Created on: 27 Oct 2025
Finance Secretary Shona Robison is under pressure to use January's budget to reverse "chronic underfunding" that has left Scotland’s colleges facing the gravest financial crisis in their history.
Appearing on BBC Scotland’s Sunday Show, Gavin Donaghue, chief executive of Colleges Scotland, said a 20% real-terms cut in government funding since 2021 had led to staff reductions, larger class sizes and a sharp drop in student numbers.
Recent reports from Audit Scotland and the Scottish Funding Council (SFC) have laid bare the scale of the problem. Seven colleges reported deficits last year, two required emergency cash support, and staffing has fallen by nearly 9% in five years.
“Some colleges are facing insolvency in this academic year because of chronic underfunding over a number of years. And going forward, that picture is not looking any better,” Mr Donague said.
“That is why we are in real discussions with the Scottish Government about what the budget looks like that will be delivered in January next year, because we really need to see a step change in Scottish Government funding of colleges if we want them to help us build a sustainable economy.”
He warned the situation was already having a direct impact on students.
“Reduced staff headcount means that we have had a reduction in the number of students we are able to teach. To be fair, we still teach over 200,000 students every single year, in everything from health and social care to culinary skills, to construction, welding and everything else.
"But unfortunately, less funding, less staff, means fewer students are being taught in Scotland’s colleges, which is a real problem, because Scotland’s colleges are the skills engines of our economies.
"They are absolutely vital if you want to take advantage of growing industries like renewables, social care and everything else.”
Mr Donaghue said there had been a 13% reduction in student numbers in the past five years, at the same tome as a 9% reduction in staffing.
“If college funding had increased in line with inflation from 2021/22 there would be an additional £150 million in the college sector right now," he added.
“That is a significant challenge that college leaders have had to manage over the last five years, and unfortunately, they have been faced with unpalatable decisions like having to cut staff headcount, reduce staff numbers, and now some are exploring whether they can keep all their campuses open.
“This is a real problem for the Scottish economy, because not only are colleges the skills engines of the economy, they are actual community anchors in every local area up and down the country.”
Asked whether colleges should share in wider public sector austerity, he insisted they had already “taken far more than their fair share of cuts”.
Since devolution, he said, colleges and councils were the only parts of the public sector to have lost staff headcount, while every other area had grown.
Mr Donaghue called for a major shift in policy to reflect the skills Scotland needs. “A quarter of a century ago, Tony Blair was talking about 50% of young people going to university,” he said.
“We need now to think what our modern economy needs. I would personally like to see far more people, both from a careers perspective and in schools, showing the value and the ability of them to go to colleges to get industry-ready skills, qualifications and training that provide the basis to get a good job and a rewarding career.”
Audit Scotland’s latest report confirmed that Scottish Government funding for colleges will fall from £675 million in 2021/22 to £656 million in 2025/26 — a 3% cash cut, equating to around 20% in real terms.
While ministers have provided extra money for staff pay and national insurance costs, the watchdog warned there had been “no uplift to cover general inflationary pressures”. Colleges, it said, were “delivering less teaching to fewer students” and risked prioritising cheaper courses over those that meet local skills needs.
The SFC separately warned that “most colleges are not sustainable” and that the financial position “continues to be extremely challenging”.
The row has deepened after UK Defence Procurement Minister Luke Pollard suggested his government could invest directly in Scottish colleges to address skills shortages in defence and engineering.
Last week, Mr Pollard told Scottish journalists that “dither” from Holyrood was one reason the UK Government wanted to inject funding into skills programmes across the UK.
“We know there are young people in Scotland who would succeed if they were given the chance — and they are not being given that chance with a government that is not valuing their sector,” he said.
“That is why we are stepping up to fund the places in Scotland that are needed, because these are good jobs.”
Higher and Further Education Minister Ben Macpherson — who turned down an invitation to appear on the the BBC's Sunday Show — said any attempt to bypass Holyrood would be “completely unacceptable” and would “show contempt for the Scottish Parliamen
“I do not want colleges to be a political football, although it is welcome that we have had a renewed focus recently on the value of colleges from both the UK and Scottish governments.
“I would like both of those governments to recognise that colleges are absolutely vital skills engines for our economies and to fund them sustainably. Obviously, education is a devolved matter, but if there is to be increased UK Government spend on skills in reserved matters like defence or social security, I absolutely want Scotland’s colleges to benefit from that increased investment. The mechanism for how that happens between the UK and Scottish governments is one for them.”
Opposition parties said Mr Donaghue’s comments should serve as a “wake-up call” to ministers.
Scottish Labour education spokesperson Pam Duncan-Glancy said: “Scotland’s colleges play a crucial role in our communities and our economy, but years of neglect by the SNP have pushed them to crisis point. The SNP’s brutal cuts to college funding and staffing have robbed Scots of opportunities and hindered businesses. The SNP cannot defend its indefensible record on colleges — but Scottish Labour will stand up for this crucial sector.”
Scottish Conservative shadow education secretary Miles Briggs said: “This was an urgent warning from the front lines of Scotland’s further education sector. Colleges teach the real-life skills which are essential to drive economic growth. But years of swingeing SNP cuts have put our vital colleges in peril.
"Two institutions needed cash support from the SFC in 2023/24, seven reported a deficit, and the overall college workforce shrank by 8%.
"SNP cuts are damaging the economy, hurting the prospects of young people, and putting the future of Scottish further education at risk. No wonder the minister did not turn up to explain a 20% real-terms reduction in support since 2021.”
Responding, Higher and Further Education Minister Ben Macpherson said: “Scotland’s colleges have a crucial role to play in both education and the economy. Through the Scottish Funding Council, funding allocations in this year’s budget provide the sector with a 2.6% increase in teaching funding compared to last year.
“We will continue to work closely with colleges to ensure a successful and sustainable future, recognising the high-level pressures facing the sector outlined in reports from Audit Scotland and the Scottish Funding Council.
“It is extremely concerning that the UK Government is threatening to bypass the devolution settlement by interfering in Scotland’s colleges. This shows contempt for the Scottish Parliament, and the UK Government must make clear that this is not their intention as a matter of urgency.
“The Scottish Government has recently invested £4.5 million in ETZ’s Energy Transition Skills Hub - a centre of excellence that will prepare young people for the highly skilled jobs and opportunities of the future in the renewable energy industry.”
Originally posted by The Herald.