Auditing Scotland’s further and higher education sectors: The story so far…

Scotland’s universities and colleges deliver a wide range of benefits to individuals and communities, and so most of us will have an interest in how they are performing, particularly in this time of significant change and uncertainty for the country’s public finances.

On Thursday, the Scottish Parliament’s Public Audit and Post-legislative Scrutiny Committee hears from Auditor General Caroline Gardner and Audit Scotland teams – myself included – on reports we’ve recently published on the higher education and college sectors. Members will also hear from the Auditor General on challenges facing Edinburgh College, and Glasgow Colleges’ Regional Board.

cover800x1132I was part of the team taking Audit Scotland’s first look at the entire higher education sector, which attracts a growing number of students and is internationally renowned. More than 50,000 students from outside the UK came to Scotland to study in 2014/15, and almost all Scottish universities deliver higher education abroad, either by running overseas campuses, through partnerships with other universities, or through distance learning.

In 2014/15, the Scottish Government provided over £1.7bn in funding, made up of direct funding to universities and financial support to individual students, such as paying tuition fees and funding student loans. Our report raises important issues about the use of public funding, and the challenges facing both universities and the Scottish Government if the sector is to stay successful, and if the Scottish Government’s policy ambitions are to be achieved.

For example, one of our key findings is that it’s becoming increasingly difficult for Scottish students to get a university place in Scotland. There’s a need for greater understanding of trends in applications, offer rates, and acceptances to assess what impact Scottish Government policies are having on access to university for Scottish and EU students. This is one of several recommendations we make in our report, touching on areas such as student support, widening access and the role of the Scottish Funding Council (SFC)

The review of higher education was followed by Audit Scotland’s annual look at the performance of Scotland’s colleges. This piece of work was managed by my colleague Stuart Nugent. You can listenas_cover_colleges to Stuart discuss the key findings of that report here. Though colleges and universities are very different bodies in a number of ways, both sectors face challenges. In the case of colleges, substantial reforms have transformed the way that they operate and deliver services.

Our latest review of the college sector found that it is financially stable and achieving learning targets, whilst still adjusting to the big changes it’s experienced in recent years. However, several issues remain outstanding if the full effects of government reforms are to be understood and addressed by the sector.

Like universities, the college sector is experiencing changes within its student population – though for different reasons – such as growing numbers of under-25s in full-time education and reductions in women and over-25s. Our report states that the Scottish Government, the SFC and colleges need to work together to improve their understanding of demand for courses across the country, and create long-term plans for how they will commit finances and staff to meet future need.

Both of these reports have generated a lot of ongoing debate about the future challenges facing the respective sectors, and how to manage them. The Scottish Government and SFC have responded to both reports ahead of Thursday’s meeting and once we present our findings to the Public Audit and Post-Legislative Scrutiny Committee, members will then decide what action they would like to take to continue their scrutiny of the sectors.

For our part, the audit teams will continue to explore ways to engage with stakeholders on our recommendations and share the knowledge we’ve gained through our work. For example, I’ve been travelling round the country since July, presenting our findings at universities and sector events and it’s been really interesting to hear the range of views on what approach should be taken to deal with the challenges ahead.

We’ll use this feedback to consider how we can focus our future audit work on education, and will post updates on our website as that starts to take shape.

About the author

kwsmallKirsty Whyte managed our audit of higher education in Scottish universities. She has worked at Audit Scotland for over 12 years undertaking performance audits on a wide range of topics across the whole of the public sector, including school education, the use of locum doctors in the NHS, and efforts to reduce reoffending.

How can we create a world-class approach to public finances?

The Scottish Parliament may have been in recess since my last blog, but you wouldn’t know it from all of the activity that’s been underway at Holyrood over the summer. It’s been a pleasure to be involved in some of this work, including contributing to the business planning days for different parliamentary committees and joining colleagues in the new budget review group, taking a fundamental look at how this important process should develop.

There has also been plenty of work under way at Audit Scotland over the summer. Colleagues have been busy signing off the financial audits of dozens of central and local government bodies, and I’ve reported on a number of different policy areas, including higher education, colleges, and broadband, to name just a few.

