The next item of business is a debate on motion S4M-15584, in the name of Paul Martin, on the Public Audit Committee’s three reports: “Report on Scotland’s colleges 2015”; “Report on The 2012/13 audit of North Glasgow College: Governance and financial stewardship”; and “Report on The 2013/14 audit of Coatbridge College: Governance of severance”.
On behalf of the Public Audit Committee, I welcome the opportunity to highlight our work on the colleges sector, which has been a major component of the committee’s scrutiny work. I draw to members’ attention the three committee reports that have been brought to the chamber today, all of which have their roots in the work of Audit Scotland.
As colleagues will know, it is not in the Public Audit Committee’s remit to scrutinise policy decisions in areas such as the mergers process. Instead, our duty—which we take seriously and perform on a cross-party basis—is to scrutinise the performance and economy of public bodies and examine whether they have used taxpayers’ money to perform in an effective and efficient manner. Unfortunately, in relation to Coatbridge College and North Glasgow College, we found that that was not always the case. I do not plan to go through the whole mergers process or dive too deeply into the issues, as I am sure that other members will wish to do so.
Across our three reports, we heard more than 18 hours of oral evidence from 34 witnesses, and we considered thousands of pages of documents during the process. We heard from the Scottish Government, the Scottish Further and Higher Education Funding Council, Audit Scotland, solicitors, individual colleges and individuals who worked in the college sector. The sheer volume of evidence that we had to ask for during the process to unpick the issues highlights the challenges that the sector faced.
First, I will touch on the report that we received on North Glasgow College. In May 2014, Audit Scotland published its report on “The 2012/13 audit of North Glasgow College”, which highlighted poor governance and a lack of transparency in relation to severance payments for senior staff. I will give a few examples. The chair of the board also chaired the remuneration committee; the remuneration committee had not met for a number of years, despite being required by its terms of reference to meet at least once a year; and the remuneration committee failed to report its decisions to the board, which is a basic governance step that it is incredible to imagine was overlooked.
Ironically, given my earlier mention of the sheer volume of evidence that the committee received, there was a lack of a basic audit trail at North Glasgow College for severance packages, which highlighted the most appalling governance failure. Although I was not on the committee during the inquiry, I know that poor governance and the ineffective oversight from the Scottish funding council in relation to highlighting guidance were of great concern to the committee. That concern would only be exacerbated by our investigation of a similar situation at Coatbridge College.
I have to say—and I know that other members share my concerns in this respect—that I was not convinced by the evidence that we received from the Scottish funding council that it had done anywhere near enough to prevent the kind of poor governance that was uncovered during the processes at Coatbridge College and North Glasgow College.
I know that I speak for the whole committee when I say that we found the Auditor General for Scotland’s section 22 report, “The 2013/14 audit of Coatbridge College: Governance of severance arrangements”, a complex report that dealt with complex issues. It is probably the most complex report that has been placed before any committee, certainly in my experience and in that of other members. Indeed, it would be possible to spend the entire debate discussing Coatbridge without beginning to scratch the surface of the myriad governance failures.
In a nutshell, what the AGS highlighted to us—and what the evidence that we received confirmed—was that John Doyle, who was the college principal, used his influence and worked with the chair of the college board, John Gray, to secure a severance package that was well beyond that which was offered to other staff at Coatbridge and indeed across the sector.
That arrogance and self-serving misuse of public money was made possible by poor governance, a lack of oversight and—at the time—a lack of appropriate sanctions available to the appropriate bodies. In our committee report, we called on John Doyle to repay £304,000 that he received as part of his severance package. We also highlighted the need for the Scottish funding council and the Office of the Scottish Charity Regulator to have in place more effective monitoring. We recommended that the college good governance task group, which is led by the cabinet secretary, reflects on our findings, and we look forward to hearing from it what steps will be taken to ensure that such a situation is not repeated. More widely, we asked the Scottish Government to look at the operation and effectiveness of the Scottish funding council, which we believe did not take sufficient action to support colleges going through the complex and difficult mergers process.
As concerning as the issues surrounding severance packages were, the committee found that there was work to do in other areas to ensure that the college mergers process laid solid foundations on which to build for the future, in the interests of students primarily. In our report on Audit Scotland’s overview report “Scotland’s colleges 2015”, we raised concerns about the need to ensure the transparency and accountability of the arm’s-length foundations that are established to carry forward college reserves. We also raised concerns over the detail of the projected £50 million of savings generated by college mergers and how the new regional boards will be supported to ensure accountability and clear lines of communication and responsibility.
In my opening remarks, I touched on reform and value for money; perhaps a better phrase would be “accountability and value for money”, which encapsulates the committee’s responsibility to push and promote at every opportunity. In the case of the further education sector, it is clear that, during the mergers process, those essential principles were not always present. It is vital that safeguards are put in place to ensure that there is a floor of basic governance beneath which public bodies cannot fall. Although we cannot change the past, we can learn the lessons for the future and ensure that public money is spent in the best interests of the public. Our unanimous recommendations, which were made in our three reports on colleges following the committee’s cross-party process, relate to stronger regulatory roles for OSCR and the SFC and transparency for regional boards and arm’s-length-foundations. We hope that they are examined, considered and taken on board as a matter of urgency.
That the Parliament notes the conclusions and recommendations in the Public Audit Committee’s 3rd Report 2015 (Session 4), Report on Scotland’s colleges 2015, its 4th Report 2015 (Session 4), Report on The 2012/13 audit of North Glasgow College: Governance and financial stewardship and its 1st Report 2016 (Session 4), Report on The 2013/14 audit of Coatbridge College: Governance of severance.
I welcome the opportunity to set out the success of Scotland’s colleges, to reflect on the need for stronger accountability and to look to the future of this valued and valuable sector. We are here as a result of three reports that the Auditor General presented to the Parliament over the course of 2014 and 2015. The Public Audit Committee considered those reports and published its own findings. I welcome the opportunity to discuss the committee’s findings, as well as the Auditor General’s findings.
As we know, Audit Scotland has a key role in ensuring transparency, high governance standards and effective use of public money, and I very much welcome its important work. It is of course likely and understandable that today’s today debate will focus on areas for improvement, but we should not forget, as the “Scotland’s colleges 2015” report acknowledges, that there are many positives. The report confirms that colleges’ finances are sound, that planning for mergers was good and that the sector has responded well to a period of significant change.
