HC Deb 18 December 1980 vol 996 cc320-2W
Mr. Ancram

asked the Secretary of State for Scotland what will be the net effect on the public sector borrowing requirement of the proposed closure of the three colleges of education in the years 1981–82, 1982–83 and 1983–84.

Mr. Alexander Fletcher

[pursuant to his reply, 15 December 1980]: I expect the closure of Callendar Park and Hamilton colleges of education, and the merger of Craiglockhart college within another institution, to result in savings in public expenditure which would allow a net reduction in the public sector borrowing requirement.

Precise estimates of savings and costs cannot yet be made because they will depend on the means by which, and the period over which, my right hon. Friend's decisions are implemented. On certain very broad assumptions, however, an approximate estimate can be made of the overall savings and costs at current prices involved in reducing the number of colleges from 10 to 7. These assumptions and costings are all subject to revision in the light of detailed consultations with the colleges concerned and other interests affected.

For the purpose of the costings set out in the table below, it is assumed that:

  1. (a) the overall number of students, including those receiving in-service training, would be as at present;
  2. (b) in the remaining 7 colleges some 90 academic and 40 non-academic staff would be required in addition to existing complements; and
  3. (c) There would be additional costs of £50,000 in connection with the provision of in-service training.

£m
(1) (2) (3) (4) (5)
Present Cost of 10 College System Present Cost of 7 Colleges Initial Direct Saving (ie (1)-(2)) Offsetting Additional Costs (Receipts) Net Saving (ie (3)-(4))
Academic salaries 14.3 12.4 1.9 1.2 0.7
Non-academic salaries 7.2 6.3 0.9 0.2 0.7
Other expenditure 6.8 5.6 1.2 0.1 1.1
Gross expenditure 28.3 24.3 4.0 1.5 2.5
Tuition fees 4.6 4.2 0.5 (0.5) —
Other income 0.4 0.1 0.2 — 0.2
Total income 5.0 4.3 0.7 (0.5) 0.2
Net expenditure 23.3 20.0 3.3 1.0 2.3

The estimated savings on grant-aided expenditure (£2.3 million) brought out in the above table will be offset by the following items:

  1. (i) The estimated net additional cost of compensating staff made redundant as a direct consequence of closure and amalgamation of colleges who would not in any event have become redundant because of reductions in student numbers. This sum will be the greatest in the first year and will diminish rapidly thereafter; provisional estimates are £1,700,000 in the first year, £550,000 in the second year and f450,000 in the third year.
  2. (ii) Any additional capital costs incurred in structural alterations to the remaining seven colleges to accommodate staff and students from the three colleges to be closed or 322 merged—provisionally estimated at £500,000 over a three-year period. This sum, however, will itself be offset by the reduction in normal maintenance costs which will result from a reduction in the number of colleges.

Thus, in round terms, I expect that the savings in the first three years after closure will be £0.45 million, £1.6 million and £1.7 million, respectively.

None of the foregoing estimates takes account of (a) any capital sums arising from the disposal of surplus accommodation as a result of closures, or (b) any savings resulting from the transfer of such accommodation to other educational training purposes.