Scots colleges face demands to release £100m of “stashed cash”

Almost £100 million of cash “squirrelled away” by Scottish colleges into “foundations” after a change in accounting rules has been targeted by teaching unions and student leaders who claim the cash could be put to “better use” as cuts ravage higher education.

Reforms have meant colleges have become public bodies and are no longer able to hold the money as traditional reserves.

The change meant institutions moved the money before it could be reclaimed by the UK government.

But under the terms of the new Arms Length Foundations (ALFs) that were set up, any transferred funds must be spent on supporting further education in Scotland and as widespread cuts to budgets bite and student numbers fall, calls for the funds to be released have now been raised.

The EIS union’s general secretary Larry Flanagan said: “At a time when lecturer and support staff jobs have been cut, courses have been withdrawn and student places and support have been slashed, we must question if these cash reserves could have been put to much better use to support learning and teaching across Scotland.”

Scotland’s college system has undergone widespread cost-cutting mergers in recent years which has seen the number of institutions fall from 37 to 20 in order to save £50m a year. The number of students has also fallen by 130,000 in recent years after a drive to slash part-time courses. More than 600 teaching staff have also been axed. Student numbers now stand at 238,000 which is down by 36 per cent from 371,000 six years ago.

The £99m placed in arms-length bodies by 19 institutions was uncovered through a freedom of information request by the EIS. It comes against total college funding in 2013-14 of £582m. There is no guarantee colleges will be able to reclaim the reserves, although its use will be limited to their general ­activities.

Gordon Maloney, NUS Scotland president, said: “When college students don’t have enough financial support to make ends meet, it’s shocking that millions of unspent college funds have been squirrelled away into arms-length foundations.

“Our colleges are right to demand more funding to ensure they can carry on their great work, but there’s no excuse for colleges and government not working together to ensure this money was spent.”

The colleges said the move was to ensure that they didn’t lose the money, much of which is already generated from commercial activities. This is because they can no longer hold cash reserves after being reclassified as public bodies. The Scottish Government and the Scottish Funding Council agreed to the move.

Shona Struthers, chief executive of Colleges Scotland, said: “If colleges had continued to spend the reserves then this would have resulted in the Scottish Government reducing its funding to colleges by this amount.”