And today, I report on the Scottish Government Consolidated Accounts for 2015/16. I’ve set out the Scottish Government’s budget, how it works and how it’s reported, as well as my findings on the Government’s financial and performance management.

The Consolidated Accounts are an integral part of the Scottish Government’s accountability to the Parliament and of course, the public. They cover about 90 per cent of the spending approved by the Parliament, and show what the Scottish Government has spent against the overall Scottish Budget.

This is the second year that I’ve produced a report to accompany the accounts. The new financial powers flowing from the Scotland Acts 2012 and 2016 mean it’s increasingly important that the Parliament and the public have comprehensive, transparent and timely information about public finances. For example, one of the key changes in this year’s consolidated accounts is that they reflect the revenue collected through Scotland’s new devolved taxes – Land and Buildings Transactions Tax and Scottish Landfill Tax – for the first time.

The Scottish Government has made some progress since my last report in improving the transparency of public finances. However, there is still no set of consolidated accounts for the whole of the Scottish public sector – something I have reported on previously. These would give a fuller picture and understanding of public spending and the longer-term implications for public finances. This is especially important considering the uncertainty created by the EU referendum result and the continuing pressures on the public purse, alongside the impact of the new financial powers.

I’ve also highlighted some significant issues and risks to the Scottish Government budget, including management and control of European Funding; an important income stream for the Government.

I look forward to taking the report to the Parliament’s Public Audit Committee later this year, and supporting MSPs to discuss and scrutinise some of the issues highlighted in my report.

As I’ve mentioned before , managing the new financial powers brings both opportunities and risks to Scotland’s public finances and with this in mind, Audit Scotland has pulled together a paper looking at some of the key issues. This paper is accompanied by a high level overview of the new powers, how the funds flow through the system and which organisations are involved. I’ll also be reporting again next spring on how well these powers have been prepared for and managed.

There are undoubtedly hard decisions ahead but I believe we’ve got a rare opportunity to create a world class approach to public finances. Let’s not waste it.

About the author

MM6A8690croppedCaroline Gardner is the Auditor General, and Accountable Officer for Audit Scotland. She started her term in July 2012, and has 30 years’ experience in audit, governance and financial management. Follow her on twitter @AuditorGenScot

Supporting economic growth: A complex picture

A strong, sustainable economy is important for a successful Scotland, and the performance of our economy has been subject to a great deal of debate and scrutiny in recent months.

In July, Audit Scotland published a review of the roles of Scottish Enterprise (SE) and Highlands and Islands Enterprise (HIE), which spend around £398 million a year delivering the Scottish Government’s economic priorities, as outlined in Scotland’s Economic Strategy.

This strategy was the starting point of our audit work, as this determines SE and HIE’s plans and activities. Although it sets out the Scottish Government’s high level priorities and overall approach to supporting economic growth, we found that the detail on how specific policies and initiatives would be implemented is missing.

The strategy states that the Scottish Government’s National Performance Framework (NPF) will measure progress, but this cannot be used to measure the contributions of policies and initiatives to delivering outcomes. We’ve therefore recommended that the Scottish Government strengthens its approach to developing, delivering and monitoring the economic strategy. This is particularly important due to the complex nature of supporting economic growth and the uncertainty surrounding public finances for the foreseeable future, as a result of new financial powers flowing from the Scotland Acts 2012 and 2016, and the outcome of the recent EU referendum.

report_cover_595pxTurning to the economic development agencies, SE and HIE provide a range of financial and non-financial support to businesses and other customers and we found that overall, they are performing well. Often their investments in projects will be significant and high risk. Our audit sought to raise awareness of how much is spent and where, and what’s achieved as a result. To help inform our conclusions we pulled together case studies which looked at specific types of support, such as SE’s work to help rejuvenate the Dundee Waterfront and HIE’s investment in the Harris Tweed industry.

Both agencies regularly meet or exceed their individual performance measures, despite a 12 per cent reduction in their spending since 2008/09, and they undertake a range of evaluation work to help demonstrate the impact their support has. There are also good examples of partnership working to achieve positive outcomes, such as creating jobs and increasing business turnover.

Where things could improve is in the way that SE and HIE often offer similar support, which means that there’s scope to deliver some activities more efficiently. We recommended agreeing common performance measures, aligned to the NPF, to allow the agencies’ contribution to Scottish Government outcomes to be identified and clearly tracked.

