'Real danger' Scottish university will go to the wall, warns think tank

There is a “very real danger” that one of Scotland’s world-famous universities will go to the wall amid an ongoing funding crisis, a think tank has warned.

Alison Payne, research director of Reform Scotland, said: “The reputation of Scotland is on the line here.” She said the policy of free tuition fees for Scottish students should be replaced by a graduate payment, which would be paid after graduates earn over a certain amount.

But Education Secretary Jenny Gilruth said the SNP government will never bring back tuition fees.

It comes after Dundee University announced plans to cut 632 jobs as it seeks to plug a £35m deficit. The redundancies account for around 20 per cent of the more than 3,000-strong workforce.

Dundee University's main library | Lisa Ferguson / National World

Dundee is not the only university to suffer from money problems. Edinburgh University recently said “nothing is off the table” as it seeks to reduce spending by £140m, and Aberdeen has cut staff through voluntary redundancies.

On Friday, the Scottish Government announced £25 million of additional funding to support higher education institutions “as they navigate current financial challenges”.

Speaking on BBC Scotland’s Sunday Show, Ms Payne said the funding system for Scottish students is “unfair and unsustainable”.

She said: “This should be an urgent wake up call that action has to be happening. At our think tank, we’ve talked about the potential of introducing a graduate payment.

“That is something that you could do where people pay a contribution after they have graduated and after they start earning over the Scottish average salary.

“But you can only do that if you start acting now, because obviously that will take four years for that revenue to accrue. There’s a real danger, if we continue to do nothing, a university might go to the wall.

“The international reputation of our institutions has been damaged by what’s going on.”

Ms Payne said a graduate payment would be a way to “maintain tuition free at the point of use, so you wouldn’t accrue any upfront cost at all”, adding: “But once you graduate, you would pay back perhaps something around about £5,500.”

She called for political leadership to “look at the long-term funding sustainability of our higher education institutions”.

Asked about the likelihood of one of Scotland’s world-famous universities going to the wall, Ms Payne said: “I think there is a very real danger.” She said ministers “have to start acting now to stop this from happening”.

Ms Gilruth said the situation at Dundee University was “deeply concerning”.

Speaking on the Sunday Show, she said: “We do need to be mindful, though, that the issues in relation to Dundee University are quite unique. Those relate to alleged financial mismanagement and are not in any way related to issues regarding tuition fees.”

She said universities across the UK are facing financial challenges, partly as a result of inflationary pressures and the impact of the UK Labour government’s National Insurance hike.

Ms Gilruth dismissed the idea of a graduate payment, and insisted: “We are not going to bring back tuition fees under an SNP government. That’s a point of principle.”

Asked if she was worried a university might go to the wall, the Education Secretary said: “I’ve not been presented with that from the SFC [Scottish Funding Council] at this time. However, of course the SFC continue to work with individual institutions in relation to some of the challenges.”

Scottish Conservative education spokesman Miles Briggs said: “Jenny Gilruth’s lack of accountability is staggering, at a time when Scotland’s universities are facing alarming cuts due to the SNP’s funding model and years of failure to support higher education.

“Her shameful attempt to compare the dire state of university finances in Scotland with elsewhere in the UK highlights the SNP’s unwillingness to face this issue head on.

“The SNP’s savage cuts have led to the dreadful position that our universities find themselves in, with many now having a question mark over their financial outlook and even their survival.

“Ambitious students should not be forced to stop their further education – but that could be the reality they face if universities continue to be short-changed.

“Rather than trying to ignore this crisis in the hope it goes away, the SNP Government need to listen to the warnings from the sector and explore options for change if we are going to restore Scotland’s reputation for educational excellence.”

Liberal Democrat MSP Willie Rennie said: "The Scottish Government needs to be honest with themselves. Although the situation at Dundee University is more extreme than other universities, there are some serious problems at most.

"The sector is facing strong headwinds which is threatening their excellence. Universities are changing with more part time students, the recruitment of international students is volatile and the there are higher taxes like employers national insurance contributions. If all that is changing we need to hunt for a new financial model.

"Liberal Democrats are prepared to work together with the government and other parties to agree a new sustainable financial model. It's now urgent to avoid more universities facing what Dundee is facing."

On Friday, Chancellor Rachel Reeves said the Scottish Government must work with universities across Scotland to ensure the crisis at Dundee is a “one-off”.

She said: “It is now imperative that the Scottish Government work with both Dundee University, but also with other universities across Scotland who have seen cuts in their budgets to make sure that this is a one-off and doesn’t affect other universities around Scotland, whilst also working with Dundee University to limit the impact of these cuts."