David Kernohan is Deputy Editor of Wonkhe

Every higher education institution in the UK is facing similar challenges right now. But the response in Scotland demonstrates real ambition for the future.

The Scottish Funding Council will overshoot the deadlines in the response to the initial government request for a review of “coherence and stability”, looking across both HE and FE sectors. The design was always for three phases:

  • Phase one, released yesterday, was to make recommendations around short-term and immediate stabilisation and to set out the wider terms of the review.
  • Phase two, originally due to complete in December 2020 and now planned for February 2021, will make a further assessment of stability and move towards more detailed options for structural and funding
  • Phase three, now due in “early summer” rather than May 2021, will move into implementation planning.

It can hardly be blamed for a small overrun – Covid-19 is a complex and changing set of circumstances with impacts into the far long term of system planning and provider-level risks. We should take heart that the substance of the phase 1 report is situated within wider narratives of change and development rather than sheer reaction – the review will build into a meaningful vision for the future of tertiary education in Scotland.

A wider frame of reference

A particularly welcome feature of this report is the absence of what may be called cultural agitation. Reading the various responses to the pandemic from English government and regulators, we become inured to a certain distaste towards the very idea of higher education. We’ve gotten used to FE being pitched against HE, and newer forms of skills provision being pitched against the offers from established providers. To possibly labour the point, you can’t even get an emergency loan in England unless the DfE is able to assure itself that you won’t go funding any SU Sabbs with the money.

There is none of that here. Right up top we’re into stuff on the consultation responses that highlighted:

the expression of immense pride in our world-leading education and research system. Our colleges, universities and specialist institutions are major national assets that have significant social, economic and cultural impact.”

That’s not to say the sector would remain frozen in amber, rather:

As in many other countries, the COVID-19 crisis in Scotland has accelerated trends and accentuated issues that were already in play, such as: financial sustainability; pressures on public spending; vulnerabilities from international competition or leaving the European Union; the pace of digital, AI and technological change; demographic shifts; and a changing world of work and of student, employer, government and the public’s expectations of further and higher education.”

We’re coming from a place of knowledge and understanding, of practicality and – yes – pride. And the recommendations flow out from that.


The pandemic and the immediate aftermath (and to a lesser but important extent, Brexit) is the immediate focus of this phase of the review – the 2020-2022 “Emergency Years”. The emphasis here is on sustaining what is already there – an emphasis on collaboration and funding stability aims to bank recent gains in everything from research capacity to social inclusion.

These priorities, and indeed the capital and recurrent funding in place to support students and providers currently, are projected to extend out into the medium term across ten themes. The starting point is the needs of current and future students – with a welcome commitment to listen to student voices – with mental health support and online learning being two clear priorities within that. SFC already supports programmes around student engagement directly with quality and representation – the next phases of the review will refer to a dedicated student advisory group.

Support for online learning – now seen as an “essential core strategy” for every provider, focuses on staff and student digital literacies. I’m enthused by the development of a national repository of knowledge and of collaborative development of teaching approaches – which reminds me of the GLOW project for Scottish schools and the University of Edinburgh Open Educational Resources initiative.

Integrated system

But most attention given to this report will focus on the idea of an “integrated, connected, tertiary education and skills system”. Scotland has been on this path for a while (recently joined by Wales), and in organising most college-level provision into single regional colleges (Glasgow, Lanakshire, and the University of Highlands and Islands consortium are hold-outs, but not for long it seems) the basics of a demographic and skills needs based funding model already exists.

That said, I detect a certain squeamishness around applying a similar planned approach to HE – even though student numbers are funded based on a target rather than market forces. The stuff on progression pathways and “stackable credentials” is all present and correct – but nothing really prepares you for the raw power of a fully integrated tertiary funding model by SCQF level.

Scottish Credit and Qualifications Framework levels 7 and 8 are delivered variously by schools (the Advanced Highers are level 7), colleges (SVQs, HNCs and HNDs) and universities (CertHE, DipHE – or the first two/three years of a degree). As things stand currently all of these things are funded in different ways and with different constraints, even though the logic of the SCQF framework defines them as equal but distinct. It is very reasonable to argue that each should attract the same level of funding and the same oversight.

Some respondents to the consultation were keen on this idea (perhaps with half an eye on Philip Augar’s proposals in England or the ongoing developments in Wales). The case to combine this with a renewed emphasis on articulation is accepted in a drive to gather more information into the way articulation currently works.