The Scottish Government announced a comprehensive review of enterprise and skills services in May this year, which should offer the opportunity to address our findings and we’ll consider the outcomes of this review and what it may mean for any future audit work in this area.

The responses to the report have been very interesting; we’ve discussed our key messages with a number of stakeholders, including the Scottish Parliament’s Economy, Jobs and Fair Work, and Rural Economy and Connectivity, Committees, and tomorrow (Thursday, 29 September) we present our findings to Holyrood’s Public Audit Committee.

And there’s more to come, as we’re exhibiting the report and other information about our work in this area at the Scottish Business Exhibition in Novemberforward to meeting business people face-to-face to chat through our findings. If you’re there on the day, please say hello!

About the author

mm6a5992Mark Pentland is a performance auditor and joined Audit Scotland in 2013. Since then, he’s worked on a number of different audits, most recently contributing to Supporting Scotland’s economic growth: The role of the Scottish Government and its economic development agencies.

Social work audit raises tough questions for us all

Until I worked on this audit my perceptions of social work came from the media: overworked professionals in a very challenging environment, constantly trying to do the right thing and having to make decisions which would likely have a serious impact on people’s lives.

And, unless you have had recent personal experience, I suspect many people think that when there is a need, the state will step in to provide help.

During this work the team learnt that the challenges we are confronting as a society are huge. The number of elderly people is increasing, there will be fewer people of working age, and more children and adults living chaotic lives or longer lives with complex needs.

While we are living longer, the number of years we spend in good health is not increasing, and in order to live independent, fulfilling lives, many of us will need help for longer. So we all have a responsibility to make lifestyle choices which will keep us healthy.

One thing that surprised us was how much we rely on unpaid carers to provide support. One in six adults in Scotland and almost 1 in 25 children under 16 are caring for someone. And the amount that saves the public purse is estimated at  nearly 11 billion a year.

The audit threw up a lot of philosophical issues for me.

Legislation gives certain groups rights but how do we balance them with other’s needs, such as the difference between a 64 year old and a 65 year old with the same needs? Or children who lose benefits and opportunities once they become adults?

How do we pay for the care we need? How much is it the responsibility of the individual or their families and how much should society pay from a finite and reducing public purse?

During this audit the team had a privileged opportunity to meet with those working in social services at all levels in six council areas. We were surprised to find that, in spite of the size of the challenge, social workers  were positive about their work and confident that they can help people change their lives for the better.

It was interesting to see how different the principal issues confronting different councils were; for example, providing care for people living in rural and isolated communities in Eilean Siar or coping with wide scale deprivation, and the consequences of drug and alcohol abuse in Glasgow.

But the overall thing I have taken away from the audit is that we as society have to make some really difficult decisions about how we define need, how we want to support those in need of help – and how we will pay for it.

liz-ribchesterAbout the author

Liz Ribchester joined Audit Scotland’s Performance Audit and Best Value group as a Senior Auditor in 2004. She was a member of the Social work in Scotland audit team.

Learning lessons from young people

Audit Scotland and Young Scot have been working with a group of young people over the past few weeks on CheckSee. This has been something completely different for Audit Scotland, working with young people to think about how we do our audits and the topics we look at.

The pilot was a great success and we’re very grateful to all the young people who took part. At the final session the group shared their thoughts and insights about what they see as being the big issues relating to education, skills and employability, and also their recommendations. There was a great buzz in the room, with loads of enthusiasm, and it was fantastic to see things from their point of view. They came up with some great ideas.


The group also gave us a strong, good challenge about what we need to be doing better ourselves – like thinking about other ways of getting our messages across, rather than long written reports. The group had some really good suggestions and they were very honest in their assessment of our current reports! That’s exactly what we need to hear so we can improve.

We’re thinking about the next steps now, and we’d love to keep working with some of the group. Young Scot will be sharing their learning from the project in due course, and I’m looking forward to hearing what the young people who took part in the sessions thought of CheckSee.

At Audit Scotland, we got such a lot out of the session, and people were really fired up afterwards. As things move on, we’ll share more information about what we’re doing and what’s changed as a result of working with the young people. This is the start of an exciting new phase for us.

