All Scottish Universities facing a deficit in the next academic year, report reveals

The briefing paper, from the Scottish Parliament’s Information Centre (SPICe) says an ‘optimistic’ scenario shows a deficit of £383.5m for Scottish Universities.

Old College, the University of Edinburgh
Old College, the University of Edinburgh

A predicted collapse in the number of international fee paying students will lead to every university in Scotland losing money in the coming academic year, new figures from the Scottish Parliament Information Centre (SPICe) has said.

The briefing paper paints a dire picture for Scotland’s Higher Education sector following the impact of Covid-19 and comes just weeks after wide-ranging job cuts were announced at several universities including the University of Edinburgh and Edinburgh Napier.

All 18 universities in the country are expected to report losses as the predicted drop in international students bites the sector.

Tuition fees make up the largest proportion of sector income at 32 per cent, with international student fees making up 57 per cent of that figure, meaning more than 15 per cent of the sector’s income is tied up in continual recruitment of international students.

Overall, the Covid-19 pandemic has cost Scottish universities around £72 million, but a deficit of between £450 and £500 million is expected for the 2020/21 academic year.

The report states a best case scenario could see an operating deficit of £383.5 million for the sector, but a worst case scenario could see that number balloon to £651 million.

Prior to Covid-19 the sector was generally in good financial health but with ten universities reporting a deficit for more than a year or moving from a surplus to a deficit between 2015 and 2019, the report notes “there was significant variation between institutions”.

Despite this, the report suggests that the final numbers for 2020/21 are “encouraging” with a three per cent increase in applications overall and a 16 per cent increase in international student applications compared to last year.

It states: “Coronavirus will have an impact on universities for the foreseeable future. While the immediate impacts have largely centred around the logistics of remote learning, teaching and assessment, as the new academic year approaches the sector will face new and considerable financial challenges, adding to existing pressures.

"It is not yet clear what final numbers of tuition-fee paying entrants will be for AY (academic year) 2020/21. While the sector is braced for a significant fall, interim applicant figures remain encouraging.

"While the final entrant and returner numbers will only be known once the new academic year begins in September, they have provided an encouraging boost for the university sector and shows efforts to promote UK universities to international markets may be paying off.”

The Scottish Funding Council (SFC) is continuing its review into the funding and future provision of colleges and universities following Covid-19 to look at how to help the sector continue to operate sustainably.

The report ends: ”If the final numbers - particularly for international students - bear out and student numbers remain stable or there is an increase in entrants, this will in turn aid efforts to stabilise university finances going forward.

"Even so, the months ahead are uncertain and will pose new challenges for the sector.

"The SFC's review will likely be the first major step on a journey toward reshaping higher education in Scotland - not only to address the financial challenges resulting from oronavirus but also to meet Scotland's skills needs for the post-virus economy.”

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