University of Dundee: Strategic Advisory Taskforce report

Chapter 3: Context

16. Student education, research and innovation, and the economic, social and cultural impact of the University are all of a high standard. University employees, students, and the wider community can be justly proud of their achievements in each of these domains. However, there are clear signs that the higher education sector as a whole - in Scotland and across the UK – has been on a difficult path over the past ten years with public investment in the teaching unit of resource and basic research both seriously eroded in real terms. This has created a high risk financial environment, affecting institutions to varying degrees, with many seeking to cross-subsidise high quality teaching and research by working hard to boost income and reduce costs. The recent decline in international student numbers, higher operational costs, and increases in employee costs continue to expose serious financial risks within the system.

17. Looking forward, it is increasingly clear that additional investment or a combination of system changes and new policy approaches will be needed to achieve sustainable funding for teaching and student support; student numbers; international education; and research funding. The Scottish sector as a whole is already leading the way on shared services and the use of shared procurement frameworks, and many universities are already taking very significant steps to improve efficiency, reduce costs, and increase income. Dundee is now following this path and can learn from others along the way.

18. Imminent key challenges:

• reduction in real-terms funding of the unit of resource for teaching indicative university resource (revenue) budget, including teaching and strategic projects, for FY 2025’26 is £773.6 m, an increase of £12.9 m (1.7%) from FY 2024’25
• a contribution of c£7,500 per Scottish student is less than the £9,535 fee recently confirmed in England. This higher level now fails to meet the costs of teaching, challenging the financial sustainability of some universities in England. The c£7,500 average contribution in Scotland includes high cost subjects like medicine which are confined to a limited group of Scottish universities.
• the number of Scottish domiciled students funded by SFC is capped, whilst the caps on the health professions include all students. The latter does not affect all universities.
• there is a significant drop in international student recruitment linked to in-country economic constraints, immigration restrictions, and changing attitudes to the UK in some countries.
• indicative university capital budget, including research and innovation funding, for FY 2025’26 is £368.3m, an increase of £11.4m (3.2%) from FY 2024/25.
• research and innovation income is constrained by reductions in flexible, longer term funding which traditionally has complemented a grant-based approach, and the fact that research project funders do not sufficiently cover overhead costs. Research intensive universities are having to subsidise the shortfall in meeting the full economic costs of research.

The particular issues facing the University

19. Despite many successes up to and including the 2020’s, the University has lost momentum over the past year, and also the trust of its community as a result of flawed leadership, governance and financial management. This resulted in an investigation requested by SFC into its financial oversight and decision making; an unprecedented intervention by Scottish Ministers, invoking section 25 of the Further & Higher Education (Scotland) Act 2005; and a growing interest in the conclusions of work sponsored by Universities UK on the challenges of ‘transformation and efficiency’ in the higher education sector:

Investigation into financial oversight and decision making at the University of Dundee: Report presented to the SFC by Professor Pamela Gillies on 19 June 2025

20. Key findings:

• a lack of financial acumen and poor financial judgement.
• inadequate management and reporting of clear and comprehensive financial data.
• poor monitoring of key performance indicators and a lack of agility by leadership in responding to a significant fall in income.
• weak governance in relation to financial accountability, and failure to hold senior management to account.
• the importance of transparency and striving for a fully engaged workforce, and an inclusive University culture.

Cabinet Secretary for Education and Skills - Statement to Scottish Parliament on 24 June 2025

21. Key points:

• the importance of universities as anchors in their communities.
• Government (financial) support dependent on the University responding (positively) to the urgent and clear conclusions of the Gillies report.
• a new Interim Principal has been appointed, and there will be elections for a new Chair of Court over the summer period.
• additional funding of £22m has already been directed to the SFC to support the University.
• the University is required to develop a sustainable long term recovery plan, drawing on public financial support alongside private and commercial investment … the aim being to draw reliance on (exceptional) public funding to an end.
• Government has issued an unprecedented direction to the SFC under section 25 of the Further & Higher Education (Scotland) Act 2005.
• the University has been informed of ‘in principle’ funding of up to £40m over two academic years (2025-26, and 2026-27) and three financial years, requiring (rigorous) due diligence prior to (committing) to any expenditure.

The funding announced by the Cabinet Secretary on 24 June 2025 will not impact on the funding available to the SFC in support of other institutions in Scotland … and her concluding remarks (below) provide a clear and legitimate challenge which should shape the University’s future:

“Presiding Officer, a line must now be drawn under mistakes made by a collective few, and we must jointly - across this Chamber – endeavour to support Dundee University to rebuild, to thrive and once again, to flourish.

The City of Discovery should expect no less.”

Universities UK - Transformation and Efficiency Taskforce: Towards a new era of collaboration. Chaired by Sir Nigel Carrington and published on 2 June 2025.

22. Key points:

• innovative collaborative structures.
• sharing more services and infrastructure.
• using economies of scale and sector buying power.
• supporting digital transformation.
• adopting a common approach to assessing efficiency and benchmarking costs.
• evolving leadership and governance.
• creating the right policy and regulatory environment that helps universities go further, faster.

Highly relevant to the University, the report also underlines the importance of:

• developing the current skillset required of executive and non-executive leaders with a particular focus on transformation, turnaround and (high level) financial skills.

As a member of Universities UK, the University will be aware that the 2 June report is the first of a series of relevant reports expected from the UUK Taskforce and a number of associated bodies. These are intended to move discussions about collaboration in higher education forward, and to explore new approaches to strategy development and managing large scale change.