Scale of funding challenge facing universities set out for Holyrood Committee

Alastair Sim, Director of Universities Scotland, has told members of the Scottish Parliament’s Public Audit Committee today that the ‘underlying risks’ highlighted by the Auditor General’s report into higher education funding are now crystalising following 12 per cent cuts to universities’ overall funding since 2010/11.

Alastair Sim was giving evidence to Holyrood’s Public Audit Committee on the funding pressures facing Scotland’s 19 higher education institutions following the first ever audit into higher education funding from Audit Scotland was published in July.

The Audit Scotland report pointed to 6 per cent cuts in real terms to higher education funding between 2010/11 and 2014/15, the period of the audit, and warned there were ‘underlying risks’ to university finances. In the two budget years that have followed 2014/15, funding for higher education has been cut by another 6 per cent, totaling 12 per cent cuts in real terms relative to 2010/11 funding levels. The pressures are now such that universities only receive 90 per cent of what it costs to teach publicly-funded undergraduates. Scotland’s ‘world-leading’ research is under-funded at 86 per cent of what it costs to deliver.

Mr. Sim told the Committee that current funding levels were unsustainable and put the quality of university teaching and university research at risk. He cautioned that more than a quarter of universities in Scotland were in deficit in 2014/15 and the sector was reaching the point where they would no longer be able to operate today without damaging the ability to do so tomorrow. However, he welcomed the close engagement the sector has had with the Scottish Government in late 2016 in an attempt to find a way out of this funding challenge.

Speaking to the Public Affairs Committee, Alastair Sim said:

“The Auditor General’s report celebrates Scotland’s universities as successful and internationally renowned but identifies underlying risks in universities’ finances as university teaching and research is funded at levels significantly below cost. The report warned of major challenges ahead for the sector. It’s essential to students, staff and the wider economy that Scotland has a diversity of truly excellent universities. We do not currently have a sustainable basis for this.”

Following his oral evidence to the committee, Mr. Sim added:

“The first ever comprehensive audit of university finances shows the sector at a tipping point and there have been further cuts beyond the scope of the report. Universities have endured 12 per cent cuts to their public funding since 2010. Universities are anxious to protect the quality of the teaching and research they deliver and to keep drawing in investment from other sources which makes every pound of Scottish Government investment go nearly two and a half times further, but they are currently in an unsustainable situation. Add to this, the financial risk and uncertainty caused by Brexit and the threat of further restrictions on universities’ ability to recruit international students and universities find themselves face-to-face with a sustainability challenge that is reaching the point where they risk not being able to operate today without damaging the ability to do so tomorrow.

“We welcome the Scottish Government’s close engagement with the sector in recent months to try and find a way through these funding challenges together. The Government has reiterated its commitment to an excellent, competitive and accessible higher education sector. We recognise the pressures facing the Scottish budget this year and have offered a range of creative ways to make investment go further. However, universities do need to see an end to the erosion of public funding for teaching and research in this year’s budget as the first step to recovering a sustainable position. They simply cannot absorb any more cuts. We look to the December budget with confidence.”



  • Mr Sim, Director of Universities Scotland, gave oral evidence to the Public Affairs Committee alongside Paul Johnston, Director-General Learning & Justice, Scottish Government and Dr John Kemp, Interim Chief Executive, Scottish Funding Council. Committee papers can be found
  • Audit Scotland’s report Audit of Higher Education in Scottish was published on 7 July 2016.
  • The Audit Scotland report found that universities recovered 94.2 per cent of the full economic cost of teaching publicly-funded students in 2014/15 (p. 29, para 62). Further cuts to the Scottish Government funded teaching grant between 2014/15 and 2016/17 have seen this fall further to 90 per cent by Universities Scotland’s analysis of Audit Scotland data.
  • 77 per cent of Scottish research was found to be ‘world-leading’ or ‘internationally excellent’ in the 2014 Research Excellence Framework.