MM6A6140About the author

Tricia Meldrum is a Senior Manager with Audit Scotland’s Performance Audit & Best Value group. She joined Audit Scotland is 2001 with a background in health economics, and currently oversees audits in the education and children’s services sectors.


What could Brexit mean for Scotland’s public finances?

I’ll remember the morning of 24 June for a long time. Whatever your views and vote in the EU referendum, it was clear something momentous had taken place. Certainties were swept away and now, nobody really knows what comes next.

And the vote came at a time when Scotland’s public sector was already dealing with significant change, including new financial powers, building pressure on the public purse and service reform. Add into the mix a new Scottish Parliament, a return to minority government and renewed debate about the possibility of a second independence referendum, and you have a future that’s far from fixed, and filled with both opportunities and risks.

The key question on everyone’s mind in the wake of the Brexit vote is what will it mean: for the country, for our politics, for me?

Of course, we don’t really know yet, but we can begin thinking through the implications and start exploring what it might mean for Scottish public finances.

Even with the devolution of further tax powers, the Scottish Government’s overall budget will continue to be linked to UK public spending decisions, and the state of the economy.

Following the EU referendum vote, the UK Government has set aside its deficit targets and Chancellor Philip Hammond has indicated scope for a ‘fiscal reset’ in the Autumn Statement, depending on early signs about economic performance.

And for its part the Scottish Government is proposing to delay the Scottish budget until it knows more, and has decided not to hold a three-year spending review at this point.

For now, all bets are off as to how things will pan out and how this will ultimately impact on Scotland’s public finances.

We know that European funding it is highly focused on a few areas in Scotland – agriculture, economic development and skills, fisheries and research. However, it’s hard for people and organisations to commit time and resources to planning if they don’t know which future is more likely to occur. The Chancellor has recently guaranteed that funding will be in place for projects established before the autumn statement but not everything is covered.

And there are other areas affected by EU rules to consider, such as procurement, environmental rules, entitlement to public services (for example, university tuition fees) and social security payments.

So a lot of questions and, at this stage, not many answers.

In Audit Scotland, we’ve extended the scope of our work on new financial powers to consider the implications of the EU referendum result. This brings together known and prospective constitutional changes affecting public finances, and will help us to identify the audit risks that we need to address in our work.

Key issues that we will need to consider are likely to include potential challenges to financial sustainability for public bodies exposed significantly to the end of EU funding streams, and the effectiveness of policy implementation in any areas that are transferred from EU to Scottish Government control and links to overall objectives, outcomes and performance

And of course, while the final destination isn’t yet known, further devolution in Scotland continues apace and the Scottish Parliament is receiving substantial new financial powers via the Scotland Act 2016. Whatever happens as a result of the EU referendum vote, these new powers need to be managed and integrated into the Parliament’s scrutiny processes and there is definitely a role for Audit Scotland to play. We’ve committed to supporting the Parliament to develop world-class arrangements for holding government to account and improving the use of public money.

We will therefore continue to work with its committees to strengthen the Parliament’s oversight, in line with the recommendation of the Smith Commission, and to support scrutiny of the implementation of the new powers.

If you’re interested in this area of our work, keep an eye on our New Financial Powers webpage for more updates.

About the author

MarkTaylorMark Taylor is an Assistant Director in Audit Scotland. He oversees a wide portfolio of central government audits, including the Scottish Government audit, and is the lead on our work on new financial powers and constitutional change.

What is an ALEO – and does it matter?

In June, Douglas Sinclair, Chair of the Accounts Commission, and I were asked to present at Holyrood Events’ Making the most of arms-length external organisations.

Arms-length bodies feature across the public sector. We’ve heard about non-departmental public bodies, executive agencies and so on. They provide public services but are somehow one step removed, or arms-length, from government – a bit like Audit Scotland!

ALEOs can be thought of as councils’ version of these bodies. As Douglas outlined, there has been steady growth in their use. First seen as sports trusts in the 1980s, ALEOs are now widely used for property, transport, economic development, and more recently, care services. You may be surprised to know there are around 130 ALEOs in Scotland, with a turnover of £1.3 billion, employing over 28,000 people.

