Colleges - Tripartite Alignment Group: terms of reference

Context

The College Tripartite Alignment Group (TAG) was set up as a temporary initiative to support collaborative working between the college sector, Scottish Funding Council (SFC), and Scottish Government (SG).

The Group was designed to provide strategic direction on a tightly bound body of work examining and providing options to enhance flexibility and sustainability of college finances. 

TAG was not intended to address all the issues and opportunities facing colleges; it was initially a proof of concept exercise to see how closer working could help us be even more efficient and collaborative in how we tackle prescient and urgent issues.

Membership

TAG will include senior representation from Scottish Government, SFC and Colleges Scotland. A full membership list is available.

The Minister will attend a number of meetings throughout the year, and the Group secretariat will provide a short update on progress to the Minister in between meetings.  

Purpose

At this critical juncture for the college sector, having provided proof of concept, we are rearticulating the purpose of TAG. To ensure it has a clear and useful role in supporting the sector through a period of unprecedented challenge and vital transformation. 

We want to improve collaboration between colleges, SFC and SG, following Purpose and Principles to deliver Scotland's wellbeing economy through trusted relationships.

We want urgent action to deliver immediate benefits to learners and the economy, while supporting longer-term transformation including Withers review recommendations.

The rearticulated purpose of TAG is therefore:

• enhance College Voice - the college sector has its place as an equal partner in a regular forum with SG and SFC which has the buy-in and support of Ministers. Through this forum, colleges suggest and explore creative and innovative ways to make improvements and do things differently for the benefit of learners and the economy. Raising and jointly finding solutions to issues is core to this function
• continue to deliver immediate change, to deliver immediate benefits - it is vital to continue to identify and deliver initiatives that can have a material benefit to learners and businesses, through colleges, in the near-term
• support longer-term initiatives and strategic transformation that improves efficiency, sustainability, and inclusivity, in response to financial challenges and evolving community needs - TAG enables the three partners to engage on strategic sector transformation, part of Scotland's public services reform. We'll prioritise financial sustainability, income diversification, and reviewing funding allocation models to support transformation and deliver skills priorities transparently and effectively

Progress update

There are a number of initiatives TAG has either proactively developed or actively supported which have delivered benefits to colleges in the near-term:

Asset disposals

In January 2025, a Ministerial letter to colleges confirmed a change to the rules around asset disposals enabling colleges to retain a significant proportion of the value of any sale to invest locally.  SFC has developed the formal disposals guidance to support institutions in this process, which was published on 31 July. 

College Transformation Framework

The SFC’s College Transformation Framework went live on 16 May 2025, offering colleges flexibility to transform their curriculum over a number of years. Work is ongoing with a number of colleges to plan for this potential implementation for AY 2025-26, and discussions continue with many colleges on the potential to use this tool to support AY 2026-27.

Evolution of the college funding model

TAG helped inform the thinking of SFC in developing the principles for AY 2025-26 funding allocations.

College Infrastructure Strategy

A formal progress report was published by the SFC on 31 July 2025, highlighting the huge work input by colleges into establishing a baseline. As well as recognising that the vital work now is to support colleges with their strategic and curriculum planning, to inform college infrastructure strategies for investment.

There are a further set of initiatives that are ongoing, which are intended to offer colleges further support to transform and achieve financial sustainability:

Diversifying income streams

The Group is engineering the conditions to enable colleges to diversify income streams (workshop held on 17 June with stakeholders such as SDS, CDN and over 30 college representatives). Also, part of , this workstream includes how we can collectively support cross portfolio funding from within SG, with Colleges Scotland, through the various sector funding bids, providing greater understanding of sector views that will inform future work. 

CDEL/RDEL

The Group is exploring potential to allow colleges to continue to benefit from the switch between capital and revenue for specific purposes.

Employers’ NI

The Group is exploring this issue and will request actual data in its August college cash flow returns, following which, a refreshed position can be considered.

Priority activities

We recognise that as the challenges facing colleges are increasing, it is vital to also support the sector with the longer-term strategic activities that can achieve longstanding change and improve financial sustainability. 

And as part of this, we must use our limited available resources to best effect. To that end, we are also proposing a short, prioritised set of activities for TAG to focus on in the coming year:

Help resolve short-term financial pressures

• address the short-term Resource/Capital pressure for colleges
• coordinate early engagement with SFC and SG on SG’s Budget for FY 2026-27 and the Scottish Spending Review to maximise opportunity for college funding
• front-load development of AY 2026-27 funding allocations, with transparent and straightforward approach

Provide foundations for transformation

• step change in improved collaboration between colleges, SFC and SG
• sharing and implementing best practice across the sector, including income generation and cost efficiencies
• pilot the College Transformation Framework, with further evolution to support AY 2026-27

Support strategic transformation

• gaining a collective agreement on the aims for the college sector for 2031
• supporting strategic, curriculum and workforce planning, to deliver national and regional skills priorities
• completion of College Infrastructure Strategy, including the Implementation Plan and exploring funding routes, informed by above plans and utilising new disposals guidance, to create pipeline for investment in transformation
• fundamental review of the funding allocation model, to provide flexibility and enable transformation to deliver national and regional skills priorities