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I accept that. I noticed that you were quiet on the issue of tuition fees, so you probably understand. However, in all seriousness, you are right to push me on this issue, because it is incredibly important.

The success of the pilot projects really encouraged me. I was blown away by what I saw. We are trying to learn from those. We are trying to encourage the colleges to get involved, which they did not do last time—to be fair, I think that that was just about the short notice that they got—and develop and build on those projects. Budget permitting, I would like to ramp this up pretty quickly. However, I stress that that is budget permitting.

I am glad that you raised that comment, because I read it and was slightly bemused by it. I will take a little time to explain why.

If the college sector is looking for clarity on the raft of asks that it has—historical asks and implicit asks—it is a fair point that we could clarify those in conversation with the colleges and consider the prioritisation of some of them. If that is what Shona Struthers means, I have some sympathy with her. However, if her comment is about the future direction of travel, I think that we have been clear with the colleges about what we are looking for. We are looking for better alignment with the needs of the local economies, where that is required—I stress those words—and improved interaction with employers, so that courses are better aligned with employers’ needs and therefore offer sustainable employment for students. We are also looking for colleges to be at the heart of skills planning, if they are not there already, and we want to exploit the potential for colleges to come together and become managing agents for a collective in certain disciplines of apprenticeship delivery.

Those issues have been discussed multiple times in multiple settings with the colleges. If the suggestion is that they are waiting for a steer from Government on how to operate in that regard, that flies in the face of what I see when I am out and about. I am a bit confused by that when I think about what Jackie Galbraith is doing at West Lothian College in a multitude of ways on employer engagement and innovative courses, about what Neil Cowie is doing at North East Scotland College, which is forging ahead and meeting the needs of the local economy and has great bilateral relationships with the two universities, or about what Dundee and Angus College is doing. In its written evidence to the committee, the Fraser of Allander Institute acknowledged that that work was going on but that it could be developed across the sector.

I make the point that I think that we have been clear. If we have not been clear, we will reiterate the position with the colleges. I have meetings with them in the next few weeks, at which I will take the opportunity to clarify matters in whatever way they feel is needed. However, my reading of the situation is that a number of colleges absolutely understand what they are doing and are getting on with it, so the challenge is to bring the sector into that space.

I am not aware of any discussions of potential mergers between colleges or universities, and merging institutions is not on our agenda. However, I am aware of—and encourage—the development of a more collaborative working approach between universities and colleges, not just in the sense of articulation. The University of the West of Scotland is a good example of that, as it is particularly active in that regard and has a close working relationship with Dumfries and Galloway College. Similarly, Queen Margaret University is doing some stuff in Fife and, as I mentioned earlier, NESCol is closely engaged with the two universities in Aberdeen. That is the kind of space in which we will see growth—in sensible, co-operative working rather than mergers.

If two colleges came to the SFC and said that they thought that it would be in their best interests to merge, and if they had a robust business case, the SFC would look to facilitate that—it did something similar with the University of the Highlands and Islands just last year. However, I am not aware that that is on the agenda.

The subject of shared services is interesting. We all hear talk about shared services being the way forward but, in my experience, those proposals rarely come to fruition, sometimes because of certain impediments. I am not entirely sighted on this, but a university said to me at the weekend that one impediment to having shared services is VAT—I will interrogate that a bit more to see what lies behind it.

It is obvious that having shared services would be a good way to go forward, but it does not happen often. Any institutions that are thinking about it are responsible for making progress on that but, if there were impediments that we could be part of helping to remove, we would look to accommodate that.

One of the difficulties in trying to answer a question as honestly and openly as you can is that you might set hares running. I read the article in question and it was accurate. That is what I said. I was simply trying—and I will do the same today—to weigh up why it is not possible to be definitive at this stage. To give a current example that is relevant to the education budget, the Educational Institute of Scotland recommended a teachers’ pay settlement offer just yesterday. We await the outcome of that, which has financial implications. We are also waiting to learn what consequentials relevant to teachers’ pay might be coming from the United Kingdom Government and when they might come. We do not have those numbers or that outcome, so there is a degree of uncertainty.

Of course, unexpected issues can arise in-year. I cannot sit today and categorically rule out the possibility of in-year savings having to be made. However, I am not saying that that will or might be necessary. It is difficult to tell at this stage.

Where and when we are confronted by such a situation, we focus, as you have indicated, on budget lines that are demand led. As I did when we last engaged on this issue, I undertake to keep the committee updated on any changes that occur. I cannot be any more definitive on that, partly because of the example that I have given you.

We will bear that in mind.

As you well know, Mr Rennie, I am always advocating for universities, colleges and apprenticeships with some degree of passion. I was simply weighing out an answer to the convener’s question. Of course I want more money for all those things, but I am in a similar position to the committee. You are the Education, Children and Young People Committee and you have to look at the overall picture in education. I am sure that you are cognisant of the fact that if, out of this process, you called for more money for colleges, universities, apprenticeships or all of them, that would have to come from somewhere. We are in the same position with the education budget.

I am not in any way a bystander in the matter. I advocate strongly for all those interests. I just recognise that the situation is not entirely within our control, so I cannot rule anything out or in at this stage.

Anecdotally, I hear the same thing from businesses and colleges, and I am not going to deny that. I said earlier that we tried, wherever possible, to target redistribution of money within the budget—or cuts; whatever term you want to use—on demand-led budget lines, but that is not always possible. Unfortunately, those funds were two examples of where it was not possible to avoid a situation that I would rather have avoided. It would be good to be in a position to reinstate one fund, if not both, but we are—unfortunately—not in that position at the moment.

We are aware of the situation that exists “down south”, as you term it. We are aware that some colleges are facing more considerable challenges than others. The Scottish Funding Council is across that situation and is providing assistance.

I do not think that there is an immediate issue, but we are working with all colleges and universities to ensure that they have a sustainable future.

You have been keeping tabs on me, convener.

That is a projection based on this year. Stuart Greig can explain the basis of that.