We know that colleges play a crucial role in this Government’s commitment to improving the employability of all Scotland’s young people. Colleges’ ability to flex to the needs of industry while attracting young people to courses that better prepare them for the world of work is excellent.
Current youth employment levels are at their highest for 10 years and colleges have played a significant role in that achievement. Quite simply, colleges matter; they make a vital contribution to our people, our economy and our society. Their proper stewardship clearly matters, too. Good boards can support a college to better the lives of students and to help businesses perform better. They can be a force for good—they can be a force for great good. However, because of their vital role, poor boards could risk actively making things worse—indeed, much worse.
That is why the committee’s reports are so jarring—they document how those entrusted with the proper stewardship of public funds broke that trust. The events at Coatbridge, at North Glasgow and at Glasgow Clyde were appalling. However, it would be catastrophic to fail to learn the lessons. That is why I am absolutely determined to take concrete action to prevent the recurrence of such events.
Although the specific governance failures outlined in the two college-specific PAC reports occurred before Office for National Statistics reclassification of colleges and the Auditor General for Scotland’s confirmation that the new controls are much more robust, we cannot and must not be complacent.
Following the serious failures of governance at Glasgow Clyde College and the unprecedented action in October last year to remove board members, I announced the formation of my college good governance task group to consider what more could be done. There is an opportunity, which my task group is seizing, to extract some good from recent failures.
I chaired an excellent second meeting of the task group last week. I thank all the members of the group for their contributions to date, including those from the president of the National Union of Students Scotland, union representatives from the Educational Institute of Scotland and Unison, and members representing Colleges Scotland, the Scottish funding council and OSCR as well as the member who is independent from the sector. The group is well on the way to producing its report next month.
I do not want to pre-empt our report but key areas that we are looking at include: the Scottish funding council taking a more proactive, risk-based approach to satisfy itself that governance standards are being met; enhancing the key role of board secretary; and providing better support for board member training, building on a lot of good work that has been done in recent months.
All colleges need to be led and governed to the highest of standards. Through my task group and other relevant work, I will ensure that we have greater confidence that the required standards are being met across the sector.
The Scottish funding council is vital to realising our ambition for the success of the sector and its better regulation. I welcome the SFC’s engagement with my task group, and my expectations are that the SFC will implement the recommendations swiftly and effectively.
My letter of guidance to the SFC, which was published just yesterday, sets out my priorities for both the college sector and the university sector. In what has been a tight financial settlement for public services in Scotland, I am pleased to have been able to protect college resource funding at 2015-16 levels. With responsibility for such a significant amount of public funds, I place the highest importance on proactive risk management and rigorous monitoring, and my letter of guidance makes clear my expectations in that regard.
Colleges have implemented the most profound set of public sector reforms in Scottish tertiary education for more than a generation, which is, in itself, a remarkable achievement. The debate over structures is behind us. We must now ensure that they work to their full potential. Colleges are now delivering similar levels of activity for less resource and with much greater impact—that is surely the definition of good public sector reform, especially in the current economic climate. The Scottish Government is working with the Scottish funding council and Audit Scotland with a view to publishing data on financial and non-financial benefits.
The Public Audit Committee’s three reports have helpfully captured areas of improvement for our continued attention. I recognise that there is more to do, and I look forward to continuing to support the sector in the next phase.
I welcome the opportunity to contribute to the debate. Colleges are critically important institutions that provide vocational education and improve employability. I know that the college in my area, West College Scotland, works with local employers to improve its offer.
The reorganisation of Scotland’s colleges has been one of the few public sector reforms that the Scottish National Party Government has undertaken. The investigations by the Public Audit Committee into North Glasgow College and Coatbridge College have shown that the SNP Government’s handling of the reorganisations has not really done it credit.
Towards the end of last year, the ElS conducted a survey of members on the mergers and, frankly, the results were damning: 89 per cent of respondents did not believe that their merger improved learning or teaching quality; 94 per cent did not believe that their merger improved staff morale in the college; 86 per cent did not believe that their merged college better meets the needs of their local communities; and 81 per cent indicated that their workload has increased following their college’s merger. That is not a pretty picture. In fact, one could describe it as a truly damning assessment from staff on the front line experiencing the SNP’s reforms to our colleges.
Last year, the First Minister asked to be judged on her Government’s record. Frankly, on further education, that record is not one to be proud of. Since the SNP came to power, the number of college students has reduced by 152,000. We in the Parliament know that the SNP Government has deprioritised our colleges in terms of funding, but it will sicken people across Scotland to see how members of senior management, such as the former principal at Coatbridge College, played the system to get a golden goodbye. I believe that the former principal should return the chunk of his pay-off that was in excess of college guidelines. To do otherwise would be a slap in the face for staff across the sector.
I know that the cabinet secretary agrees with that, but I hope that the SNP Government considers how the loopholes that were abused can be closed and what action it can take to prevent that from ever happening again. What role should the funding council play? Was the SNP cabinet secretary at the time aware of what was going on and, if not, why not? There also needs to be an acceptance that the mergers have been incredibly damaging to further education in Scotland.
Analysis of responses to freedom of information requests that were submitted by the Scottish Labour Party shows that nearly 3,500 college staff have been made redundant since 2007 and that the cost of shedding staff from our colleges has been a staggering £90 million. Meanwhile, NUS Scotland has said that student support in further education is not fit for purpose. If we want to do something for students who access colleges, including the most disadvantaged students, it is essential that we increase the support that they receive.
To me, that all reads like a shopping list of failure on the part of the Scottish Government. It is the Government that created the circumstances that allowed people such as John Doyle to feather their nests. That should act as a wake-up call. The First Minister has said that education will be the “driving and defining” issue for her Government. That should apply to all forms of education, and the Government should learn the lessons that the scandal of Coatbridge College has to teach us.
The public outrage is about more than a bureaucrat playing the system to line his pockets; it is about the fact that he did so while in charge of a college in one of the most deprived parts of Scotland—a college that for generations had been a ladder out of disadvantage—and while the SNP has taken an axe to further education budgets. Under the SNP in 2016, students lose out while bureaucrats rake it in. It is not fair, it is not right and it makes a mockery of the SNP’s statement that education is its priority.
