Inconclusive Spending Review makes January budget critical for Scottish HE

The UK Government Spending Review announced on Wednesday (25 November 2020) has made January’s Scottish Government budget a critical event for Scottish higher education.

The Scottish block grant will increase by an additional £2.4bn in 2021/22 as a result of core and COVID-19 expenditure. Within UK Government spending priorities, an extra £400 million expenditure per year until 2023/24 was announced for research and development for the next three years [see notes].

Whilst the investment in research is welcomed by the sector, there was no new money assigned to the sector directly from the Treasury to help with issues caused by the pandemic and little clarity over the future funding arrangements at the end of the transition period out of the EU  [see notes]. Scottish universities are facing financial insecurity that could be helped by the Scottish Government in January’s budget.

Universities are now facing uncertainty with no clarity about how much money will be coming to Scotland via either the investment in research or the Shared Prosperity Fund. Combined with doubt over the nature of the sector’s relationship with the EU, the sector is looking to the Scottish Government to deliver the sector security and reassurance in the critical budget year of 2021/22.

Ahead of January’s Scottish Government budget, universities are looking for:

  • Sustainable funding of our core teaching, research and knowledge exchange contributions.
  • Specific funding for additional actions to support an education and innovation-led recovery and help Scotland rebuild better.

Universities in Scotland currently face a tough set of circumstances which have been exacerbated by the pandemic. The Scottish Government’s budget for 2021/22 is the first strategic opportunity since the pandemic, to address the acute financial challenge faced by universities. Which are quantified as:

  • The Scottish Funding Council (SFC) estimate that public funding of university teaching in 2018-19 was £157 million per year below the full cost of provision.
  • In the same year research was funded at 80% of cost, a deficit of £340 million.
  • The university sector’s debt has increased from £437 million in 2014/15 to £1.65 billion at the end of 2018/19.
  • SFC estimate that the sector will face an overall deficit of £176 million in 2020/21.

Professor Gerry McCormac, Convener of Universities Scotland and Principal of the University of Stirling said:

Scotland’s recovery from the COVID-19 pandemic will be education-led. We owe it to our young people, to provide maximum support and ensure they have the best educational experience possible in the years ahead.  To do this universities need to recover from the financial shock and receive a reliable, sustainable funding settlement from the Scottish Government.  We are ambitious for Scotland and want to fully contribute to the recovery, but the next budget from the Scottish Government will be critical in terms of addressing the major gaps in higher education funding.

“It is regrettable that with only days to go until the end of the transition period we still have no clarity over our future research relationship with the EU, nor do we know if we will be members of the Erasmus student mobility scheme. Whilst we welcome the commitment that all EU funds will be covered, the lack of detail around the Shared Prosperity Fund is of concern.

“In January’s budget we would like to see rapid progress towards sustainable funding of every Scottish-domiciled student. If that cannot be achieved in one leap, we look at least for complete reversal of the £750 per student real terms erosion in funding since 2014/15.

“The value of university research has never been more evident than during this pandemic. We need further progress towards research being funded at full cost, so that Scottish universities can continue the world-leading research and innovation that will build a sustainable recovery. Our  knowledge exchange activities have been exemplary and support and enhance Scotland’s businesses from multi-nationals to small firms.

 “As we move out of the deep crisis caused by the global pandemic, we need to rebuild our capability to create more jobs, enhance social services, restore living standards and build an even more inclusive society. Investment in universities does that.”


Spending Review: what it delivered for HE in Scotland:

  • The Scottish Government will have an additional £2.4bn in 2021 made up of the additional £1.1bn ‘core’ and £1.3bn of COVID-19 expenditure.
  • Shared Prosperity Fund: the fund will operate UK-wide and that further details will be set out in a UK-wide investment framework to be published in the spring. The themes for investment are noted as: investment in people; investment in communities and place; and investment for local business.
  • Science and research: a multi-year settlement for the National Academies and UK Research and Innovation’s core research budgets will see these grow by more than £400 million on average per year for the next three years. It concludes that by 2023-24 the government will be investing £1.4 billion more per year in core funding for the research base.