The Scottish Funding Council has today (Thursday, 4 April) published its funding allocations for universities for academic year 2025/26. This follows the Scottish Government’s budget settlement for universities as announced in December. The allocations set out teaching funding for Scottish undergraduates, research and innovation funding and other, smaller grants.
Total teaching funding allocated to universities for AY 2025-26, including the Main Teaching Grant and additional elements, has been set at £727.1m, an increase of £12.9m (a cash increase of 1.8%) compared to 2024/25. The capital budget, including research and innovation funding, has been set at £368.3 million; an increase of £11.4 million (a cash increase of 3.2%) from 2024-25.
Responding to the allocations, Sir Paul Grice, Interim Convener of Universities Scotland:
“The amount invested in each Scottish student next year will increase in cash terms and we were clear to the Government and Funding Council that was our priority, so we do welcome that decision. However, the Funding Council’s indicative allocations confirm that most institutions will see a real terms cut to their teaching funding. Taking the long-term view, next year’s cash increase doesn’t fundamentally change the fact that the gap between the cost of teaching and the investment in each Scottish student remains unacceptably high. The reality is that the level of additional investment made by the Scottish Government does not give the sector the financial support we asked for at a time when it has never been more necessary.
“The cash increase to university capital budgets was all new investment and we are pleased to see that has been steered into research and innovation.
“Universities are facing challenging headwinds on multiple fronts, but we need to be straight-forward about the extent to which the decade-long pattern of structural under-funding of Scottish undergraduates and research has eroded universities’ financial resilience. This must be addressed to enable the sector to tackle the collective challenges we face.”
Notes:
- The SFC’s indicative allocations for universities for 2025/26 can be found on the Funding Council’s website from 14.00 on Thursday.
- The Scottish Government’s budget invested an additional £12.9m (a cash increase of 1.7%) from FY 2024-25. Using the budget increase, and repurposed funding associated with the reduction of funded places by 2,500 FTEs (which are the additional COVID-era places and which is resource that was already baselined in university teaching funding) the Funding Council has been able to increase teaching subject prices for AY 2025-26, compared to the previous year, by 3.3% in cash terms. Universities Scotland had asked the Scottish Government and Scottish Funding Council to prioritise the teaching subject prices, which is the amount spent on each Scottish student.
- Based on the current Treasury GDP deflator for 2025/26 at 2.65%, the 1.7% cash increase in the SFC’s resource budget for universities represents a real terms cut of 0.95% year to year.
- The indicative grants for teaching (table 4 in the SFC’s allocations) show that 17 of 19 higher education institutions will therefore receive a real terms cut to their teaching allocations.
- The indicative total allocations for teaching, research and innovation funding in table 7 show that 12 HEIs will receive a real terms cut to their allocations.
- Whilst the GDP deflator continues to be the standard index used by government to assess real terms, many sectors now also use RPIx as it better reflects the realities of cost increases faced by organisations. The OBR’s forecast for RPIx in Q3 of 2025 (the start of the next academic year) is 3.1% so under this measure the real terms cut facing institutions is deeper.
- Universities Scotland’s budget submission to the Scottish Funding Council asked for a 4% real terms increase to the resource (teaching) budget in addition to the budget-neutral measure of retaining the resource linked to the removal of 2,500 FTE places in the system to be redirected to the teaching subject prices.