When the Auditor General for Scotland says that this case was among the most serious failures of governance that she has ever seen in her time, the Scottish Parliament must not fail to take notice. Although I am also conscious of the difficult and sensitive issues, including the tragic death of a senior member of the college staff, it is important that Parliament ensures that all the facts come into the public domain and that it takes action to ensure that such a situation can never be repeated. On that point, I compliment the convener of the Public Audit Committee and his fellow committee members for the assiduous manner in which they have pursued the truth, often against the odds. They deserve great credit for the report that they have produced and I am sure that it will serve as a blueprint for the future.
At the time of college reform, there was general agreement that there was a need for some mergers and economies of scale, and that mergers should at all times be measured against the drive towards better educational outcomes and financial discipline. There was less agreement about the pace of reform and how it would be handled—especially whether we had the right relationship between the Scottish Government and the Scottish funding council. I remember several committee meetings in which that relationship was put under the spotlight, and I remember the cabinet secretary at the time being certain that the pace of change was appropriate.
The college sector, however, was split. Some colleges were very keen on the merger process while others were much less so—usually because they were worried about losing their autonomy and/or their ability to best serve the needs of a diverse local economy. Jackie Baillie referred to the EIS survey on that very issue.
We might have thought that, amidst all that, extra care would have been taken to provide maximum transparency and scrutiny of the merger process, and to allay the fears of people who were unsure about the new structures for governance. When large sums of public money are involved, it is paramount that institutions are fully accountable for their spending and how they make their decisions.
In the case of Coatbridge College, there was utter failure on several fronts. Although it was the worst example that the Auditor General saw, we should not assume an absence of failures in other colleges. The failures might not have been so comprehensive, but they exist, so it is to be hoped that those colleges also learn a great deal from this episode.
I have no wish to dwell on the specifics of the case because they have been well covered in recent months. For me, the worst aspect of the Coatbridge College culture was the deliberate collusion in some echelons of senior management to secure personal financial gain and the complete incompetence when it came to abiding by good practice in governance. All that was happening at a time when there was already significant concern about whether some public sector institutions were sufficiently honest and principled.
In Audit Scotland’s report “Scotland’s colleges 2015”, it was made clear that the external audit of Coatbridge College had not been completed at the time of publication because the auditor had experienced difficulties with getting the relevant information. Two months later, Audit Scotland published a press release alongside the presentation of its audit of Coatbridge College to the Scottish Parliament. In that, Audit Scotland highlighted the weaknesses in governance that had been uncovered, including the fact that severance payments exceeded the terms of the college’s severance scheme.
It then became clear that that was the tip of a very substantial iceberg that successfully sank every principle of good governance. There were no accurate minutes; in some cases, there were no minutes at all and in others the minutes were produced nine months later. There were examples of meetings that had no agendas and a complete absence of the appropriate lines of communication. Those are inexcusable failures—indeed, they are unbelievable. That any governing council could allow such a situation to persist is extraordinary as well as unacceptable.
Serious failings in senior levels of the Scottish funding council have also been uncovered. The committee’s report could hardly be blunter and I am sure that the Scottish Government and Parliament will want to reflect on it. It is important that we review what happened in the Coatbridge situation and whether the tripartite relationship between the Scottish Government, the Scottish funding council and individual colleges is the most appropriate when it comes to maximum transparency and financial probity. Whether the SFC is being asked to be judge and jury at the same time is surely an important question.
All this has had a human cost, the most tragic of which was the death of a member of staff. It has also had very serious effect on staff morale at a time when colleges are already facing huge pressures from financial cuts. Who can blame staff and students when they worry about the broader implications of the Coatbridge College issue? We need public confidence in our colleges and we need an assurance that the means by which they are governed are wholly watertight and in line with the very best practice that can be expected.
These are very serious matters and the Parliament cannot ignore them.
The Auditor General’s report “Scotland’s colleges 2015” confirmed that college finances were sound, that planning for mergers was good and that, overall, the sector had responded well to a period of significant change. That is important.
However, the reports on Coatbridge College and North Glasgow College highlighted that in both cases there was clear evidence of poor governance and lack of transparency—most particularly around severance payments. The negative findings were a considerable concern, so I welcomed the rigorous investigations that were undertaken by the Public Audit Committee, of which I am a member.
I would like to focus on the worst of the two cases—that of Coatbridge College, where incontrovertible evidence was found of deliberate deception and obfuscation by key players.
Over the years, I have been involved in many investigations, but I have rarely seen such a blatant and successful attempt to subvert normal processes and to seek an outcome that brought financial benefit to one person. Make no error: other staff benefited financially from the doubtful practices that were followed by the college, but none did to as great an extent as the college principal, Mr John Doyle, who pocketed more than £300,000 in cash. In part, that payment resulted in the college going into the red at the end of the financial year to the detriment of the students of that college, who otherwise would have enjoyed the benefit of that money being spent in support of their education.
The Public Audit Committee was unanimous in its condemnation of the practices that were followed by the college, and Mr Doyle should repay the money, which was obtained under false pretences, and settle for the same severance terms that other staff at the college enjoyed.
We would not be the Public Audit Committee if we did not seek to identify those who were responsible for what appears to have been misapplication of public moneys. Mr Doyle, as the principal, and Mr John Gray, as the chair, bear responsibility for serious failures in the governance of Coatbridge College. No system of supervision has yet been devised that will provide 100 per cent protection against deliberate and premeditated deception such as took place at Coatbridge College. It is astonishing, to say the least, that senior staff wilfully colluded to achieve a particular outcome, but I believe that that has been proved to be a fact in this case.
Could the Scottish funding council have done more? It is apparent that the SFC was not sufficiently prepared to manage the levels of deception and avarice that were evidenced. The SFC should have been aware that opportunistic individuals might take advantage of the fluid situation that was created as the merger process progressed. Clearer directions and firmer management of the overall merger process might have made a significant difference. As I have already stated, deliberate and intentional collusion in deception can be very hard to detect, at least initially, especially at senior level and when more than one senior individual is involved.
