Ancient universities better able to cope with financial pressures than newer ones

There is a growing gap between how well Scotland’s universities are coping with funding problems, with ancient universities generally better placed to respond than newer ones, according to a new report.

Audit Scotland has found that three of the four ancient universities – Edinburgh, Glasgow and St Andrews – are less reliant than most other institutions on government funding, which has been falling. They have large reserves and have increased the income they receive from other sources, particularly non-EU student tuition fees.

But modern universities have seen smaller revenue increases from tuition fees and other sources, and rely for more than half of their income on government funding.

Universities have experienced a 12 per cent real terms cut in government funding between 2010/11 and 2017/18, as well as rising pensions costs. In addition, Brexit is set to have a significant impact on teaching and research.

Tuition fees replaced Scottish Funding Council (SFC) grants as the single largest source of income for the sector in 2017/18.

Caroline Gardner, Auditor General for Scotland, said: "There's significant variation in the financial strength of Scotland's university sector. 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.”

Liam McCabe, president of the National Union of Students Scotland, said: “Today’s report underlines concerns that are held by students in Scotland about the sustainability of funding of our universities. We need a fully-funded sector, not one which is increasingly reliant on fee-paying students.

“The message coming from Scotland’s students is clear: our colleges and universities need funding, not hollow rhetoric. If education really is the Scottish Government’s priority, they need to prove it with meaningful, sustained investment. Students deserve nothing less, and that is the case NUS Scotland will be making as we approach the next Budget.”

Higher Education Minister Richard Lochhead 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 £1 billion 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.”

The report notes that more than half of Scotland’s universities were in deficit in 2017/18 and the position was worse for most modern and chartered universities than in 2014/15.

Queen Margaret University faced a deficit of £5.4m (15 per cent of its income), while Robert Gordon’s was £11.4m (12 per cent of its income).

Glasgow School of Art faced a deficit of £26.4m (65 per cent of its income), mainly due to fire-related costs.

By contrast, Edinburgh, Glasgow and St Andrews had a combined surplus of £68m.

Aberdeen was the only one of the ancient universities to face a deficit, which came to £7.5m or three per cent of its income.

Scotland has 19 universities (including the Open University), attended by 230,940 students in 2017/18.

Scotland’s ancient universities are Aberdeen, Edinburgh, Glasgow and St Andrews. It has four chartered universities – Dundee, Heriot-Watt, Stirling and Strathclyde – and seven modern universities – Abertay, Edinburgh Napier, Glasgow Caledonian, University of the Highlands and Islands, Queen Margaret University, Robert Gordon and University of the West of Scotland. In addition, Scotland has three specialist institutions – Glasgow School of Art, the Royal Conservatoire of Scotland, Scotland’s Rural College – and the Open University in Scotland.

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Audit Scotland noted that, while the Scottish Funding Council (SFC) uses outcome agreements to set out what universities undertake to provide in return for public funding, many 2017/18 agreements did not include clear targets for teaching and research, making it difficult to assess if the institutions are delivering on government priorities.

Gardner added: "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."