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The implications of the decision of the Office for National Statistics to reclassify colleges as part of central government in Scotland are as follows;

(a) Borrowing - Consolidated Budgeting Guidance, available at:

http://www.hm-treasury.gov.uk/d/consolidated_budgeting_guidance_201314.pdf

sets out the treatment of borrowing for central government sponsored bodies at chapter 9. Scottish Ministers are committed to working with colleges to minimise the impact on Scottish budgets from this change whilst maintaining any planned investment funded from borrowing.

(b) Learners – none. We set out our ambitions for improving the Post 16 education system for our learners in 2011 through ‘Putting Learners at the Centre’. Those ambitions remain following reclassification.

(c) Planned Capital Programmes in the college sector – Ministers are committed to working with colleges to maintain their current capital investment plans. Ministers have already taken steps to mitigate any risks to the affordability of the three college NPD projects, by ensuring the continued use of accumulated reserves for the purpose defined within their business cases.

(d) Procurement – none. We do not expect reclassification to have an impact on procurement. Colleges are already subject to EU Procurement Directives and would continue to be so when reclassified as central government bodies.

(e) Charitable status – none. Reclassification will have no impact on the charitable status of the affected colleges.

(f) College governance – none. Existing arrangements and our plans set out in the Post-16 Education (Scotland) Bill currently before the Scottish Parliament are unaffected by reclassification.

(g) Access to European Structural Funds (ESF) – none. We do not expect reclassification to have an impact on colleges’ ability to access ESF.

(h) Capital funding and investment – none. Ministers will maintain previously announced levels of capital funding and investment to colleges.

(i) Commercial income – none. Reclassification does not impact on colleges’ ability to secure commercial income.

(j) UK wide activity – none. We do not expect reclassification to have an impact on UK wide activity undertaken by the affected colleges.

(k) International activity – none. We do not expect reclassification to have an impact on international activity undertaken by the affected colleges.

(l) Reserves - Consolidated Budgeting Guidance sets out the treatment of reserves for central government sponsored bodies at chapter 9. Ministers are committed to working with colleges to find ways of mitigating the impact of the change on deployment of reserves.

(m) Unincorporated colleges – none. The ONS classification decision relates only to incorporated colleges.

UK Government Ministers have insisted that we must begin implementing the ONS decision with effect from 1 April 2014.

Colleges were notified of the change in 2010. Since then Scottish Ministers have been raising objections with HM Treasury on the basis for the decision, the timing of implementation and the scope for mitigating the implications.

The Cabinet Secretaries for Education and Lifelong Learning and Finance, Employment and Sustainable Growth held a positive and constructive meeting with college Chairs and Principals on 13 May to discuss the impact of reclassification.

The Cabinet Secretary for Education and Lifelong Learning met with the Regional Leads on 14 May. A Project Team has also been established and met with the college Finance Directors on 23 May.

Implementation of the decision to reclassify colleges will not begin until 1 April 2014.

The ONS’ decision itself does not compromise our ambitions for reform as set out in “Putting Learners at the Centre” in 2011. Nor does the decision affect the rationale for, or ability of, colleges to merge. Ministers therefore remain committed to working with colleges to secure the changes needed to support our learners, employers and economy.

Legislation is not required and to introduce legislation would not be compatible with our policy priorities.

The successful outcomes delivered by our colleges are founded on a partnership between Government and colleges. That partnership has its roots in existing governance arrangements – themselves the cause of reclassification. We have no plans to weaken that relationship between Government and the college sector.

We are creating strong regional institutions of influence, increasingly collaborating across the public and private sectors. Our current plans to strengthen governance complement this new regional structure.

Under the terms of the Public Service Contract between Scottish Ministers and Serco Ltd, in respect of the Northern Isles Ferry Service, the subsidy for providing this service, is paid monthly and not daily. The subsidy provided is not split between the routes which Serco NorthLink operate. The grant payment is therefore paid to cover all the services combined.

Under the terms of the contract, Serco NorthLink are required to pay a penalty whenever the services do not run according to schedule other than in cases where this is due to a relief event. This breakdown of the MV Hamnavoe is not considered to be a relief event and will result in a fixed penalty to Serco NorthLink of £7,732 per return sailing missed. Discussions are ongoing with the operator in respect of what penalties should be imposed following the introduction of the freighter service.

The six year cost of the Scottish Government contract with Serco Northlink is £223 million. The sums paid in subsidy will vary in each year of the contract and from month to month in accordance with the provisions in the contract, particularly in relation to penalties payable to the Scottish Government and provisions in relation to any increased fuel costs payable to Serco Northlink. Serco are paid monthly in arrears.

There were no discussions prior to 25 April 2013 between Transport Scotland and Serco Northlink to consider modifications at Stromness or Scrabster harbours.

Following the unforeseen mechanical engine failure of the MV Hamnavoe, Serco Northlink took immediate and proactive action to bring one of their freight vessels into service on the Scrabster to Stromness route.

Serco Northlink worked in conjunction with the Scrabster Harbour Trust to make alterations to the Queen Elizabeth Berth that have since allowed the freight vessel, MV Helliar, to operate. This service commenced operating on the Scrabster to Stromness route from 2 May 2013. During the period from 25 April 2013 to 2 May 2013 Serco Northlink kept both myself and Transport Scotland officials fully appraised of the modification works at the Queen Elizabeth Berth, Scrabster.

The MV Helliar has been operating two return sailings each day on a broadly similar timetable to the scheduled service. The timetable was established through discussion with local hauliers and it provides a major increase in freight and vehicle carrying capacity across the Pentland Firth.

The Scottish Government believes that the contingency arrangements, put in place, and acted upon, by Serco Northlink, were sufficient following, the unforeseen breakdown of the MV Hamnavoe.

We continue to communicate with Serco Northlink to ensure that all efforts are being taken to minimise any disruption to passenger, vehicle and freight traffic between Orkney and the Scottish mainland.

I refer the member to the answer to question S4W-14746 on 22 May 2013. All answers to written parliamentary questions are available on the Parliament’s website, the search facility for which can be found at:

http://www.scottish.parliament.uk/parliamentarybusiness/28877.aspx.

I refer the member to the answer to question S4W-14746 on 22 May 2013. All answers to written parliamentary questions are available on the Parliament’s website, the search facility for which can be found at:

http://www.scottish.parliament.uk/parliamentarybusiness/28877.aspx.