Could the Government have done more? Some people argue that closer oversight of the SFC might have been appropriate, and that the Scottish Government had too much confidence in the SFC and its ability to manage the merger process. However, micromanagement of the SFC would not have been expected, as the SFC’s role in the process seems to be clear and no regulator in the United Kingdom has Government officials closely monitoring its activities.
I am pleased that the committee’s report has resulted in the Government responding by the cabinet secretary setting up the college governance task force. The cabinet secretary has also confirmed that the Government will take full account of the committee’s recommendations.
We must all ensure that no such disgraceful event can happen again, and I am encouraged by the knowledge that, post-merger, such an event is highly unlikely, given the new governance structures, but the role of the SFC needs to be beefed up. In effect, the SFC is the regulator for the college sector. It must be fit for purpose, and its function must be clear and unequivocal.
I am very grateful to the member for taking an intervention. As a member of the Public Audit Committee, I sat there thinking all the things that he has just mentioned.
However, I find myself reflecting on whether boards of such public bodies are in a good place to provide the kind of scrutiny and challenge that they should provide. There were many members of the board of Coatbridge College who did not challenge some of the things that they could have seen. I suspect that they could have understood what was going on.
The investigation highlighted the unacceptable behaviour of a few people in the college sector, but we should remember that not everyone in the sector should be tarred with the same brush. However, it is required that good guidance be enforced in order to ensure that public funds are not diverted for the benefit of individuals by public figures who should be setting an example to the communities in which they work.
I commend the good work that was done by the Auditor General in bringing her report to the Public Audit Committee for its scrutiny.
I thank the Public Audit Committee for the in-depth work that it carried out on the reports on Coatbridge College and North Glasgow College. I think that the Public Audit Committee is one of the top committees in Parliament in terms of how it drills down to the detail of issues and flags up areas of real concern for public policy and use of public money.
A total of £52 million was made available to support the college merger process, so it is right that serious questions are asked about not only whether the process has delivered the political outcomes that the Government wanted but whether it has delivered value for money. When we look at some of the detail in the two reports, we can see that there are areas of real concern.
Questions have to be asked of the Scottish funding council because it is absolutely clear that it did not provide proper guidance and oversight. The guidance on severance payments was issued in 2000—it was 12 years old at the time of the merger process, but was not reviewed, reissued or reinforced, which I find absolutely shocking in audit terms.
There are also real concerns around governance in the two colleges and the lack of audit trails. The fact is that the chair of the remuneration committee at North Glasgow College and the chair of the college board could be the same person, which is unacceptable, given that such big decisions were being taken at the time about large sums of public money. We really have to wonder how that situation could happen.
People in my constituency who work in colleges or who are students struggling to make ends meet would be shocked by some of the sums of money that have been involved in the colleges’ severance processes. The top three severance payments for North Glasgow College totalled £700,000, and the payment to John Doyle at Coatbridge College, which has been under a lot of scrutiny because it was reckoned to be overpaid, was £304,000. That is £1 million of public money in those examples alone. It is absolutely correct that the Public Audit Committee has asked Mr Doyle to pay back that money, because it is clear that there was collusion in order to get a good deal. However, it has clearly not been a good deal as far as the public are concerned.
It is very important that the SNP Government takes some responsibility for that situation. A theme that has run through the way in which the Government operates is that when something goes wrong, it is “an operational matter” and somebody else’s fault. It was a Government decision to go through the college merger process and the Government backed it up to the tune of £52 million, but there were serious errors in how it was implemented and there was a lack of proper follow-through.
There are clear audit and financial points that have to be followed through in terms of there being a lack of proper guidance and good governance. However, in terms of how the college sector is operated, there are 152,000 fewer college places than there were in 2007 and when they see how the severance payments operated, it demoralises staff and students.
That situation is an example of why the SNP needs to wake up to what is going on in the college sector. The Government not only needs to take the lessons from the two audit reports, but needs to examine the overall process to see why we have fewer college places than we had in 2007 and why we are not getting students out to fill the skills gaps that our employers are asking to be filled. Those issues have to be addressed by the Government.
This debate would not be happening were it not for Audit Scotland and Caroline Gardner, the Auditor General for Scotland. It is on days like this that a number of us reflect that Audit Scotland is one of the few parts of the public sector that keep the rest of the public sector and the Government honest, which is what happened in this case. The convener of the Public Audit Committee rightly drew attention to Audit Scotland’s forensic analysis of what went on at Coatbridge College. Our committee report, which covers that analysis in some detail, and all the hours of evidence that we took happened only because Audit Scotland did the job that we expect it to do.
Audit Scotland deserves a heck of a lot of credit for that work, not least because, when the former principal of Coatbridge College whom we are discussing today turned up at the Public Audit Committee, the first thing that he did was to attack the Auditor General, cast doubt on the veracity of her findings and impugn her reputation. What we found out afterwards was that the person who needed to apologise for their behaviour was not the Auditor General but John Doyle.
I agree with what other members such as Colin Beattie have said. I do not know how Mr Doyle can look at himself in the shaving mirror in the morning. He should get up, write a cheque for £304,000 and pay it back, not to the Scottish funding council or even to the cabinet secretary, but to the students and staff at the college. That £304,000 would help the institution to move forward. If we achieve anything as a committee—I do not suppose that we will—it would be something on those lines.
A number of members have reflected on why all this happened, and some members, including Jackie Baillie, have drawn some of that out. I completely understand that the then cabinet secretary Mike Russell was determined to deliver a college merger programme across Scotland and he had cross-party support for that. I suspect that what happened was that the funding council was pretty well left to get on with it by the cabinet secretary and the Government of the day. We can understand that, but the fact that there was not a heck of a lot of parliamentary scrutiny of it at that time is an illustration of what is not good about public policy. It points to the need to constantly question why something is happening, even if we agree with it.
As others have said, there was no question but that, because of the merger process, a number of college principals and senior people in different colleges were going to go. That was illustrated by one of the tables that we eventually dragged out of the Scottish funding council. The 14 individuals who left different colleges across Scotland under the merger process received a total of £2.6 million of public money in pensions, on-costs, annual leave and various other things. I do not think that that would be acceptable to any of us, and it is certainly not acceptable to the woman or man who is walking down Market Street this afternoon that people could benefit to that extent from a merger process.
