SCOTLAND'S universities “face an acute and growing financial crisis” amid pressures including the UK visa regime pushing down international student numbers, a leading expert has warned in a new report.
The research, conducted by former Glasgow University principal Professor Anton Muscatelli, found that for 2023-24 expenditure by Scottish universities exceeded their income by about £200 million.
The report went on to warn that as it stands, “current funding arrangements are insufficient to support universities on a sustainable basis”.
The work, part of the Future Framework initiative from the Scottish Government and Universities Scotland to look at the future of higher education, outlines a “bleak” situation, Muscatelli said.
Now the president of the Royal Society of Edinburgh, Muscatelli led the work which was the “first systematic attempt for many years” to examine the gap between income and expenditure across Scotland’s universities.
Speaking to the BBC on Friday, Muscatelli said: "Clearly, the solutions may range from additional public support to finding other sources of income.
"For instance, if additional international students were to come to Scotland, and there are challenges to that at the moment because of the visa regime that the UK is running, then that would begin to address some of these issues."
Muscatelli said that universities "recover 82% of the full economic costs" of teaching Scottish students who receive free tuition, leaving the sector with an “ever-increasing reliance on other sources of income, particularly international student fees”.
His the report also identified a maintenance backlog which “exceeded £1.1 billion in 2023-24”.
He warned: “Unless the sector can secure additional, reliable income streams – be that from public or private sources – it is not sustainable in its current shape and size.”
Insisting the current funding arrangements are “insufficient to support universities on a sustainable basis”, the report told how publicly funded teaching had a funding gap of about £288 million in 2023-24.
It continued: “The evidence presented throughout this report points to substantial funding challenges across several university activities.
“Publicly funded teaching and research consistently recover less than their full economic cost, while institutions report a range of infrastructure, workforce, student support, and other operational pressures.
“The scale and nature of these pressures vary across institutions and institutional groupings. Nevertheless, the findings suggest that the challenges identified are widespread across universities and their activities.”
Speaking as the report was published, Education Secretary Mairi McAllan said: “Scotland’s world-class universities make an outstanding contribution to our economy and wider society.”
She said the Scottish Government’s policy of maintaining free tuition for Scots studying at the country’s universities means “Scottish students are not hampered by the levels of debt we see elsewhere in the UK, and they are able to go to university based on their ability to learn and not their ability to pay”.
But she acknowledged “the need to ensure a sustainable model of funding which recognises wider financial pressures facing universities in Scotland and indeed across the UK”.
McAllan said: “This is not a challenge unique to Scotland. The UK Government’s crackdown on international student visa routes, coupled with Brexit, inflation, energy prices and increases to employer national insurance contributions have all added to the sector’s financial pressures.”
Universities Scotland convener Professor James Miller said: “Scotland’s universities have faced significant financial pressures for some time, and this report provides an important, evidence-based assessment of their scale.
“Importantly, it establishes a shared understanding between the sector and Government of the challenges that must now be addressed.
“The analysis is clear that the current position is not sustainable and provides a foundation for the work ahead.”
Mary Senior, Scotland official at the University and College Union, said: “This report comes as no surprise to workers in universities, as they along with students have been at the sharp end of this chronic under-funding.
“The reality of the unsustainable system is cuts to jobs and courses, unsafe workloads, stagnating pay, and all too many workers on precarious contracts.
“It’s vital that the next stage of this review leads to sustainable solutions.”
