Scotland's university funding system 'all but dead', claim Scottish Liberal Democrats

Ministers are being challenged to “step up” to secure the future of Scotland’s universities amid concerns the current funding system is “all but dead”.

Scottish Liberal Democrats made the plea as research by the party suggested almost half of universities had run up a deficit last year.

The Lib Dems said their analysis of university accounts and public statements indicated that seven of Scotland’s 18 universities had recorded a deficit in 2024.

Party education spokesperson Willie Rennie warned the sector is at risk of being tipped “over the precipice” because of funding.

Staff at Edinburgh University have already been warned “nothing is off the table” as the institution seeks to make urgent savings to fill a £140m financial black hole.

Meanwhile, Dundee University revealed in November that it faces a £30m deficit, with warnings that staff cuts will be “inevitable” – leading to strike action by lecturers and others.

Edinburgh University is looking to reduce staff numbers to help tackle a £140 million funding gap (David Cheskin/PA) PA Media

Professor Steve Oliver, the principal of Robert Gordon University in Aberdeen, said last month that “all universities are feeling the pinch”.

His comments came as he warned of a “major existential threat” to the sector, adding that universities are “significantly underfunded”.

Finance secretary Shona Robison announced at the end of February that up to £15m is to be made available to the Scottish Funding Council (SFC) to help cash-strapped universities,

But Rennie said more action is needed to change the overall funding model.

Scottish Liberal Democrat education spokesperson Willie Rennie said the government must act with ‘urgency’ on the issue (Fraser Bremner/Scottish Daily Mail/PA) PA Media

The Lib Dem stated: “Scotland’s word-class universities produce talented graduates, important research and good jobs across the country but, without action now, Scottish higher education is not sustainable.”

He added the current financial model, where universities rely on the income from fees paid by overseas students to help subsidise places for Scottish students was “all but dead thanks to changes in the global economy”.

He said: “Greater geopolitical upheaval could easily send the system over the precipice.”

Adding that higher education minister Graeme Dey has agreed a discussion on “sustainable funding” is needed, the Liberal Democrat MSP insisted that this work “must now proceed with urgency”.

Rennie said: “We are now past the point where the SNP can just point at Scotland’s lack of tuition fees and declare the conversation over higher education over.

“If both free tuition and the sustainability of our higher education institutions are to be maintained, now is the time to step up.”

A Scottish Government spokesperson said: “Universities make a valuable contribution to Scotland’s economy and wider society.

“Ministers have listened closely to the sector in the development of this year’s budget, which is why are investing over £1.1bn in university teaching and research.

“While universities are autonomous institutions with responsibility for their own strategic and operational decision making, the Scottish Government and Scottish Funding Council will continue to work closely with the sector and offer appropriate support as institutions develop plans to mitigate their financial challenges.”

The spokesperson added: “There are factors impacting universities across the UK, including UK migration policies and the UK Government’s increase to employer national insurance contributions, which is estimated to cost Scottish universities over £48m.”