Exclusive:The inside story of the moment a major Scottish university plunged into crisis and changed forever

At 2pm on November 12 last year, members of Dundee University’s governing body gathered in the Ustinov Room at Bonar Hall.

It would turn out to be a meeting that none of the 32 attendees will ever forget.

The University of Dundee's Queen Mother Building | Lisa Ferguson

This week, MSPs were told at a jaw-dropping Holyrood hearing how many senior figures at the prestigious institution had been unaware of the scale of the financial challenges at the university until that day.

Some were under the impression the university was on course to break even for the year 2023/24, when in fact there was a deficit of £12.3 million. This financial year, 2024/25, was shaping up to be even worse.

There were challenges in relation to student recruitment, but they did not believe the university was in a substantially worse position than any other in the sector. Members of the ruling court now question whether information was being “deliberately” kept from us them.

On the day the bombshell evidence was unfolding at the Scottish Parliament on Wednesday, The Scotsman can reveal the university quietly uploaded the minutes from that meeting on November 12.

Professor Iain Gillespie, former principal of the University of Dundee | Submitted

It shows that after some preliminary matters, the meeting heard a report from the university’s then principal, Professor Iain Gillespie.

He started by revealing Dundee had been named “Entrepreneurial University of the Year” in the Triple E Awards for Europe, and that it had “improved its performance, in both UK domestic and international league tables”.

There were details of a new staff pay award, and changes to a pension scheme, as well as “recent success” in securing several high-profile grant awards, including a major research programme funded by the Michael J. Fox Foundation.

Then came the bombshell revelation from Prof Gillespie.

The minute said: “Having outlined these positive developments, the principal then turned to the main issue he wanted to highlight and discuss with the court, which was the current financial environment and the university’s fiscal position.

“Members were reminded that a deficit of £11.7m had been budgeted for 2024/25, but were advised that recent projections showed this would not be attainable and that the university’s position had very seriously weakened.

“Downturns in student numbers and a hostile environment for international recruitment had resulted in a significantly more negative position than had been predicted, particularly for the Scottish HE [higher education] sector.

“The announcement in the UK Budget of changes to employer National Insurance contributions, coupled with the real living wage increase, would add significantly to the university’s costs and updated forecast estimates for Semester 2 student intake were not positive.”

Prof Gillespie went on to say that previous financial projections “could not now be considered reliable” and the “current projection was that without immediate further action, the university’s deficit was likely to reach £30m”.

In light of the “gravity of the situation”, a paper on the proposed business case for the replacement of the Fulton Building Roof was being withdrawn.

The minute added: “The court noted the utmost seriousness of the issue, was advised that the UEG [university executive group] was working at pace with colleagues across the university and that substantial cost and efficiency savings would require to be made and baselined, which would have a significant effect on the institution.

“In addition, the university had breached two of its three banking covenants. In the course of a lengthy and involved discussion, court urged the UEG to take care not to prioritise short-term actions to the detriment of the longer-term sustainability of the institution.”

The court noted the university sector as whole in the UK was “facing similar challenges”.

Members then “welcomed the candour with which the principal had apprised the court of the current position” and requested the university executive develop a range of scenarios for action in the short, medium and long term”. The court urged the executive to consider being “both disruptive and ambitious” and to make staff aware of the university’s financial position as soon as possible.

The court then discussed that “in light of the significant worsening of the university’s financial position since the year end”, it would “require to revisit and review” its accounts for 2023/24, including working with auditors on a “review of the going concern assessment and the narrative sections accompanying the figures, which were presently overly positive”. The accounts remain unpublished.

The next day, the Scottish Funding Council was informed of the extent of the university’s 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 £30m.

About three weeks later, the principal resigned with immediate effect. He was followed out the door last month by court chair, Amanda Millar.

An independent inquiry is now due to be launched into what went wrong at the university. It will be chaired by Prof Pamela Gillies, the former principal of Glasgow Caledonian University, and could take three or four months to complete.

Mr Gillespie, Ms Millar and former director of finance Peter Fotheringham are now being called to appear before Holyrood’s education committee to give evidence about the institution’s slide into crisis.