A real-term reduction of £1 in every £5 of investment since 2021/22 has led to colleges operating “in an extremely difficult financial landscape” according to Audit Scotland.

The report warns that “without changes to baseline funding, colleges will have to deliver even less to remain sustainable at a time when demands from students and employers are not being met.”

The Audit Scotland report comes just days after a stark publication from the Scottish Funding Council (SFC) which warned most colleges are not financially sustainable within the current funding environment, and that some colleges are facing insolvency in this academic year.

Findings in the Audit Scotland report include:

• Colleges are unable to meet demand from students and employers for some courses and apprenticeship programmes – but student numbers are down by over 30,000 (12.4%).
• Cost savings have mostly come from voluntary severance schemes – the college workforce shrank by 7.7% in 2023/24.
• Student satisfaction and positive destination rates are still very high (92%). 

Gavin Donoghue, CEO of Colleges Scotland, said: “This is the second report in a week warning of the dire financial circumstances colleges are operating in. Taking together, these two reports show very clearly the acute damage being done to colleges by cutting government investment by 20%.

“Reducing college funding by a fifth has directly led to less students being able to access a world-class college education, unsustainable cuts to staff numbers, inadequate estates maintenance, and reductions in courses on offer.

“Audit Scotland is, however, right to highlight that overall college student satisfaction remains very high at over 90%. This is testament to the hard work of college staff who continue to deliver education and support to their students within ever-diminishing resources.

“Colleges are a vital anchor institutions in our local communities, and skills engines of our regional economies, delivering the upskilling and re-skilling required to lift people out of poverty and deliver sustainable economic growth.

“Colleges Scotland is calling for a step-change in approach at the next Budget to halt the decline and bring back a sustainable level of investment for our crucial college sector.”