SFC’s Financial Sustainability of Colleges in Scotland Report

The Scottish Funding Council have today (Thursday 1 October 2026) published its report on the Financial Sustainability of Colleges in Scotland.

The report paints an increasingly urgent picture of the financial challenges facing Scotland’s colleges as already evidenced by Audit Scotland in their Scotland’s colleges 2026 report published last month which found that that overall funding for colleges still remains 7.5% lower in real terms than in 2021.

The Scottish Funding Council report highlight’s the destabilising effect that potential flat cash Scottish Government Budget settlements would have on the college sector, causing “further intensify financial pressures” on colleges already operating in “an extremely tight fiscal environment”.

Gavin Donoghue, Chief Executive Officer of Colleges Scotland, said:

“The Scottish Funding Council is right to highlight that many colleges remain financially unsustainable under current investment levels, and the risk of further destabilisation if they were to face flat-cash settlements in the next Scottish Government Budget.

“This is why Colleges Scotland is calling for further sustainable investment in our colleges, building on the welcome increase in the college budget last year, and seeking to address the 7.5% real-terms cut colleges have faced since 2021.

“The Scottish Funding Council’s analysis underlines the fact that many colleges are operating in an extremely challenging fiscal environment, and there is a clear need for sustainable investment to safeguard the education, training and support that is crucial to the country if we are to sustainably grow our economy and tackle poverty at source.

“This report demonstrates that colleges have already taken significant steps to reduce costs and improve efficiency, including 16% fewer students and 12% fewer staff between academic year 2022/23 and academic year 2024/25. Colleges have done everything possible to balance their budgets, but they cannot continue to absorb current rising costs, or adapt for the future, without additional support.

“Colleges are Scotland’s skills engines and vital community anchors. They provide places of opportunity, aspiration and inclusion, helping people improve their life chances, supporting economic growth, and contributing to national priorities around productivity, equality and wellbeing.

“Colleges look forward to working constructively with the Scottish Funding Council and the Scottish Government in advance of the 2027/28 Scottish Budget to find the sustainable investment required for colleges so they can continue to deliver world-class education, training and skills to over 200,000 people across Scotland each year.”

A copy of the Financial Sustainability of Colleges in Scotland report is available on the Scottish Funding Council website.