Sustainability support for universities - Further £10 million for Scottish Funding Council to support the sector

16th March 2025

Additional support will be made available through the Scottish Funding Council (SFC) to support universities facing financial challenges.

Education Secretary Jenny Gilruth said an additional £10 million will be provided to the SFC to support higher education institutions such as the University of Dundee as they navigate current financial challenges.

It brings total additional support for the sector from the Scottish Government to £25 million, on top of the £1.1 billion in the 2025-26 budget for university teaching and research.

The Scottish Government will convene a range of expertise from across the higher education sector, government, and Dundee City Region to support the University of Dundee while it develops its Financial Recovery Plan. This is in addition to work already underway by the SFC, which engages closely with universities on financial sustainability.

Ms Gilruth said:

"The Scottish Government is providing an additional £10 million support package to assist universities such as Dundee with navigating immediate financial challenges. This is on top of the £15 million of extra support previously announced for the sector in February.

"Ministers have held further meetings with the University of Dundee, unions and the Scottish Funding Council this week, building on the extensive engagement that has already taken place with the institution since financial issues came to light.

"Both the Higher Education Minister and I have conveyed our deep concern at the level of job losses currently being discussed at the University. While the University is an autonomous institution, it is our clear expectation that the University's leadership works with us, and engages fully with staff and trade unions, to explore all options to protect jobs.

“Work will continue in the coming days to convene the right range of expertise from across government, the sector, and the wider city region to support the institution as it continues to develop its Financial Recovery Plan.

“Scotland's universities play a pivotal role in the economy and wider society, and they must be supported to thrive into the future. This support package is another clear sign of the Scottish Government's commitment to support the sector with financial challenges - challenges which have been compounded by UK Government policies on migration and employer National Insurance contributions."

Chief Executive of Scottish Funding Council Francesca Osowska said:

“We welcome Scottish Ministers’ continued commitment to the tertiary sector and confirmation of this additional funding. Recognising the particular challenges facing the University of Dundee, we look forward to engaging with a wide range of partners to secure its continued success as a world-renowned University delivering excellent outcomes for learners and researchers and contributing to economic growth and social wellbeing."

The additional £10 million capital funding has been identified from within the education portfolio.

The Scottish Government has put forward proposals for a Scottish Graduate Visa and the First Minister wrote to the UK Government in January seeking clarity on changes to employers National Insurance contributions.

Dundee University Financial Problems
The University of Dundee is currently facing significant financial challenges, with a reported £35 million deficit. To address this, the university has announced plans for major restructuring, including cutting over 600 full-time jobs, which amounts to around 20% of its workforce.

The financial crisis at universities has been attributed to several factors, including a drop in international student recruitment, underfunding of higher education, inflationary pressures, and internal issues like inadequate financial controls and poor capital planning. The university is also considering selling off assets, including property and intellectual property rights, as part of its recovery plan.

This situation has raised concerns about the impact on staff, students, and the local economy, with calls for the Scottish Government and the Scottish Funding Council to work closely with the university to ensure its financial sustainability.
Universities are facing financial challenges due to a combination of factors:

Inflation and Rising Costs: The cost of running universities has increased significantly, but tuition fees have often been capped or frozen, leading to a real-terms drop in income2.

Dependence on International Students: Many universities rely heavily on international student fees, which can be unpredictable and have declined in some cases3.

Government Funding Cuts: Reductions in direct government funding for higher education have forced universities to depend more on tuition fees and other income sources.

Economic Pressures: Broader economic challenges, such as the cost of living crisis, have impacted both students and institutions.

Pandemic Aftermath: The COVID-19 pandemic disrupted operations, reduced student numbers, and increased financial strain.

These issues have created a tough environment for universities to maintain financial stability.