Exclusive:Scottish Government body started work 'immediately' on rescue plan for crisis-hit university

A Scottish Government body has been working on a financial recovery plan for Dundee University for a month, it has emerged, as spending pressures continue to push the country’s esteemed higher education institutions to the brink.

The Scottish Funding Council (SFC), a non-departmental organisation that oversees the higher and further education sectors, said it was “immediately” involved after the scale of the institution’s budget hole emerged.

The University of Dundee has flagged staffing cuts to meet a 30 million pound deficit. Picture: NationalWorld | TSPL

The university was rocked last week following the shock resignation of its principal, Professor Iain Gillespie.

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The announcement was made amid concern over the scale of the university’s budget challenge, as well as criticism of the principal’s expenses bill, which totalled £131,000 in three years. It also came just days after The Scotsman revealed the university faced having to repay a chunk of its grant to the SFC as a result of under-recruiting Scottish students.

Dundee University’s financial woes were confirmed following a meeting of the university’s ruling court on November 12, in which its accounts for 2023/24 were discussed, among other items. The next day, the SFC was informed of the extent of its problems.

Then Prof Gillespie wrote to staff saying job cuts could not be ruled out because the university faced a budget deficit of up to £30 million.

An SFC spokesperson said: “The financial sustainability of universities and staffing matters are the responsibility of university management and the university court. However, as a condition of SFC’s funding, universities must alert SFC to any significant financial issues.

“When the extent of the financial challenges at the University of Dundee were made known to SFC, we engaged immediately with the senior team to begin discussions on their financial recovery plan. Our priority will be to work alongside the university as they take the necessary steps to return to a position of financial health.”

The spokesperson added: “We were made aware of the extent of the current financial challenges at the University of Dundee on November 13, slightly prior to staff and students at the university being told of the need to find savings, and have begun discussions on their financial recovery plan.

“Our priority will be to work alongside the university as they take the necessary steps to return to a position of financial health.”

Dundee University is not the only prestigious institution to have drawn up a financial recovery plan in recent months.

Aberdeen University embarked on its own £18.5m cost-cutting programme, having been forced to admit in its last published accounts that it could not guarantee it would be able to continue as a “going concern”.

Aberdeen University has said the SFC was not involved in its recovery plan, although it kept the body informed. The university has also said an improvement in its position means it will avoid a repeat of having to highlight any "going concern" uncertainty in its next published accounts.

Meanwhile, Robert Gordon University announced in November that it plans to make a further 135 redundancies to ensure its long-term “viability”, with the announcement coming after 130 workers had already left in the previous few months under voluntary severance schemes.

Edinburgh University has been controlling recruitment and cutting spending since the summer, and has now told staff it will “need to take a series of actions, which will include selective voluntary and, if unavoidable, compulsory redundancies”.

Its principal, Sir Peter Mathieson, highlighted the impact of the UK government’s decision to raise employers National Insurance contributions.

The situation for universities remains grim despite this month’s Scottish Budget. Claire McPherson, director of Universities Scotland, said last week the sector remained in an “immensely difficult place” after what she described as a 0.7 per cent real-terms cut in higher education resource.

Dundee University said it was working towards the publication of its accounts for 2023/24. It previously confirmed the under-recruitment of Scottish students was likely to add to the institution’s financial woes.

The university recorded a shortfall of just more than 300 Scottish students for semester one of this academic year, against a target of around 2,400 Scottish undergraduate entrants. As a result, it could be told to repay part of the grant it receives from the SFC for the tuition of Scottish undergraduates.

However, across the nation, acceptances to Scottish institutions for home students increased by 7 per cent to a new high of 37,805, according to the latest UCAS statistics.

There has also been an 11 per cent increase in acceptances from the most deprived areas in Scotland to all UK universities, up 665 on last year to a record 6,500.

Overall acceptances to Scottish providers is 49,280. This is an increase of 2,930, or 6 per cent, since last year.

Higher and Further Education Minister Graeme Dey said: “It is hugely encouraging to see a record number of Scottish students from our most disadvantaged communities getting into university.

“This demonstrates the strong progress being made on widening access to higher education and ensuring every young person in Scotland has an equal chance of success, no matter their background or circumstance. I commend our universities for the key role they have played in helping to deliver this.

“We have also seen overall acceptances for Scottish students reach a new record high. These figures show the great strength and resilience of Scotland’s education system.

“Our resolute commitment to free tuition and our enhanced student support offering ensures that access to university remains based on the ability to learn and not the ability to pay, ensuring that the opportunity of a university education is available to everyone, regardless of their background.”