Narrowing the gap: funding Scotland’s university sector

The recently published Funding Gap Analysis of Scotland’s University Sector identified acute, structural weaknesses within the current university funding model. Universities Scotland recognises that neither the sector, nor the Scottish Government, can close a recurrent, structural funding gap of more than £200 million in a single spending round. The question for the budget 2027/28 is therefore not whether the gap can be eliminated immediately, but whether it can be prevented from widening further, while longer term reforms are developed through the ‘Future Framework’ process.

We therefore make a twofold ask of the Scottish Government’s 2027/28 Budget:

1. Arrest the decline in core funding
   • increase SFC’s Higher Education Resource budget by 5% in real terms; and
   • increase SFC’s Higher Education Capital budget by 9% in real terms.
2. Empower reform
   • provide access to affordable borrowing through a University Capital Loans Scheme, using Financial Transactions or other means, to protect the future operability of the university estate and other essential infrastructure, reduce climate impact, and enhance the sector’s physical contribution to diverse local places; and
   • enable the Scottish Funding Council to develop a more strategic, longer term approach to supporting sector transformation, by creating a multiyear University Transformation Fund, and committing substantial new investment to the first year.

We have deliberately confined our asks to the essential measures needed to lessen the financial pressure on universities over the coming year. However, we must also urge the Scottish Government to look afresh at the significant challenges facing some of our students – especially those that study parttime, and/or are reliant on Discretionary and Childcare Funding to enable their studies –to ensure that personal circumstances do not act as a barrier to accessing a university education.

Our asks, particularly of the SFC revenue and capital budgets, will not remedy years of underfunding at a single stroke; not because more investment isn’t desperately needed, but because we recognise and are responding to the fiscal constraints facing the Scottish Government.

In the longer term, the sector needs a sustainable, predictable, multiyear settlement to drive future success; that is the challenge posed to the Future Framework process. More immediately, the settlement we are seeking for 2027/28 represents the bare minimum required to maintain delivery and prevent the structural funding gap from growing any larger. Any less, and the sector inevitably faces another year of impossible decisions – undermining the student experience, demoralising staff, and spreading more uncertainty across our institutions and the communities in which they are anchored.