I agree with the comments of the convener of the Public Audit Committee, Paul Martin, and other members who have spoken this afternoon that the lines of financial accountability were just not there in the way that, frankly, we should expect. The cabinet secretary made a good point about a risk assessment at the end of her speech. It is a pity that that did not happen at the start, but she is right.
There is no better illustration of that than in the Public Audit Committee’s “Report on Scotland’s colleges 2015”, which was published on 28 September 2015. On the savings that were claimed for the merger process, the Auditor General told the committee in evidence on 29 April 2015:
“At this stage, the funding council and the Government could not give us the information that we asked for to demonstrate the costs of the merger process.”—[Official Report, Public Audit Committee, 29 April 2015; c 33.]
It is no wonder that all this was going on behind the scenes when the matter was first considered.
I ask the Government to reflect both on the committee report and on what the Auditor General has said about the lines of financial accountability and the governance of what happened, not just for Coatbridge College but for the future of public spending in Scotland.
I am not a member of the Public Audit Committee, but I sat on it during the first year of this session, and I am only too aware of its work programme. I appreciate the hard work that its convener, Paul Martin, and others have done on this and many other issues.
As a member of the Education and Culture Committee, I have followed the sorry saga with great interest. The whole purpose of the reform of colleges was that they would make a more powerful contribution to growing Scotland’s economy and be more focused on employability. We are all aware of the very challenging times that we live in and that public sector reform, like college reform, can deliver services in new and innovative ways, but the process of reform is not helped by examples such as Mr Doyle, who encouraged the public to be very cynical about the public sector. In his case, greed overcame practicality and reality. Certain very senior managers have put their own financial security above that of the education institution that they have served and have forgotten about the college, the staff and the students who have been involved in the major reforms at a very difficult time.
I have found the whole sordid little deal rather sickening. Such situations, although they are in the minority, make our constituents and the public very cynical about the value of public service. They do an injustice to the men and women who commit themselves to the noble ideals of public service and show an individual who is looking after number 1 and no one else.
I would like to discuss the part of the committee’s report on the Scottish funding council’s financial memorandum with colleges. The report says that that memorandum states:
“The Council (SFC) must be able to rely on the whole system of governance, management and conduct of the institution ... to safeguard all funds of the institution deriving from Scottish Ministers and to achieve the purpose for which those funds are provided.”
Exhibit 3 in “The 2013/14 audit of Coatbridge College: Governance of severance arrangements” includes
“Extracts from Scottish Funding Council guidance on severance arrangements to senior staff in further education colleges”.
Paragraph 13 of that guidance says:
“Colleges have a responsibility to use both public and any ‘private’ funds in a prudent way that achieves value for money.”
That does not seem to have been the case in this scenario.
An institution’s management structure needs to be robust and transparent enough to deliver the desired outcomes. Mr Doyle, in the position that we have had to deal with, seems to have failed in those principles. Perhaps Mr Doyle’s principles might have to come into question.
With that in mind, I commend the Public Audit Committee for its work, sitting through the evidence that it has had to sit through, and particularly for the recommendation that it came up with on page 45 of its report. Recommendation 1 states:
“We recommend that John Doyle repay the £304,254 he received and that his severance pay is then recalculated with reference to the agreed voluntary severance scheme applicable to all other staff. In the event that he does not repay the money, renewed consideration must be given to recovering it from him.”
That is probably one of the most important parts of the whole scenario.
I take on board the fact that, since April 2014, the Scottish Government has put in place in the “Scottish Public Finance Manual” a number of measures to ensure effective scrutiny of severance and settlement arrangements, as the cabinet secretary has already said. Colleges must comply with that manual and, in doing so, seek approval from the SFC on both severance and settlement arrangements.
We need to ensure that we are very prudent with public money, and we need to learn from the excellent report that is in front of us. We need to ensure that we do all that we can so that what has happened does not happen in the public sector again.
Recommendation 1 in the committee’s report sums up a very sordid affair. It is time for Mr Doyle to do the right thing.
I, too, thank the Auditor General for illuminating the entire saga, and I thank the Parliament’s Public Audit Committee for the thorough and analytical report that it has produced on a very sorry chapter in further education in Scotland.
My colleague Jackie Baillie was quite right to discuss at the beginning of her contribution the various ways in which colleges matter. They matter to our communities, to employability and to Scotland’s economy. I was slightly surprised that the minister mentioned on various occasions their importance to young people. If I am correct, it was said three times that they are important to young people. Surely their importance is not just to young people, but to women returners or those who need to be reskilled, for example. I am disappointed that the minister has not recognised that. A suspicion that many people in and out of the sector have had for a long time is that the 152,000 college places have been lost to the detriment of such groups.
My particular concern about the reports before us is about North Glasgow College, which was located in my constituency and, in its new merged form, still is. I was surprised when I read about the scale of the payments made to some outgoing staff members. I was even more surprised to read of the many opportunities to intervene and to question whether the payments were appropriate. Unfortunately, those opportunities were not taken.
The Public Audit Committee drew our attention to the fact that, in 2000, the Scottish funding council provided guidance to colleges about how to deal with severance for senior staff. In 2004, it updated that guidance, as my colleague James Kelly said. Crucially, the Scottish funding council did not remind colleges of the guidance at the point at which the mergers were being discussed and taking place.
This is not the first time that Scotland has witnessed the merger of public bodies. The Auditor General has provided good practice guidance for such occasions. Therefore, we must also question why the guidance was not followed in this case.
The college merger programme was one of the largest public sector reorganisations that we have ever seen. In those circumstances, we could—indeed, perhaps we should—have expected the funding council to be more proactive in that regard. However, it is also clear that North Glasgow College failed in a number of important ways. As the committee said, it fell short of the required level of governance. That is just unacceptable.
The merger was a Scottish Government initiative and it conformed to the Government’s requirements. I do not understand how it did not foresee the possibility of the scenario that arose. Where people want to do something that is perhaps not up to the standard that most people would expect, they will always find a way to get around the rules. The measures were controversial and senior staff of long standing found themselves in a situation in which there was no longer a job for them. How those staff members would depart should surely have been of concern to ministers, as well as to the funding council.
