Top Scottish university would run out of cash within weeks as boss asks if data was 'deliberately' withheld

Dundee University bosses have revealed the institution would run out of money within weeks without emergency funding as they claimed key financial information may have been “deliberately” withheld from senior figures.

MSPs on Holyrood’s education committee heard the “jaw-dropping” evidence on Wednesday from Professor Shane O'Neill, the university’s interim principal and vice-chancellor, along with other senior colleagues. It comes just days after Dundee University announced plans to cut 632 jobs to plug its deficit.

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

Amid a backlash against the proposed job losses, which would save £49 million, Prof O'Neill said other options would be for the university to seek a merger or to cease to exist.

However, he also revealed the university was looking at ways to “reduce the numbers” of redundancies, after being told by the Scottish Government to seek “alternatives”.

The MSPs also heard from Tricia Bey, acting chair of court at Dundee since February, who said the university was on track to run out of money within weeks.

“We are actually in a very grave cash crisis,” she said. “Without the very welcome liquidity support from the SFC [Scottish Funding Council], we will run out of cash by the end of June.”

Liquidity support of £22m is expected to be confirmed by the SFC board on Thursday.

Iain Gillespie resigned as the university’s principal in December, only a few weeks after announcing that job cuts were inevitable to try to plug a deficit of up to £30m.

Since then, court chair Amanda Millar resigned in February, staff have embarked on strike action and bosses have ordered an independent investigation into what went wrong.

It was announced on Wednesday the inquiry would be led by Professor Pamela Gillies, former principal of Glasgow Caledonian University, and could take three or four months to complete.

Dundee University is the only higher education institution in Scotland still to publish its accounts for 2023/24.

Helen Simpson, interim director of finance, revealed to the committee the draft accounts show it had an operating deficit of £12.3m, and there had been a “sharp decline” in cashflow to £30m. It means eight of Scotland’s 18 universities were in the red last year, up from four in the previous year.

She said she was “extremely concerned” about what she found when she was appointed in November, and raised it on her first day in the job.

Striking Dundee University staff | Lisa Ferguson

In his evidence, Prof O'Neill said there was “misleading” reporting of the financial position, with some senior figures at the university under the impression the institution was still on course to break even last year, before the £12.3m operational deficit emerged in November.

He also said “dissent wasn’t welcomed” within the previous culture at the top of the institution. However, he told MSPs he had seen no evidence of criminality.

Ms Bey, a court member before becoming interim chair, suggested important financial information may have been withheld.

“Why this investigation is so important to us is to find out whether things were deliberately kept from us - whether this is oversight/incompetence or whether somewhere in those processes things have been deliberately kept from filtering upwards, because at the moment we genuinely don’t know the intention behind it,” she said. “We know what the result was, but we don’t know what the intent was.”

Asked by journalists if there was a “cover-up” after the hearing, Prof O'Neill said: “I don’t believe there is any evidence I have seen that suggests that, but those questions have to be asked.”

Committee convener Douglas Ross questioned Prof O'Neill on whether the “incompetence” of the previous leadership was to blame for the crisis. He replied: “You could say that perhaps. There were gaps in the competence of the leadership.”

Prof O'Neill blamed several “external and internal” factors for the financial crisis, including those common to throughout the sector, such as falling international student numbers, inflation and rising National Insurance contributions.

The interim principal added: “But there are also quite a few Dundee-specific causes to the problems. There has been, and we have been learning all of these lessons and absorbing them as we’ve been building our recovery plan, there has been inadequate financial discipline and control, poor investment decisions, including on IT systems, weak compliance at times in financial control, lack of accountability.

“There has also been inadequate oversight at executive and court levels of our financial position, not least in ensuring that strategic ambitions were underpinned by financial rigour.”

Asked by Labour MSP Michael Marra about the job cuts proposed in the recovery plan, Prof O'Neill suggested other measures were being considered to limit the losses.

"We are working at pace with SFC, particularly to explore other options to see what could we do, rather than what we have set out last week, in terms of what are the other ways forward,” he said. “So we will be doing that in the next couple of weeks.”

Quizzed on the reaction of the Government and SFC, he added: "They have encouraged us to think about other alternatives.

“We have got to see whether there are any opportunities to phase some of the changes, perhaps, whether there are any opportunities to find other funding mechanisms that would allow us to reduce the numbers in some other way.

“Other alternatives are much more significant, changes to the nature of the organisation, whether or not we continue as the entity as we are or not.”

After the hearing, Mr Ross announced the committee had agreed to call Mr Gillespie, Ms Millar and former finance director Peter Fotheringham to give evidence.

Scottish Labour education spokesperson Pam Duncan-Glancy said “The jaw-dropping evidence heard at this session exposes the scale of the chaos at the top of Dundee University. This session has left us all with more questions than answers, and it is vital that the investigation gets to the bottom of what went so badly wrong here.”

Scottish Liberal Democrat education spokesperson Willie Rennie said: “The oppressive environment at the top of Dundee University prevented alarm bells from being raised. It shut down any questioning about the performance of the university and the evident financial problems.

“The independent investigation must get to the heart of this and those responsible must be held to account.”