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Part of the debate – in the Scottish Parliament on 9th February 2016.

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Photo of Paul Martin Paul Martin Labour

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.

I move,

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.