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College in Thurso faces £2.5 million deficit by 2022/23

By Gordon Calder

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THURSO-based North Highland College UHI could have a deficit of £2.5 million by 2022/23, according to a report which has been published by Audit Scotland.

It shows the college – part of the University of the Highlands and Islands (UHI) – had a surplus of £100,000 in 2017/18 but faces risks to its financial stability.

The report says colleges in Scotland are operating within "an increasingly tight financial environment" and points out the gap between their income and expenditure is widening and this is forecast to continue. Twelve colleges are expected to have recurring financial deficits by 2022/23.

On North Highland College, Audit Scotland said: "It is forecasting a cumulative underlying deficit of £2.5 million by 2022/23 – equivalent to around 16 per cent of current costs – and a negative cash-flow position from 2019/20 onwards.

"The college has loans of £1.3 million and in 2017/18 relied on waivers from its bank to avoid breaching loan covenants. At the time of the annual audit, the college did not have an agreed financial plan in place to achieve the required savings in both the short and longer term."

The auditor highlighted the need for "more detailed interaction" between the college and UHI as savings plans are developed.

"The college has since began a curriculum review, with a view to achieving savings for the 2019/20 budget. However, the college anticipates that it may require financial support from UHI, in the form of cash advances, for 2019/20."

Responding to the report, college principal Donald MacBeath said: "In common with many other colleges, North Highland College UHI is facing up to financial challenges over the next few years. These are primarily attributable to our projected core funding allocations being insufficient to cover increasing operational costs.

"The college is taking a number of actions in response to the situation. These include establishing a new business development unit to increase our commercial income and completing a comprehensive curriculum review exercise focusing on growing student numbers and securing cost efficiencies.

"We will continue to work closely with the University of the Highlands and Islands, our regional strategic body, and draw upon its support throughout this period of transition. We are optimistic that these measures will help secure our financial position. The college’s board of management remains fully committed to maintaining the college’s very favourable performance ranking confirmed in the report."

Audit Scotland found that across the country student numbers increased but over the past three years colleges provided less learning to students aged 16-24 and more to those aged 25 and over.

The college sector is looking at the potential implications of the UK’s planned withdrawal from the European Union. The report says the main areas likely to be affected are students, staff and funding.

Commenting on the findings, Shona Struthers, chief executive of Colleges Scotland, said: "Colleges will continue to work closely with the Scottish Government and Scottish Funding Council to provide sufficient sustainable investment which will enable colleges to continue delivering benefits for students, communities and the economy."

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