The committee’s report exposed that, on 11 October 2013, the funding council received a funding request from North Glasgow College that included payment for two senior staff members. On 24 October 2013, the funding council apparently advised the college that funding would be restricted—that it would not get the full amount that it had asked for. However, by that time, just over two weeks after the college had made the initial request, the payments to those senior staff members had been authorised and, on 28 October 2013, they were made. There was a three-week period between the application and the money being disbursed. That seems to be what can be described only as a deliberate attempt to pay money that perhaps should not have been paid in the first place.
It should also be noted that North Glasgow College’s remuneration committee’s decisions about severance were not reported to the college board, because the chair of the board was advised—wrongly—that there was no need for that to happen.
The cost of restructuring and severance at North Glasgow College was £1.29 million. In the end, the Scottish funding council provided £866,000 of that amount, resulting in a shortfall of £424,000. Of that amount, £240,000 arose from the severance payments. That might not be a huge sum of money in the overall scheme of things, but that sum might have been better spent on supporting students, widening access or perhaps even in restoring staff morale. We must learn the lessons.
As someone who studied at college before attending university, I have a huge amount to thank further education for.
I was happy to support the proposals for college mergers because I thought that they would introduce efficiencies into the college sector. I also thought that by removing layers of senior management we could ensure that more money would be invested in students. That is where the money should go. Members will notice that I used the word “invested”, rather than “spent”. Every penny that is invested in colleges should be an investment in people and in the future prosperity of the country.
I knew that the merger process would raise issues that would need to be addressed, and I knew that some bad apples would be found as mergers occurred. However, I was genuinely appalled by the arrogance of some people in the sector, who thought that they could use taxpayers’ money as well as college-earned income to top up their already substantial pension pots—and at a time of public constraint, when public sector workers were being offered a pay increase of 1 per cent.
The discovery of the information proves two things. First, the Government was right to change the college structure, to make it more accountable. Secondly, the greed is good attitude was unfortunately alive and well in a sector in which reform was long overdue.
Audit Scotland deserves a huge amount of credit for the reports that we are considering. The organisation exists not to curry favour with the Government of the day but to shed light on how the public pound is being spent. My former colleague Andrew Welsh could not speak too highly of Audit Scotland, because the thorough auditing of Scotland’s public finances did not take place before the re-establishment of this Parliament.
A speech of four minutes is short for a topic of this nature, so I will focus on the Coatbridge College audit. It is obvious that something has gone seriously wrong when a committee report quotes an Auditor General saying this:
“There is absolutely no doubt that there have been very serious failures of governance; indeed, they are among the most serious that I have seen during my time as Auditor General.”—[Official Report, Public Audit Committee, 9 September 2015; c 11.]
Liz Smith mentioned the Auditor General’s comment in her speech.
As members said, the Public Audit Committee decided to investigate the matter. I commend our report, which was published on 13 January, to anyone who has an interest in the matter. It was clear that the overall governance was not as it should have been. During our investigations, we asked for a timeline of events, so that we could try to clarify a somewhat cloudy situation. The timeline can be found in annex C of our report.
I never for one minute thought that my name would go on a parliamentary report that we would send to Police Scotland and to OSCR, the charity regulator, but it did—and we have sent the report to Police Scotland and OSCR, which was the least that the committee could do. Ultimately, when money over and above already budgeted-for and generous leaving packages leaves the college sector, that is nothing short of removing money from students’ pockets.
All members of the committee were shocked, disgusted and appalled by the actions of a few at the expense of many at Coatbridge College. Our report is clear on that. We made three recommendations. First, we recommended that Mr Doyle pay back the money, although we did not expect that to happen because no admittance of wrongdoing was forthcoming during the evidence sessions.
Our second recommendation concerned action for the Government. During this afternoon’s debate we heard from the cabinet secretary about progress in that regard, particularly in relation to the creation of the college good governance task group.
Our third recommendation concerned the Scottish funding council. I accept that there were limitations on the SFC at the time and that its remit has changed as a result of the college restructuring programme. However, the committee thought that the SFC could have been more forceful, could have deployed more scrutiny and could have been more attentive to what was going on. The SFC has questions to answer.
Audit Scotland uncovered, at best, bad practice, and at worst, financial chicanery. The Public Audit Committee has produced excellent reports, having obtained further detail on how bad things were. We have done our job. The next step is a strengthening of the rules, to ensure that Scotland’s students do not face such a financial hit at the hands of the few again.
I am sure that the Auditor General, who is a senior figure in Scottish public life, would not have made the comment that she made—that it was one of the worst cases that she had ever seen in her time in the role—had it not been true. That alone one of the most important reasons why the Parliament must take the matter so seriously. I return to the fact that the Public Audit Committee of the Parliament has recognised that, and I compliment the convener and his committee once again on their handling of the issue. They have had to deal with thousands of different documents; as Stuart McMillan said, some were of such a serious nature that they had to be sent to OSCR and the police. It was no small task, and the committee has done excellent work, because it was clear that the audit trail simply did not exist. In fact, I believe that it has been an extraordinary state of affairs—I will come back to that in a minute, because how we react to it is important in how we take things forward.
There are, of course, issues to do with the Scottish funding council. It is clear that it had not done enough to uncover all the problems and to ensure that its important monitoring role was operating correctly. The Scottish funding council’s structures need to be looked at, as does its responsibility to the cabinet secretary. I think that it was James Kelly who made a good point about what good audit actually means. We have to be clear in our own minds about whether there are structural issues with the Scottish funding council and whether we need to make changes that could spread across how it looks at colleges and universities, or whether we feel that there have been some failures of leadership in that body too. What we decide on that will be crucial in how we react to the serious reports that have been put before us.
There are also issues to do with OSCR and whether it needs to have more measures at its disposal, should it feel that there has been malpractice. We need to think carefully about that, but I suggest that that should come after we have examined the funding council’s mechanism.
I mentioned in my opening speech that there are question marks over the tripartite relationship between the Scottish funding council, the Scottish Government and individual colleges, particularly in a merger process that has perhaps been necessary in many cases but which has certainly been controversial, particularly as the pace of reform was seriously questioned by many colleges. Some of them did not respond well, and Parliament must take that seriously.
