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Letters / Legal status of new college is ‘fundamental to its future’

EIS-FELA Shetland College branch are writing to you in connection with the proposals to merge Shetland College, Train Shetland and NAFC Marine Centre.

Whilst EIS-FELA is supportive of the proposed merger in principle, we have very significant concerns about recommendations that the new merged college will be privatised.

We believe that the legal status of the new college is fundamental to its future. Any moves to privatise the new organisation would be detrimental to the future provision of further and higher education in Shetland. There are twenty incorporated colleges (i.e. in public control) across Scotland, out of twenty-six colleges in total.

The new merged college will be funded predominantly from public funds and therefore needs to be subject to democratic public accountability and the scrutiny of Audit Scotland, in line with public sector finance requirements. If it was to become a private company, it would also not be subject to other areas of scrutiny, such as Freedom of Information (FOIs) requests.

We are very concerned that if it was to become privatised i.e. a company limited by guarantee (only £1 for each board member), then it could be wound up without recourse to the Scottish Parliament – clearly this would have a devastating effect on students and Shetland as a whole. These concerns are shared by the vast majority of the public we have spoken to and who have signed our paper based or online petition.

There has been some misleading information, that needs to be corrected. To be clear, if the new merged college is incorporated (i.e. democratically accountable to the public), then it would be a charitable organisation, as is the current situation with incorporated colleges throughout Scotland. It would be accountable to the regulator OSCR and, contrary to previous reports, this would enable the NAFC Marine Centre, to be part of any new merged organisation.

There have also been repeated suggestions that if the new college was privatised, it would have a greater ability to generate funds from external sources. This is very misleading. As a charitable organisation, an incorporated college will have access to the same sources of funding as a private company limited by guarantee.

It is crucial that the new merged college is financially sustainable, but surely this is more about operating a small surplus every year rather than building large amounts of reserves, particularly when they are being sourced mainly from public monies. It is worth noting that in 2019, Audit Scotland reported that, five of the six non-incorporated colleges were “projecting a recurring deficit during the next five years”.

Incorporated bodies are regulated by Scots law and are accountable to the Scottish Parliament.  However, unincorporated colleges can change their governance structures by amending their Articles of Association. As such, changes to governance arrangements are recorded at Companies House and controlled by Company Law which is a reserved matter for Westminster.

It is clear that the creation of a company limited by guarantee, essentially results in the delivery of tertiary education by a private company. Given the level of public funding, which is invested, we believe that the delivery of FE and HE in Shetland deserves the same level of democratic public accountability, security and parliamentary oversight as is applicable to the incorporated bodies in all other areas of Scotland.

EIS-FELA has raised these concerns directly with the shadow board and Shetland College board members. However, perceived concerns about financial flexibility and the “need” to accumulate reserves are driving decisions around the legal status of the new entity.

We would urge your readers to oppose the privatisation of further and higher education in Shetland by signing our petition, which will help to ensure that the new college is incorporated, and as such, democratically accountable to students and the public. The delivery of tertiary education to students throughout Shetland deserves no less and should be protected in the same way as it is for students in all other areas of Scotland.

Shetland College Branch

Scottish Parliament election, 6 May 2021