It’s fair to say that the public can be wary of such bodies. The term ‘quango’ is often used in a less than complimentary way – not to mention ‘bonfire’. So what is an ALEO? There is no legal definition. They are separate from the council but subject to its control or influence. They take many forms including companies, charities, and community enterprises.

And why do councils use them? A common reason is to save money. About one-third of ALEOs have charitable status and this attracts business rates relief. They can generate income through selling services more widely, and it is argued their independence helps them really focus on the business at hand and be more responsive to customers.

I mentioned accountability as a concern. This is a factor councils should consider carefully. When used well, ALEOs can help to put the spotlight on the service – with the ALEO board, council committee, and importantly, service users, providing oversight. But there have been cases where ALEOs have gone wrong, putting services and public money at risk – Caithness Heat and Power, and Strathclyde Passenger Transport Authority being past examples the Accounts Commission has reported on.

Councils must of course put safeguards in place. The Accounts Commission and COSLA’s Following the Public Pound Code expects councils to spend public money wisely and be clear what is delivered in return. The Code applies regardless of how our money is spent – be it through partnerships, contracts or outside bodies such as ALEOs. And we have an important role to assure the public that councils follow the Code’s broad principles. So perhaps the exact definition of an ALEO is not so important after all.

The Accounts Commission has a strong and continuing interest in ALEOs. It plans to build on the work it has already done through the Following the Public Pound Code and its How Councils Work series of reports. From October, annual audit work in councils will become more integrated with the audit of Best Value, including a focus on councils’ compliance to the Code and their use of ALEOs.

Peter-Worsdale_CROPPEDAbout the author

Peter Worsdale is an Audit Manager within Audit Scotland’s Performance Audit & Best Value (PABV) group. He joined the organisation in 2004.


CheckSee with Young Scot – a new approach to public engagement

Audit Scotland is keen to do more to engage, in different ways, with people who use the public services we audit. We’re also looking to engage with people much earlier, before we even begin planning audits, so that we can learn from their experiences. This will help shape our audit work.

We’re kicking off something new this week, working with Young Scot. Young Scot is the national youth information and citizenship charity that does lots of different work with people aged 11-25. There’s loads of information about them and what they do on their website.

The Young Scot Co-design team is working with us on a new project called CheckSee. One of the aims of CheckSee is to help us identify the main issues that young people think are important to them, in particular relating to education, skills and employability. The other aim is to help us understand how we can engage more with young people as we develop and carry out audits.

For the young people involved, this is an opportunity to help shape our work in these really important areas. It will also help them develop their confidence in communicating their experiences, views and ideas.

CheckSee involves a group of 15 people aged 15-20. The group will get together four times over the next six weeks. I’m looking forward to going along to some of the sessions, along with colleagues. The first session is a getting to know each other ‘pizza and patter session’. There’s one great idea for a new approach to our team meetings already! We’re particularly looking forward to the young people coming into our office here in Edinburgh for the final session. This will be an opportunity for the group to meet more of our staff and ask us questions. The group will then share their thinking with us. I’m sure this will be a lively and really informative session.

We’ll be using what comes out of the sessions to help us think about, and shape, the areas we audit. We’ll also be really interested to hear the group’s thoughts on how people who use the services we’re looking at could be more involved in the audits. This is something we’ll take forward as we start planning new audits. Hopefully some of the members of the group will be keen to keep working with us after the pilot finishes, to keep up that momentum.

We’ll be tweeting from the sessions, sharing the sessions via Periscope and asking some of those involved to publish blogs about how the pilot is going, so watch this space for updates and follow the #CheckSee hashtag.

About the author 

MM6A6140Tricia Meldrum is a Senior Manager with Audit Scotland’s Performance Audit & Best Value group. She joined Audit Scotland is 2001 with a background in health economics, and currently oversees audits in the education and children’s services sectors.

New Parliament, new powers, new opportunities

A lot has happened since my last blog, and it’s fair to say that Scotland’s new financial powers won’t have been top of the list of political developments for many of us over the last few days. Yet however events unfold in the months to come, the state of the country’s public finances is likely to be even more important, and the need for effective scrutiny even greater.

The new session of the Scottish Parliament delivers a new opportunity to focus on scrutiny and improvement of public services, as well as new faces and new priorities. The biggest change for me as Auditor General is working with a new Public Audit Committee (PAC). The committee’s membership is smaller this time around, down from nine MSPs to seven, but it’s great to see that the gender balance of the group is even, with four female MSPs on board, including the new convener and deputy convener.

