in student support levels.
The much-missed Flexible Workforce Delivery Fund (FWDF) could be re-imagined to enable colleges to connect more smoothly with employers and deliver a diversified income stream for the college sector. Colleges could move away from fire-fighting, and start to focus on what is required regionally to pivot to provision that will have the greatest impact for learners and the local and national economic and skill needs.
Colleges would also be able to adequately pay for student mental health support, careers advice, sport on campus, address digital poverty, and increase international links. This would enable learners to thrive.
How much has the sector shrunk already?
Since 2021/22, in real terms, college funding has fallen by 20% in real terms. Colleges have responded with cost containment – cutting staff numbers by 8.7%, scaling back courses, consolidating curriculum. Having made every conceivable saving there are no sustainable options left to take. The most striking and alarming repercussion of real-terms cuts is that student enrolment is down by over 30,000 (12.4%) as colleges tighten capacity rather than risk insolvency.
In June, two college Principals told the Education, Children and Young People’s Committee directly about the unmet demand issues they faced in their regions. Ayrshire College turned away 764 students who passed at interview, and Glasgow Kelvin College could only accept 1 out of every 3 applicants. Glasgow Kelvin also told the Committee that the college had received 700 applications within 24 hours for a 24-person ESOL class.
Supporting the call for investment
On a personal note, I’ve only been CEO at Colleges Scotland for a few months now, but in that time I’ve yet to meet a politician from any party who doesn’t understand the importance of upskilling and reskilling people for our economy or care deeply about the future of their own local college. Cross-party support for colleges is very welcome and I would like to thank all the MSPs and MPs who have taken the time to visit and engage with their local college and see all the fantastic work that takes place there for themselves.
However, warm words are not enough: we need to see political commitment and prioritisation of sustainable funding of our valued college sector at this next Budget.
That is why it is so important for colleges to generate support from other parts of civic society, to show our politicians the importance of colleges for Scotland’s economic and social growth. Anti-poverty campaigners, educationalists, employers, think tanks such as Enlighten, and experts from a very wide range of organisations have all noted the negative impact of lack of college investment, and the positive contribution colleges make to life in Scotland. This collaborative support has been hugely welcome.
The draft Budget itself is a collaborative creation, and I do believe that with the support of civic society and our politicians that we can show the strong case for sustainable investment for our nation’s colleges.
Gavin Donoghue is CEO of Colleges Scotland