Scotland is gearing up for a significant reshuffle of its post-compulsory education funding framework, aiming for implementation by autumn 2026. The changes, announced after extensive consultations, address longstanding criticisms of fragmentation and inefficiency in the skills funding system, as highlighted by James Withers in his comprehensive review.
Streamlining the Funding Structure
Under the proposed reforms:
- Scottish Funding Council (SFC): Will assume responsibility for all post-school funding, including apprenticeships and training currently managed by Skills Development Scotland (SDS).
- Student Awards Agency Scotland (SAAS): Will take over student support for further education, relieving the SFC of this responsibility.
SDS will continue to handle careers information and guidance, but its direct funding roles will be phased out. This restructuring leaves Scotland with two primary entities: one funding body (SFC) and one student support distributor (SAAS).
Why This Model Was Chosen
During the consultation process, two models were considered, with the chosen option representing the less drastic approach. A key factor influencing this decision was the practicality of implementation and the preferences of stakeholders.
The consultation revealed mixed opinions on some aspects but a clear focus on the broader funding question: “How much funding is available?” rather than “Who handles it?”
While there was no overwhelming justification for keeping SAAS as a standalone body, it was marginally preferred by respondents (44% to 35%). The alternative—a full merger of SAAS into the SFC—was seen as unnecessarily complex with limited strategic gain.
Challenges and Opportunities
This restructuring marks a significant step toward a more unified approach to Scotland’s skills and education funding landscape. For Francesca Osowska, the incoming chief executive of the SFC, this new structure offers a chance to adopt a landscape-wide perspective, akin to the integrated approach seen in Wales with the Commission for Tertiary Education and Research (CTER).
However, challenges remain. Despite streamlining funding responsibilities, the Scottish government has given no indication that the SFC will gain flexibility in allocating funds across the skills system. Budgets will likely remain tightly itemized, leaving stakeholders to navigate detailed annual allocations.
The timeline for these changes—autumn 2026—is also ambitious, given that Holyrood elections are scheduled in the interim.
New Powers and Oversight
The consultation also explored the potential for enhanced governance and powers for the SFC. Notably:
- Strengthening data collection processes was widely supported, particularly in light of financial sustainability concerns within the higher education sector.
- Calls for greater financial oversight have grown louder, with higher education minister Graeme Dey linking such powers to the SFC’s ability to address crises like those faced by some Scottish universities.
However, proposals for new powers of intervention faced resistance, with many stakeholders arguing that the SFC already possesses sufficient authority for its current role. Critics emphasized the need to focus on implementing reforms before revisiting the question of expanded powers.
Next Steps
Legislation to enact these changes is expected in the coming weeks, with parliamentary debates likely to focus on:
- The extent of new powers granted to the SFC.
- Strategies for addressing financial pressures on universities and skills providers.
- Ensuring that the restructured system delivers tangible benefits to Scotland’s education and skills sectors.
This reshuffle may not address all concerns about funding adequacy or strategic flexibility, but it represents a step toward a more cohesive and efficient system for supporting Scotland’s learners and workforce.
