The Scottish Government and Universities Scotland have today (28 August) published the first report of the co-owned Future Framework for the Sustainability and Success of Scotland’s Universities (Future Framework). This ambitious and evidence-based review is looking at funding of university teaching, skills development, research and innovation to ensure it is fit for the future.
The report is the product of pillar 1 of the Framework, which was tasked with quantifying the funding gap facing Scotland’s 18 universities and was led by Professor Sir Anton Muscatelli.
Amongst the report’s key findings:
- The funding universities receive and the income they generate is not sufficient to sustain their core activities of teaching or research, creating a funding gap between cost and all sources of income of around £200 million in 2023/34.
- The public funding gap for teaching Scottish students reached approximately £288 million in 2023/24 with around only 82% of the costs of teaching recovered.
- The funding gap for university research (from all sources of income) has reached approximately £580 million in 2023/24, with only 72% of costs recovered.
- Universities had an estates maintenance backlog in excess of £1.1 billion in 2023/24.
- The data present a funding gap pattern, not a single-year anomaly. Scotland’s universities have collectively operated below full economic cost recovery throughout most of the period from 2016/17 to 2023/24. There was only one year this was not the case.
Commenting on the report, Professor Sir Anton Muscatelli, President of the Royal Society of Edinburgh, said:
“The picture painted in this analysis is bleak. Collectively, Scotland’s universities face an acute and growing financial crisis. The funding they receive – from both public and private sources – is not sufficient to sustain their core activities.
“The gap between income and expenditure has grown markedly since the Covid pandemic, reaching almost £200 million by 2023/24. If anything, this is a conservative estimate, which underestimates the full gap, but our aim has to present figures with as robust an underpinning as possible.”
The Funding Gap Analysis Report presents the first comprehensive assessment in 15 years of the gap between all sources of income to Scotland’s universities and the full economic cost of delivering their activities.
The report reinforces the rationale behind the Scottish Government and Universities Scotland’s decision to launch the Future Framework, confirming concerns already recognised by both government and the sector. Rising costs, declining real-terms public funding, increasing regulatory requirements, and growing uncertainty in international student recruitment are placing significant strain on institutional sustainability.
Drawing principally on Transparent Approach to Costing (TRAC) data, supplemented by Higher Education Statistics Agency (HESA) data and sector evidence, the data demonstrate that universities are increasingly unable to fund the full costs of teaching, research, infrastructure, innovation, and wider civic activity. While institutions have historically managed these pressures through cross-subsidy, particularly from international student fee income, that model is becoming increasingly fragile.
The Future Framework is co-owned by the Scottish Government and Universities Scotland.
Education Secretary, Màiri McAllan said:
“Scotland’s world-class universities make an outstanding contribution to our economy and wider society. They are the anchor institutions in communities across the country through their teaching, research and civic impact.
“Our joint commitment to the protection of free tuition means that Scottish students are not hampered by the levels of debt we see elsewhere in the UK, and they are able to go to university based on their ability to learn and not their ability to pay. The latest data shows we have record Scots going to university for the first time, particularly those young people from a deprived background.
“However, I recognise the need to ensure a sustainable model of funding which recognises wider financial pressures facing universities in Scotland and indeed across the UK. This is not a challenge unique to Scotland. The UK Government’s crackdown on international student visa routes, coupled with Brexit, inflation, energy prices and increases to employer National Insurance contributions have all added to the sector’s financial pressures.
“That is why we jointly commissioned a Future Framework review with Universities Scotland to consider the future shape of our sector. This report, which is transparent in addressing the financial pressures in the sector, establishes a shared and evidence-based understanding of the need for change. It is an essential first step in addressing these pressures and will help shape a constructive and forward-looking conversation about how we move forward in reforming the sector to be sustainable for the decades ahead.
“Our shared commitment remains to securing a sustainable future for Scotland’s universities while protecting the core principle of free tuition for Scottish students. I am clear that this Framework, as it develops its second and third pillar, must consider bold and new opportunities to ensure we deliver for the next generation and in our country’s future prosperity. I look forward to this work continuing in the weeks ahead.”
Commenting on the launch of the Framework, Convener of Universities Scotland and Co-Commissioner of the Future Framework, Professor James Miller, said:
“Scotland’s universities have faced significant financial pressures for some time, and this report provides an important, evidence-based, assessment of their scale. Importantly, it establishes a shared understanding between the sector and government of the challenges that must now be addressed. The analysis is clear that the current position is not sustainable and provides a foundation for the work ahead.
“This is not simply an issue for universities but for Scotland as a whole. I welcome the Scottish Government’s partnership in this process and its willingness to engage with the evidence. Today’s report is the beginning of a wider conversation, not the end of it. As we consider the options ahead, it will be important to proceed in a thoughtful and collaborative way to ensure Scotland’s universities remain sustainable, successful and able to deliver for future generations.”
The report concludes that the challenge is systemic rather than institution-specific. Although the scale and nature of pressures vary between universities, all parts of the sector are affected by underlying structural weaknesses in the current funding model.
Professor Andrea Nolan, Co-Convener of the Future Framework said:
“I am grateful to Professor Musctaelli, to Scottish Government analysts and to all members of the project team who worked on this report.
“I am pleased that this first output from our programme of work has delivered an agreed quantification of the scale of the pressures on the sustainability of the HE sector. Alongside the clear vulnerability of university finances, the work has highlighted the complexity, tight interdependencies and fragility of the current funding model.
“Our task in the coming months is to find effective ways to respond to these findings. The complexity highlighted above indicates there are likely to be no simple answers. However, working closely with stakeholders across Scotland we will build options to secure a sustainable sector that delivers for Scotland’s social, economic and cultural needs.”
Mary Senior, Scotland Official for UCU Scotland and Future Framework Steering Group member, said:
“This report comes as no surprise to workers in universities, as they along with students have been at the sharp end of this chronic under-funding. The reality of the unsustainable system is cuts to jobs and courses, unsafe workloads, stagnating pay, and all too many workers on precarious contracts.
“It’s vital that the next stage of this review leads to sustainable solutions. Alongside that there is an urgent need for an injection of cash to stabilise the system. We are clear that the forthcoming Scottish budget needs to support a university sector without mass redundancies to deliver the world leading teaching and research that powers our economy and society.”
The Framework for the Sustainability and Success of Scotland’s Universities was launched in late December 2025 as a joint exercise between Scottish Government and Universities Scotland. Its task is to explore options for ensuring a sustainable and successful future for Scotland’s 19 higher education institutions to 2045. The first phase of the work was to assess the extent of funding challenges facing the sector. Having presented this work, the next phases will draw on trend analysis and stakeholder input to consider how universities will need to adapt ahead of the curve of a raft of anticipated demographic, technological and other changes. Pillar 2 looks at sector-led transformation before Pillar 3 presents evidence-led options for a new Framework.
The Framework’s remit is to consider options within the publicly-funded model for undergraduate education for Scots. The Framework has cross-party support within the Scottish Parliament.
ENDS
NOTES:
- The full report, analytical report and summary can be downloaded, as of 01 Friday, 28 August, from: https://www.futureframework.scot/
- The Funding Gap Analysis Report does include a set of recommendations but they are of a technical nature, relating to the collection of finance data in universities and reporting requirements. It is not within scope of the phase of the work led by Professor Sir Anton to make recommendations for the future funding policy of universities. That will follow in later phases of the Framework under the stewardship of the Steering Group as Co-Convened by Scottish Government and Universities Scotland.
- Scotland has 19 universities but the Open University in Scotland is not included in the TRAC return and therefore the data in the report covers 18 institutions.
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