Universities fear 'more funding cuts and borrowing'

By Jamie McIvor
BBC Scotland education correspondent

  • Published
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In 2017-18, more than half of Scotland's universities were running at a deficit

Scotland's universities say they need more government money to help put them on a surer financial footing.

They made the call after a report from the public spending watchdog said the value of central funding had fallen significantly.

Audit Scotland said there was a 12% real-terms cut in funding over seven years.

The Scottish government said it invests more than £1bn in universities every year.

Universities Scotland - which represents the shared interest of the sector - said universities were facing increased costs, further funding cuts and more reliance on borrowing.

Convener Prof Andrea Nolan said: "The next budget in December provides a vital opportunity for Scottish government to increase the level of teaching and research funding to universities in real terms.

"This would go some way to ensure that institutions receive appropriate levels of public funding for the services they deliver for Scotland and it would support institutions onto a surer financial footing."

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Scotland's oldest universities, including St Andrews, are generally better placed to respond to funding pressures

The Audit Scotland report spelt out the financial challenges facing Scotland's universities.

These include:

  • A 7% (£91m) real-terms cut in government funding between 2014-15 and 2017-18
  • Estates costs and rising pension costs
  • The significant implications of EU withdrawal for teaching and research.

The report said that for the first time Scotland's universities as a whole receive more money from student tuition fees than they receive from Scottish government grants.

Universities get their income from a number of sources. They include the Scottish Funding Council, which distributes the government money to pay the fees of Scottish and EU students.

Other major sources of income include the fees paid by students from other parts of the UK, the higher fees paid by students from other parts of the world and research funding.

Generally, older universities are less dependent on government money than the former colleges and polytechnics which became universities in the 1990s.

The report says three of the four ancient universities - Glasgow, Edinburgh and St Andrews - were generally better placed to respond to funding pressures.

In 2017-18, more than half of Scotland's universities were running at a deficit.

Society and culture

Prof Nolan added: "There is a £936m backlog in estate maintenance. This situation is extremely challenging.

"We owe it to students, and to the nation we serve, to have sustainable public funding of the important work universities do which makes such a broad and meaningful contribution to Scotland's economy, society and culture."

Caroline Gardner, Auditor General for Scotland, said there was a "significant variation" in the financial strength of Scotland's university sector.

She said: "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."

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Image caption,
The Scottish government says it continues to invest more than £1bn a year in universities

The report said that universities only receive 92% of the amount they need to cover the cost of teaching UK and EU students.

The report also highlighted the risks to university funding which may come from Brexit.

The Scottish government sees Scotland's universities as an international success story. It also believes the introduction of free tuition for Scottish students is one of its greatest achievements. The number of Scots at university is around a record high.

The University and College Union said the report was "yet another wake-up call to government that it cannot deliver university education on the cheap".

The union's Scotland official Mary Senior said: "With more than half of Scottish universities in deficit, and the sector suffering cuts of 12% in real terms over the seven years to 2017/18, the need for sustained investment in the sector is crystal clear.

"When university staff are expected to put up with below inflation pay rises and attacks to their pensions it is difficult to see how we can continue to be a world class university sector.

Ensuring efficiencies

Higher Education Minister Richard Lochhead welcomed the report but pointed to Scottish government investment of over £1bn in universities every year since 2012-13.

He said: "Scotland has a world-class higher education system with more top-200 universities per head than any other country bar Switzerland. This analysis provides a useful overview of the financial issues facing the sector.

"The report is clear that Brexit will have significant implications for universities, such as possible shortages of teaching or research staff, or the impact on collaboration with EU partners.

"We have invested over £1bn in our universities every year since 2012-13 and the report demonstrates the many ways in which universities are diversifying their income streams while ensuring efficiencies.

"We will continue to work with the Scottish Funding Council to support our universities to remain globally competitive and collaborative."

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