Dundee University loses out on £7m funding as questions mount over how severe the institution's finances are

Dundee University has been barred from accessing £7 million after breaching the conditions for government funding.

The Scottish Funding Council (SFC) has ruled that the university does have sufficient funds to meet its financial obligations.

The interim principal, Nigel Seaton, says he’s “exploring the consequences” of the decision, while unions say it questions the need for further job losses.

It is the first time Dundee University has been declined for government funding, having already been allocated £62m in the wake of the university’s financial crisis in 2024.

A total of £22m was previously given to the university as immediate funding, with a further £40m “second pot” for additional assistance.

In March this year, the university was allocated £13m from the second pot.

Now, another request for a further £7m has been denied, with new questions now being asked about the severity of the institution’s financial situation.

A spokesperson for the SFC said: “As a public body, the Scottish Funding Council has a responsibility to ensure accountability for public funds. This includes ensuring that public funds are not released in advance of need.

“Our financial analysis of the University’s request to draw down funds has concluded that the University currently has sufficient funds to meet its financial obligations.

“We remain committed to the long-term sustainability and success of the University. We will continue to work closely with the University Executive Team to monitor cash balances and will respond to further drawdown requests, based on the evidence available at that point, as the University continues to move to a position of financial stability.”

The SFC confirmed that the university could still access the remaining £27m in the future; however, this will be the case only when its cash balance falls below the agreed £30m.

There were concerns raised that, due to the university’s financial situation, the decision would impact staff’s pay.

The university has made clear that staff wages will continue to be paid.

University denied access to £7m as it did not meet the obligations

A spokesperson for the university said: “In June, we made a submission to the Scottish Funding Council to access the second tranche of additional grant funding, £7m, having received the first tranche of £13m at the end of March.

“The SFC have informed us that, in their judgement, we have not met the conditions to access the second tranche of funding at this time.

“They have stressed that the full remaining balance, £27m of up to £40m of additional grant funding, remains available to the University – subject to the terms of the funding agreement – until 31 July 2027.

“We are engaging further with the SFC to get a more detailed understanding of their reasoning for this decision, which relates to the Maximum Funding Threshold in the conditions of funding. This requires the University’s Net Cash Balance to remain below £30 million.

“By our interpretation of the conditions of grant, our Net Cash Balance at the time of submitting the drawdown request, June 2026, met this particular condition. We are discussing this with the SFC who have a different view, which they concede is subjective.

“We had planned for the contingency of not receiving this funding to the anticipated timeline and have mitigations in place to minimise the impact on our cashflow.

“The University is not at risk of insolvency as a result of this decision, but it does have an impact on our planning, budgeting and resource allocation.

“We are now exploring those consequences in the short, medium and long-term.

“I must emphasise it does not threaten our financial solvency, we are not going bankrupt, and wages will continue to be paid, to answer what I understand would be some of the immediate concerns and questions.”

“Capital investment has been cut back to the bare minimum over the past two years, despite a significant need to address decaying infrastructure and invest in our facilities.

“Planned investment in our physical and digital infrastructure, as well as equipment in the future, will now be reviewed with urgency, as an impact of the funding decision from the SFC.”

Doubts over financial situation

Following an email to staff aimed at alleviating concerns that the funding would affect pay, the Dundee University and College Union (UCU) branch is now questioning the severity of the financial situation.

A spokesperson said: “The university’s failure to secure the second tranche of SFC funding expected in June 2026 comes as a shock to staff and students, especially since the chief finance officer (CFO) had reassured all staff on Friday that UEG was confident the funding would be released.

“However, the decision should not come as a surprise, given the recent revelation that the University held approximately £85m in cash at the end of the 2025/26 financial year.

“Throughout the year, the cash-flow projections presented to staff by the chief finance officer (CFO) consistently indicated that the University would close the financial year with only approximately the level of cash required to maintain its operations, i.e. around £30m.

“Any discrepancy between the University’s actual cash position and the projected cash position was repeatedly attributed to timing differences. It is now clear that this explanation did not reflect the true position.

“The university’s need for the full financial support available from the SFC in order to remain a going concern was presented by the CFO as a matter of fact.

“Yesterday’s admission, in an all-staff email, that the withdrawal of this supposedly essential funding does not place the University at risk of insolvency raises two fundamental questions: first, it calls into question the accuracy of the statements repeatedly made by the CFO regarding the university’s financial position and its dependence on SFC funding; second, it raises serious questions about the necessity and proportionality of the redundancies being pursued on the basis that they are required to secure the university’s financial position.

“If the University’s position is that the loss of such a large amount of funding can be mitigated through careful control of capital expenditure, why was that option not fully explored as an alternative to redundancies, as per university policy?

“If the University does not need £27m to be financially viable, its financial case for further redundancies – which would deliver only a fraction of that saving – has collapsed.”

The Dundee UCU has once again called for the university to stop staff cuts.