Let’s work together

It’s worth bearing these ideas in mind as we look at the recommendations on collaboration. As the report makes clear:

As public finances become increasingly pressured, in part through the likely effects of COVID-19 on economic recovery, institutions will need to take difficult decisions about what they can afford to provide and how best to provide it.”

There’s a recognition that a lot of this has already happened within providers, and a logical next step would be to think across providers. The lessons of Wales have been learned – front and centre we see a recognition that such arrangements are best considered before a financial crisis point, and that there is not a single model of collaboration that could or should be mandated. However the examples given are instructive – we see an “integrated college/university regional partnership” and an “integrated tertiary model” for both compact regional providers and subject area provision (the example given is the rural economy), alongside the usual stuff on back-office savings and flexibility.

It’s here we get clarity that Lanarkshire will move to the single regional college model, and that Glasgow is starting on that same road. I’m interested to note that SFC sees more scope for consolidation and alignment within the constituent colleges of the University of the Highlands and Islands.

Money talks

There’s so much we don’t know about funding in 2020-21. In Scotland, a funded rather than fee-based system cuts out a lot of the uncertainty about home and EU students, but international income plays – if anything – a wider part in the cross subsidy of other activities. The review comes alongside some traumatic financial forecasting for the whole sector – the picture is mixed but some institutions are likely to suffer a lot more than others. The focus of universities is on their cash position – and on covenants across borrowing.

It’s these issues that appear to have led to may consultation respondents indicating that they:

do not believe the current system of colleges and universities is financially viable into the medium term”

One technical measure under consideration is the reclassification of colleges away from the public sector (in line with the Cumberford-Little recommendations) – thus allowing both for the accumulation of reserves and less restrictions on borrowing and other transactions. This would require primary legislation.

For universities, fees are still not an option. We’re back to regional planning as a part of the answer – based on a similar demographic model to that used in FE, but this is caveated by a clear recognition that:

Students may choose to travel to a particular university or college outwith their local region because of the reputation of the institution, for preference or to study a particular subject or take part in a particular programme; non-Scottish domiciled students will study in Scottish institutions self-funded through tuition fees. And some national institutions will not naturally fit a regional planning model”

Such experiments would inform rather than direct a funding model, but it is certainly more sophisticated than the existing volume measures. I’m not expecting a speedy revolution as a result of such planning, but the eyes of regulators in other UK nations will be viewing developments with great interest. The pendulum may be swinging away from market forces – and there are clearly other ways to approach the suggested input or output measures.

On number controls there is a recognition that the full costs of tuition and research (as estimated with the TRAC methodology) is not covered by state funding. There’s a couple of alarming ideas on the table:

  • Consolidation of courses across providers (likely to become an increasing area of focus!)
  • Reducing student numbers to raise the unit of resource – less students, more money per student. This would be done via the use of flexibility margins.
  • “Fee-only” places available to providers who can afford them.

The integrated future

Integrated planning and collaboration naturally raise the question of an integrated funding model. Very much within the SFC wheelhouse, a “single budget line” for colleges and universities would allow for the parity described above and support the movement of places between colleges and universities based on identified regional needs. There’s an interest in performance based funding premiums – rewarding providers who offer better outcomes to students, with a particular focus on graduates from areas of multiple deprivation or care-experienced graduates.

If all this has you thinking about changes to Outcome Agreements, you’re on the same page as SFC is. Though not the entirety of SFC regulation (the QA system comes to mind), OAs have been “instrumental in helping to articulate the contribution of the sectors to key government priorities”. There’s been some pushback – Ministers are increasingly loading OAs with new issues, and the design and implementation process places a burden on providers.

So the idea now is to move to a National Outcome and Impact Framework – with streamlined OAs (less metrics) from this academic years. Accountability would be clearer and simpler, with provider statements published alongside data and metrics.

A starting point

For phase one of a three phase report, there is a lot in here. I’ve not even touched on measures around research, innovation, and business. What we see here is less a direct response to Covid-19 (though measures are in there) and more the first part of a wider transformation of tertiary education in Scotland. There’s even ideas of a Transformation Investment Fund to support providers through this process.

Make no mistake, this is the beginning of a series of huge changes. What follows will likely set the pace (and the standard, frankly) for the rest of the UK.

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