'Nothing is off the table' in cost cutting spree amid 'urgent gap' in finances at Scottish university

Staff at Edinburgh University have been left in a state of “alarm and anxiety” after bosses warned schools or programmes could be closed to help the prestigious institution balance the books.

Sir Peter Mathieson, the university’s principal, wrote to employees saying that “nothing is off the table” as part of efforts to stabilise the institution’s finances, raising the prospect of “restructuring”.

The University and College Union (UCU) said it was a “deeply worrying” time for workers, and highlighted it had lodged a “failure to agree” notice over management’s refusal to rule out compulsory redundancies.

Staff at Dundee University cited the same reasons when they voted for strike action last month.

Edinburgh University has already launched a voluntary redundancy scheme and hired an interim finance director who describes himself as a “turn-around specialist”.

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Sir Peter’s memo said the gap that needed to be closed to “secure the university’s financial sustainability is large enough and urgent enough for us to have to confront the likelihood that other measures will be needed in the near future”.

He said: "These might include restructuring, possible closures of programmes or even Schools, mergers or shared services between Schools, centralisation of some services, outsourcing of others: nothing is off the table.

"I fully understand the anxiety and uncertainty that this message will induce, but my senior colleagues and I feel that it is best to be honest and open about the scale and urgency of the measures likely to be needed.

"Detailed information about the financial position will be discussed by the University Executive on February 18 and I will write again after that.

"I genuinely believe that there is much to be optimistic about for the University of Edinburgh and that with swift and decisive action now, we can put the university back onto a secure footing for the future. Inaction would leave us heading rapidly towards the deficit position in which many other universities already find themselves.

"We owe it to our predecessors and to our successors to do everything we can to ensure that the university has a distinguished future to go with its distinguished past."

Accounts for 2023/24 show the university’s surplus before other gains and losses, and prior to pension-related changes, was £25 million, down from £104m in the year before.

Jo Grady, general secretary of the UCU, said: “This is a deeply worrying time for workers at the university. UCU has already lodged a failure to agree with senior management over its refusal to rule out compulsory redundancies as it undertakes this current restructure process.

“This is an employer that wastes millions on capital projects, but is now seeking to cut the very staff who deliver the teaching, research and student support that make the university the successful institution that it is. Management now needs to change course and guarantee workers will not be forced out the door.”

Many other universities across Scotland and the UK already have an underlying deficit, in part due to a fall in numbers of international postgraduate students and real-terms funding cuts. A recovery plan is being drawn up to ensure the survival of Dundee University.

Scottish Conservative education spokesman Miles Briggs said: “This stark warning from Edinburgh’s principal, which will cause alarm and anxiety among staff and students, is just the latest siren call from a leading Scottish university over its perilous financial position.

“It tells us that the SNP Government’s current funding model is short-changing our universities. This, coupled with Labour’s reckless job tax, has created a perfect storm for Scotland’s higher education sector.

“Our universities urgently need more resources if they’re to have a sustainable future, something which is absolutely imperative if Scotland is to produce the skilled workforce that our public and private sector will depend on in the years ahead.”

Scottish Liberal Democrat education spokesperson Willie Rennie said: “The Government is in danger of sleepwalking into a disaster in our university sector. If they do not act fast, more jobs will be lost.

“There needs to be an acknowledgment that the current financing model is just not fit for purpose.”

Scottish Labour Education spokesperson Pam Duncan-Glancy said “Scottish students and our world-class universities are both being let down by a funding model that is no longer fit for purpose. The SNP must listen to these deeply worrying warnings.

“Scottish Labour’s commitment to maintaining free tuition is iron-clad, but it’s clear the wider funding model isn’t working. We’ve written to the heads of Scottish universities to invite them to work with us to develop a funding model that supports students and unlocks the full potential of our universities.”

A University of Edinburgh spokesperson said: "In line with our commitment to be transparent about the university’s financial position, we have today shared with staff that we anticipate having to take further actions to ensure the university remains on a secure financial footing.

"We have also decided to extend the deadline for applications to the voluntary severance scheme by two weeks until Friday, February 28.

"The University Executive will consider our financial position next week, after which we will be in a position to update staff further."

A Scottish Government spokesperson said: “While this is ultimately a matter for Edinburgh as an autonomous institution, we recognise that staff and students will be worried.

“We encourage the university to carefully consider its proposals in line with our Fair Work principles, and to work with trade unions to ensure staff are treated fairly.”

Edinburgh University’s earnings before interest, taxes, and amortization (EBITA) last year was £84m, having fallen from £148m. It is now 5.8 per cent of total income, having previously been 10.7 per cent of income.

Its total income in 2023/24 was £1.434bn, an increase of 4 per cent from the previous year, driven by higher research income and increased returns on treasury investments.

Student headcount fell by 0.5 per cent to 49,485, from 49,740 in the year before.

Total expenditure in 2023/24 was £1.409bn, a 10 per cent increase on the £1.28bn in the year before, with salary costs rising by 12 per cent, and other operating expenses up by 17 per cent.

Meanwhile, the UK government’s decision to raise National Insurance employers contributions is expected to add £12.5m to the university’s staff bill, or 2 per cent.