Oldest universities ‘stretch ahead’ of new bodies in funding race

Scotland’s oldest universities are increasingly better at coping with “severe funding challenges” compared to newer institutions, the public spending watchdog has said.

Students at St Andrews

Tuition fees from outside the EU and greater financial reserves mean three of the four ancient universities are generally better placed to respond to these pressures, according to Scotland’s Auditor General.

Having faced a 7 per cent real-terms cut – equivalent to £91 million – in government funding between 2014-15 and 2017-18, the financial gap between the older universities, whose incomes have risen, and the more recently established institutions is growing.

Auditor General for Scotland Caroline Gardner said Glasgow, Edinburgh and St Andrews universities were “stretching ahead of the rest” due to larger pots of money and increasing revenue from tuition fees paid by students from outside the EU.

Some 32 per cent of ancient universities’ income comes from tuition fees.

Modern universities rely on government funding for more than half of their income and have had smaller increases in revenue from other sources.

Despite reductions in Scottish Funding Council funding, eight of Scotland’s 18 universities – Aberdeen, Edinburgh, Glasgow, St Andrews, Dundee, Heriot-Watt, Stirling and Strathclyde – have generally continued to increase their income, mainly from non-EU tuition fees.

Ms Gardner said: “There’s significant variation in the financial strength of Scotland’s university sector.

“A small number of universities are stretching ahead of the rest and are in a better position to deal with the financial pressures facing the whole sector. But they still face strong global competition. More work needs to be done to make sure that universities’ outcome agreements provide a clearer picture of what each institution is contributing to the government’s national priorities.”

Tuition fees replaced Scottish Funding Council grants as the single-largest income source for the sector in 2017-18 and representative body Universities Scotland has said the next budget from the Scottish Government “will be vital to the sustainability of the higher education sector”.

Universities Scotland convener Professor Andrea Nolan said “Today’s Audit Scotland report has highlighted what university leaders said after the government’s budget settlement for higher education in 2018 – there are a combination of severe funding challenges facing the sector.”