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Council / ‘Milestone’ reached as councillors approve business case for college merger

Shetland College.

THE MERGER of Shetland’s tertiary education sector has reached a “key milestone” after councillors gave their backing to a business case which will ultimately go in front of government ministers.

It came a day after an online protest was held by education union EIS-FELA against the proposed legal status of the new college amid a concern over what it called the “privatisation” of education.

Local branch secretary Andrew Anderson said the “campaign will continue”, but it will be focused towards the Scottish Government.

Shetland’s councillors met in a virtual meeting on Wednesday morning and one of their tasks was to consider and note the content of the college merger’s final draft ministerial business case.

They did just that, while they also agreed and endorsed the proposal to merge, and approved governance arrangements and responsibilities for the new merged entity.

Plans to bring the NAFC Marine Centre UHI together with the council-operated Shetland College UHI and Train Shetland together in a new entity under the UHI umbrella have been rumbling on for years, but back in December 2018 councillors gave the idea their formal backing.

Since then work has been undertaken on forming a business case for the merger, with the ‘vesting’ date when the new college – due to named the Shetland Institute UHI – would begin operating potentially slipping back to March 2021.

Shetland Islands Council’s corporate services director Christine Ferguson said the approval of the ministerial business case, which will go in front of the Scottish Funding Council and the Scottish Government, was a “key milestone”.

“It’s really important that this milestone…is not delayed any further,” she warned.

Councillors were told that savings of around £1 million a year would be achieved upon the new entity launching.

The ministerial business case shows that £3.6 million will be requested from the Scottish Funding Council over five years to provide cashflow management security and capital investment funding.

The council, meanwhile, is set to lease the college and NAFC buildings it owns to the new entity for £39,000 a year.

The textile facilitation unit at the college will also be transferred to the new entity for a capital investment cost of £100,000.

Question marks, however, over the finances of the trust which runs the NAFC Marine Centre in Scalloway have been raised during the merger process.

In 2018/19 and the current financial year the NAFC has used reserves to meet the operating deficit as it continues to spend more than it receives.

This led to members of the board overseeing the merger being warned last year that one “alternative scenario” to the process is for the Shetland Fisheries Training Centre Trust – a charity which operates the NAFC Marine Centre – having to wind up before the merger completes.

Councillors were told that “for the merger to proceed it is essential that each organisation is able to continue to deliver to the point of vesting”.

“To ensure that NAFC in particular can continue, additional financial support of approximately £0.6m is required,” a report continued.

“This would cover the current financial year (2019/20), and next (2020/21) by which time vesting must have been achieved. The success of the merger is contingent upon interim stability funding to both partner organisations.”

A report on traditional funding relating to the college merger was later heard in private due to financial sensitivity. Trustees of NAFC Marine Centre also recently approved the business case.

Shetland College principal Jane Lewis, who will lead the new merged organisation, said during Wednesday’s meeting that the business case was about “securing the future of tertiary education in the islands”.

She said the offering for students at the Shetland Institute would maintain existing courses, and remain closely linked with economic activity in Shetland.

Westside councillor Catherine Hughson asked how up to date the financial figures were in the business case, with Lewis saying they were reviewed from January to March this year.

“They are the most up to date figures that they could be, obviously before the present issues came on board,” she said.

Lewis admitted that there is “no doubt that the future will be challenging”, with the new college needing to be active in getting funding.

The council’s finance chief Jamie Manson said the figures were “cautiously optimistic”, but there was flexibility allowed with the numbers.

The legal status of the new college body is set to be unincorporated, which the EIS union says would mean that it would sit outside of governance arrangements for Scotland’s public sector further education colleges.

The EIS had also criticised that it would not be allowed to listen into the meeting as an observer.

Ferguson said that there were financial benefits to being unincorporated, although the final decision rests with the Scottish Government.

Lewis, meanwhile, said she believed that the incorporated model was better suited to further education facilities, with non-incorporated more appropriate for universities.

She said the new college would still be placed under high levels of scrutiny.

College board chairman Peter Campbell referenced West Highland College, which he said had a surplus of £380,000 at the end of the 2018/19 financial year.

The Lerwick councillor said as the college is non-incorporated it was able to put that surplus back into the facility.

As the meeting moved into debate, Campbell referred back to December 2018 as councillors gave the merger the green light, when he proclaimed it was the “end of the beginning”.

“Now we are the beginning of the end,” he said on Wednesday.

Education and families committee chairman George Smith said “we should not underestimate the amount of work” that has gone into the business case.

He said it would make for a “single, stronger voice” in the education sector, although he believed that the financial projections in the business case would change over time.

The business case was given widespread approval from councillors across Shetland who were communicating together thanks to Microsoft Teams.

North Mainland member Andrea Manson said her email inbox had experienced some amount of “angst” recently regarding the status of the new college.

But she said the new entity would “always be a public body given that it will be Shetland’s institute”.

Shetland Central member Ian Scott warned against the new college’s board going the way of Shetland Charitable Trust, which no longer features any elected members.

Fellow central member Moraig Lyall, meanwhile, stressed the need for progress – with the new college potentially able to support the Shetland economy post-Covid-19.

“Let’s not delay any further,” she said. “Let’s get it wrapped up and sent off to the minister.”

Council depute convener Cecil Smith added: “This can work, and will work, but everybody needs to pull together from now on in.”

The last word went to SIC convener Malcolm Bell, who hailed it as a “really important milestone”.

Speaking after the meeting EIS-FELA Shetland branch secretary Andrew Anderson said the decision came as no surprise and suggested it was already a “done deal”.

He reiterated that the union is in favour of the merger, but he said the branch was disappointed that the non-incorporated model continues to be preferred way forward.

“The campaign will continue, and that campaign will now be focused on the Scottish Government,” Anderson said.

In a statement released after the meeting, co-chair of the college merger shadow board Davie Sandison, who is chair of the Shetland Fisheries Training Centre Trust, said:  “A massive stride has been taken in the process toward the creation of the new Shetland Institute UHI.

“We have an opportunity now, working alongside our staff and students as well as local industry and the wider community, to secure the future of tertiary education and research in Shetland. We now look to the key external bodies involved in the formal approval process to ensure the timeline for Scottish Ministers to sanction the plans is met.”

Fellow shadow board co-chair Peter Campbell added: “This is a critical milestone on the way to merging these bodies, and I’m extremely pleased that we have reached this point after a long period of hard work by staff across all areas.

“The MMBC [ministerial merger business case] presents the case for a new, unified college to serve the Shetland community – something which will be of critical importance as the isles contemplate the future post-coronavirus.”

Once the government receives the ministerial business case it will begin its own 12-week consultation period.

It is expected that in December ministers will notify their decision to Shetland Islands Council and the NAFC Marine Centre.