The most important thing that we can do is restore trust, because that is the crucial word when it comes to our responsibilities to college students and staff, who feel badly let down. George Adam described the situation as a very “sorry saga”, and he was correct. We have a responsibility to students and staff to ensure that they can feel confident about their future.
I believe that the Public Audit Committee has gone a long way towards helping that process, but it will take robust action from both the Scottish Government and this Parliament to deliver on the committee’s recommendations. Specifically, I draw the chamber’s attention to paragraphs 296 and 301 of the committee’s report on Coatbridge College, in which the committee asks for consideration to be given to the future powers of both the SFC and OSCR. It is clear that it believes that those are central core issues to be discussed. Whether sanctions should be available to the SFC and whether there is an appropriate relationship at the base level between the funding council and the Scottish Government, as Tavish Scott mentioned, this is about lines of accountability, democracy and the transparency that we can provide to allow people to have trust in our college sector again.
I am pleased to have the opportunity to speak in the Public Audit Committee’s debate on Scotland’s colleges. I pay tribute to the Auditor General, her staff at Audit Scotland and the convener, committee members and clerks for their dissection of the issue.
Context is important when we come to talk about this issue. Scotland’s colleges should be the envy of the world. Everyone, regardless of privilege or postcode, should be able to access the skills that they need in order to get on in life. Sadly, that is not happening. The Scottish Government’s record on colleges has been shambolic. As Jackie Baillie pointed out, the NUS says that support is not fit for purpose and the lecturers union says that the SNP’s mergers have not improved learning and teaching quality.
College mergers are one of the few public sector reforms that have been undertaken by the Government, and the programme has been a complete and utter failure for the 152,000 students who have been locked out of college courses, a large number of whom are women returning to work and other adult learners, as Patricia Ferguson said. The SNP should have spent its eight years in power investing in colleges, not making nearly 3,500 college staff redundant at a cost of more than £90 million.
As Stuart McMillan pointed out, the parliamentary report into a former college principal who is accused of accepting a “vastly excessive” severance payment has been passed to the police. That should shock everyone here. As Colin Beattie said, the Public Audit Committee has called on John Doyle, the former principal of Coatbridge College in North Lanarkshire to repay part of his £304,000 deal—a settlement that was described as an
“appalling abuse of the public purse”.
The report also criticised the Scottish funding council, which was responsible for overseeing the merger process.
Last summer, Auditor General Caroline Gardner issued a highly critical report on Mr Doyle’s severance deal. The committee agreed with Ms Gardner’s view that John Gray, the chair of the former college, colluded with Mr Doyle
“to get the result they wanted” by withholding relevant information from the college’s remuneration committee, which approved the payment. The committee’s report said:
“Given the significant governance and oversight failings ... the Scottish Government must look at the operation of the Scottish Funding Council and the effectiveness of its supervisory role.”
That is the context of where we are today.
The amounts that are involved and the failure to get to grips with the issue will stun people outside the chamber. However, how do we move forward? I think that an apology and repayment would be a good place to start, but I will not hold my breath. The Government has insisted that the college governance task group will review the circumstances that led us to this point. I appreciate the update on that that the cabinet secretary gave. I note that she did not want to pre-empt that review, but has she drafted new rules or regulations that would avoid such a circumstance arising again? Is there a blueprint in place for future public sector pay-off scenarios that could be used more widely? There was a blame game at the time, with the Scottish funding council, officials and politicians all scrambling to avoid taking the brunt of the criticism. Will there be a clear channel of responsibility for the size and nature of the packages after the review is complete?
I welcome the Public Audit Committee’s work in this area and commend the dogged approach that it has taken in seeking to shed light on the issue.
The Scottish Government must show that it has more of an appetite to try to correct the perceived injustices of the packages that were delivered in this case. The only thing that we can hope for is that we do not see a repeat of this shambles, because one thing that is clear is that, as Stuart McMillan, Colin Beattie and others have said, the money that has been paid in severance packages has come directly from funds that would have supported college students in my region and in my colleagues’ regions.
Once again, I want to reinforce how important the work of Audit Scotland is in helping us to focus on the actions that we can and should take. When I was first elected to Parliament, one of my tasks was to chair the Scottish Commission for Public Audit, which is in charge of auditing Audit Scotland, so I am well acquainted with the good and thorough work that Audit Scotland undertakes on behalf of us all.
I pay tribute to the Public Audit Committee. At the start of the debate, we heard from Mr Martin, who spoke of the 18 hours of oral evidence and the 34 witnesses, of whom I was one, as well as the task for the committee in going through such a volume of evidence.
It is right that college governance has faced considerable scrutiny. We must understand the detail of what happened to ensure that there is no repetition. I want to assure members, not just on the Public Audit Committee but throughout Parliament, that the recommendations in the committee’s report and from the Auditor General are all being actively pursued.
As is often the case with debates on further education, this debate has touched on the pros and cons of the reform programme and the outcomes for young people and other learners. James Kelly, Patricia Ferguson and Jackie Baillie have all referred to that. This Government has more than met its manifesto commitment to maintain full-time equivalent provision and I will accurately maintain that we are spending more in cash terms than our predecessors; we have also invested more in capital. I also point to the fact that student support is at a record high and that the number of full-time students over and under 25 is increasing.
However, for me the crux of the matter in college reform is that it is the right thing to do to have more full-time students studying recognised qualifications that relate to the skills needed for work and for our local and national economy. I remain of that view. I have spent much of my time as a minister looking at youth unemployment. What we, as a Parliament and as a country, have failed to do has been to tackle structural youth unemployment at times of economic growth and increasing budgets. The reform of the college programme is absolutely essential in order finally to get to grips with structural youth unemployment in this country. I remain absolutely committed to the college sector in terms of what it can deliver, not just for older learners but to the aim of tackling structural youth unemployment.
According to the Auditor General, in her evidence on 4 November last year, the failures of governance at Coatbridge College occurred because of the actions of a small number of people. Although that does not abdicate me, the funding council or anybody else in this chamber from our responsibilities, we should remember that, at the centre of this, was a small number of people—people who ignored guidance. As we have heard from Mr Kelly and others, we had a situation in which the chair of a college board was also the chair of a remuneration committee. I would say to Mr Griffin that my task group is very interested in that issue. When the funding council said, “Don’t do it. Don’t pay the money”, it was ignored.
