Investment ‘badly needed’ in college sector amid funding cuts, says trade body

Investment in Scotland’s colleges is “badly needed”, a trade body has said as funding has been cut in real terms.

The Scottish Funding Council (SFC) announced its allocations to each college on Thursday, with just eight of the country’s institutions given a real-terms increase in funding.

Colleges Scotland – the body which represents the sector – has said it is “critical” more funding is provided following a 17% drop since 2021-22.

In total, £522.5 million has been provided for colleges in 2025-26, up from £509.2 million last year but below the rate of inflation.

Graeme Jackson, chief executive of Colleges Scotland, said: “The allocations announced today confirm that eight colleges will receive funding which is above inflation. The remaining colleges and college region will receive funding which is at or below inflation.

“We appreciate the effort that the Scottish Funding Council has gone to in terms of revising the model which decides the funding for each college. Unfortunately, the mitigations on offer to transition to the revised model haven’t been explained in full to the sector as yet.

“Increased employer national insurance contribution costs for colleges are also incredibly concerning and will cost colleges millions of pounds. Colleges Scotland will continue to raise this issue with the Scottish Government – in England colleges are receiving 100% of additional NI costs.

“College funding overall has dropped 17% since 2021-22 and more investment is badly needed to provide students with the right skills to help critical sectors of the economy grow.

“Colleges also have a major and under recognised role in alleviating and preventing poverty, so it is critical that the overall funding picture starts to improve, and soon.”

SFC chief executive Francesca Osowska said the body had “worked hard” to provide fair allocations in a “difficult financial environment”.

She added: “Changes announced today follow discussions with key groups within the sector and are accompanied by measures to mitigate any adverse impact on individual colleges.

“The announcement looks towards safeguarding college education in the long term as well as supporting next year’s college students by investing in the opportunities they deserve.”

Scottish Labour education spokeswoman Pam Duncan-Glancy said the sector had been “let down” by the Scottish Government.

“Colleges are engines of skills and anchors in their communities – it is socially and economically incompetent for the SNP to inflict these cuts,” she said.

“Our economy is being held back by skills shortages, Scottish students are missing out on opportunities, and college staff need support, but the SNP continues to undervalue the sector.

“The SNP cannot keep paying lip service to colleges and skills whilst raiding the sector’s budget year after year.

“Scottish Labour recognises the value of colleges and will support them to skill our workers and support the communities in which they serve.”

But colleges minister Graeme Dey said: “Our colleges have an important role in providing those who have the greatest barriers to learning with the opportunity to fulfil their potential, whether by upskilling for future careers or providing strong pathways to higher levels of study at college and university.

“That’s why in the Budget we provided a 2.1% uplift for colleges, and an additional £3.5 million to support colleges to create a pipeline of skilled workers in offshore wind and social care.

“Individual colleges are best placed to respond flexibly to emerging trends at local and regional level, and the indicative allocations published by SFC will enable colleges to move forward with planning for academic year 2025-26.

“The 2.6% increase in teaching funding compared with last year includes an additional £4.5 million for lecturers’ pay and £8.3 million for pensions, while an increase of almost 5% in capital maintenance funding will help colleges further invest in student’s learning experiences.

“The student support budget has been maintained at the same level as last year, despite pressures on the public purse.

“The college sector called for greater transparency and the ability to compare funding for students on similar courses across institutions, and the SFC has been able to meet that ask.”