The PAC will also have a wider remit in this session, with the addition of post-legislative scrutiny to its responsibilities. It’ll be interesting to see how that new role develops in the future, and to explore how our audit work can support the committee in this area.

I’ll report to the new PAC for the first time tomorrow, starting with a briefing for members on my latest update on the Scottish Government’s Common Agricultural Policy Futures Programme. I highlighted a number of concerns with the management and delivery of the programme, particularly with the IT project designed to process funding applications from Scotland’s farmers and rural businesses. Challenges remain with the project as it continues to work towards key deadlines and we’re monitoring progress, and the impact on the Scottish budget, through our annual audit of the Scottish Government’s accounts.

I’ll then give evidence on my March report on Changing Models of Health and Social Care. This report highlighted the growing need for Scotland’s health and social care services to create new ways of working, and adapt to increasing pressures. Stronger leadership is needed to achieve this, underpinned by clear, long-term planning by the Scottish Government. Health and social services are used by all of us at some point in our lives, and I expect that the committee will be keen to spend some time exploring the issues raised in my report.

At the core of both of these reports is the implementation of reforms in the public sector. As we highlighted in Audit Scotland’s 2015/16 annual report, tracking the impact of reform across public services has been a key focus of our audit work in recent years, from looking at college mergers, to examining the creation of a single police service for Scotland.

And there’s more to come, with the new financial powers for the Scottish Parliament set to have a considerable impact on how public money is managed and spent. Audit Scotland has already produced in-depth reviews of the implementation of devolved taxes delivered under the Scotland Act 2012, and we’re currently planning our next report on managing the new powers.

It’s essential that the Parliament and the public have the information they need to understand the big choices and challenges underway in public services, so Audit Scotland has committed to making our work as transparent as possible. If you’d like to know more about how we contribute to the Parliament, you can tune in and watch the PAC session live from 9am.

About the author

MM6A8690croppedCaroline Gardner is the Auditor General, and Accountable Officer for Audit Scotland. She started her term in July 2012, and has 30 years’ experience in audit, governance and financial management. Follow her on twitter @AuditorGenScot


Exploring early learning and childcare: Have your say

Audit Scotland looks at public spending and policy across the whole of the public sector, meaning there’s a huge number of areas we can potentially explore.

Right now we’re considering an audit on Early Learning and Childcare (ELCC) in Scotland. These services have recently been changed and face further reform in the future, so this feels like the right time to take a closer look at how the system is working, and what outcomes are being delivered for the people who access this support.

We haven’t explored these services in detail before, and we want to make sure we’re on the right track when we start planning our audit work. So, we’re looking for parents and carers of children eligible for funded early learning and childcare services (usually three to four-year-olds, and some two-year-olds) to share their views and experiences with us, in a brief new survey.

We’re particularly interested in exploring how public money is spent on ELCC, and what the impact has been on children, and their parents and carers, from the recent changes to the system.

Icon_A_B_AS-04These changes include:

  • An increase in the number of funded hours available for three and four year olds from 475 to 600 hours a year;
  • Provision of funded places for some two year olds;
  • An increase in the flexibility of the services, such as offering places with different hours or in different settings, dependent on local need

These are the areas we’re primarily interested in, but we also want parents and carers to let us know if there are other aspects of ELCC they think we should look at when we begin our work.

By telling us about their experiences and what areas they think we should be focusing on, they can play an important role in helping to make sure public money is spent properly, and creates positive outcomes for the people who rely on vital services like ELCC.

So if you’re a parent or carer of an eligible child (or children!), please spare a few minutes to help us build a picture of what’s happening across the country, what’s important to you and your family, and the kinds of issues we should cover in our work.

We’ll run the survey until the end of August and post further updates here and on our website as our audit starts to take shape. Why not sign up to our newsletter when you complete the survey, so we can send updates straight to your inbox?

About the author

MM6A5569Rebecca Smallwood is an auditor and joined Audit Scotland in 2008. She has worked on a number of audits with a health and social care focus, including community health partnerships, emergency departments and reshaping care for older people.