I reassure members that I agree with the funding council’s assessment that it could have been more proactive. I went to a recent board meeting of the funding council to communicate that, and I have also communicated it through the recently published guidance letter. I do not want anybody in this chamber to be in any doubt that I will take whatever action is necessary to prevent or deal with poor governance. I think that my actions to date have demonstrated that.
It is imperative that we learn the lessons, and that the appalling circumstances so eloquently outlined by a range of members in the chamber today do not happen again.
Yes, and Government officials remain in contact with OSCR to deal with any outstanding concerns that it has in relation to the powers that it has or does not have.
The Auditor General has confirmed that the new controls that are in place are much more robust. As we all know, before reclassification decisions on severance were the sole responsibility of colleges, taking into account funding council guidance. Following reclassification in April 2014, incorporated colleges must now seek approval from the funding council for severance and settlement arrangements.
Seeking that approval is a term and condition of grant, and ministers now have far more explicit powers to remove incorporated college boards for serious or repeated breaches of those terms and conditions.
This has been an excellent debate. In all the years that I have been on the Public Audit Committee, it is the first debate that that committee has had in the chamber. I hope that there will be more in the next session of Parliament.
I thank every member who contributed to the debate, and I have to say that I detected a bit of additional anger coming from those MSPs who are members of the committee. When Paul Martin spoke about the hours that we spent taking evidence, he did not mention the hours that we spent reading the hundreds and hundreds of pages of evidence that we all received.
I acknowledge a point that was made by Colin Beattie and the cabinet secretary. Because things were so bad at Coatbridge and North Glasgow, at the outset of this speech I point out that it would be wrong to say that all colleges are the same—they are not. There is absolutely excellent best practice in Scotland that should be put on the record.
However, we regularly debate how money should be allocated in Scotland’s public sector. We do that every week and in every debate, but we should perhaps scrutinise a bit more thoroughly how well the money is spent in relation to delivering value for money and high-quality public services. When we meet someone like John Doyle, it is right that they are named and shamed and that we were willing to use the Parliament’s powers to compel him to give evidence. It is only right that that has been done across the chamber today.
The debate highlights the work of the Parliament’s Public Audit Committee. I commend the excellent chairing of the committee by Paul Martin, who ensured that a fair, thorough and measured approach was taken to the volumes of information and figures brought forward. The inquiry showed the Parliament's Public Audit Committee at its best, doing the job that it is tasked to do. This Parliament is at its best when every member on every committee works together and we certainly did that on this occasion.
We also received the Linkston report, which was conducted as a review of the merger process at Coatbridge College. I thank the family of Francis McGeachie, who insisted that the committee should see the report, which highlighted that the arrogant approach pursued by the principal of the college allowed no duty of care to the rest of the staff. Tragically, depute principal Francis McGeachie took his own life during the merger process at Coatbridge College.
Even the college trade unions were described as going ballistic when they heard of the principal's pay-off, which was far in excess of anything they may ever have dreamed of.
The Public Audit Committee has been monitoring the college mergers, but we still do not have an accurate figure for the cost of the process, although £52 million was allocated for the purpose. We cannot monitor the promised improvements in the quality of education, as it seems that there are no baseline figures for comparison. The £50 million of savings that were promised are hard to find, although the Scottish funding council says that it is on track to achieve those savings.
An Audit Scotland report in 2012 on “Learning the lessons of public body mergers” was available to guide organisations through the merger process. However, we have found serious issues relating to police reform; a huge funding gap in the Scottish Fire and Rescue Service; and college reform sometimes following worst rather than best practice.
The Auditor General described the section 22 report on Coatbridge as highlighting
“very serious failures of governance ... among the most serious that I have seen during my time as Auditor General.”—[Official Report, Public Audit Committee, 9 September 2015; c 11.]
At the outset of the merger process, the Scottish Government and the Scottish funding council should have set out the parameters for severance payments. The information and guidance was there, but the Government and the SFC allowed colleges to go their own way. The committee’s report asks that the Government looks again at the operation of the Scottish funding council and the effectiveness of its role. That is quite a stark recommendation, and I hope that we will hear back from Government on what its plans are.
It was that lack of rigour that allowed Mr Gray to present to the remuneration committee a severance package for John Doyle that was well over the level that was specified in the guidance. When the remuneration committee agreed the package, there was no agenda and no formal papers. John Doyle received written confirmation of the deal—and it was a deal—within 24 hours, yet the minutes of the meeting were not written up for nine months. It seems that the board of management at the college was not notified either, despite every member of the remuneration committee sitting on the board.
There is no doubt that information was withheld from the remuneration committee members in order to ensure that John Doyle got the package of more than £300,000, with no business case whatsoever to support it. Even the legal advice that was given was based on a lack of information, given that the lawyer was unaware of John Doyle’s letter confirming his severance pay. While there was a public sector pay freeze, John Doyle gave his personal assistant a pay rise of 19 per cent on the basis of her communication skills. The college was out of control at that time.
The Public Audit Committee has carried out a rigorous piece of work on Coatbridge College and it is now for others to follow the process through. I agree with other members that John Doyle should pay back the additional lump sum that he received.
It is now 11 years since the Parliament set up the Office of the Scottish Charity Regulator. The evidence that the committee received pointed to the need for extended powers in order to deal with the other John Doyles around Scotland, who think that public money can be exploited to benefit themselves rather than being used for the purpose of educating and training people and providing high-quality public services.
One of the most disappointing aspects of the inquiry and the report was the failure of the Scottish funding council to hold further education colleges to account. The funding council’s lack of effectiveness and governance allowed for public money to be exploited at Coatbridge College, and it is the Scottish Government’s responsibility to ensure that it now steps up to the mark and carries out the job that it is tasked to do.
There is a substantial amount of evidence in the committee’s report, in addition to the documentation that we received, to enable Police Scotland to carry out an investigation, and I trust that the committee’s recommendation in that respect will be fulfilled.
Finally, I hope that the investigation in Coatbridge will serve as a warning to all other institutions and other individuals in Scotland that, when scarce public money is wasted, they will receive a polite invitation to the Parliament’s Public Audit Committee to account fully for their actions.