Edinburgh University to cut staff to plug £140m black hole

Edinburgh University plans to reduce staff numbers to plug a £140 million financial black hole.

University principal Professor Sir Peter Mathieson said the gap equates to about 10% of the university’s annual turnover.

He said “radical university-wide actions” are needed to make the savings, which will lead to “a smaller staff base and lower operating costs”.

The university declined to confirm the number of staff reductions and whether these will include compulsory redundancies.

The size of the financial gap that we need to close over the next 18 months is about 10% of our annual turnover

The announcement was made shortly before Finance Secretary Shona Robison confirmed £15 million of funding to help struggling universities.

Prof Sir Peter said in a statement: “I have been open about the severe financial difficulty our university, and the wider sector, is facing. Today, my senior team and I have announced how we will address these issues.

“We are currently forecasting to be in operational deficit in forthcoming years, and this must be reversed for us to sustain our position as a world-leading institution.

“The size of the financial gap that we need to close over the next 18 months is about 10% of our annual turnover – a similar percentage to that of many other universities.

“This has to be a recurring and sustainable reduction in our costs. For us, this is of the order of £140 million. To put this into context, it costs around £120 million a month to run the University of Edinburgh.

“To make these recurrent savings, we need radical university-wide actions, which will lead to a smaller staff base and lower operating costs.

“We are also reviewing all capital expenditure – including previously approved projects – with a renewed lens of affordability.”

He said the plans aim to restore the university to a “secure sustainable position” by financial year 2026/27.

Prof Sir Peter said the factors behind the financial problems include “years of income for teaching not rising in line with costs, steeply rising utilities prices, inflation, recent unexpected announcements on national insurance contributions, and rise in employment costs: these have all contributed to the fragility of the sector’s finances”, as well as the UK being a less attractive destination for international students.

He said the announcement is “understandably difficult” but pledged the university will “emerge as a stronger institution”.

The University and College Union (UCU) said the university should use its reserves.

UCU general secretary Jo Grady said: “The University of Edinburgh is one of the oldest and richest institutions in Scotland with endowments stretching back through the centuries, so management’s threat to make cuts of this size is shocking.

“Professor Mathieson needs to use the billions of pounds the university boasts in wealth to protect jobs, protect provision and protect the university’s global reputation.”

The announcement comes amid warnings of financial trouble in the sector.

Last week Professor Steve Oliver, the principal of Robert Gordon University (RGU) in Aberdeen, said Scotland’s universities are facing a “major existential threat” through being “significantly underfunded”.

His comments at a fringe event at the Scottish Labour conference in Glasgow followed bosses at Cardiff University confirming plans to cut 400 jobs last month, as the university there also seeks to close some courses and merge departments to save money.

Durham University, meanwhile, is looking to axe some 200 positions, while staff at the University of Dundee have voted for strike action over plans to cut posts to help reduce its deficit.

During the final debate on the Scottish Budget at Holyrood on Tuesday, Ms Robison said she recognises Dundee University faces an “immediate challenge”.

She said: “I can inform the chamber that up to £15 million of financial transactions will be made available to the Scottish Funding Council to support the sector and universities such as the University of Dundee.

“Further work will be ongoing in the coming weeks on this matter, and the minister for higher education will keep Parliament updated.”

Ms Robison used the issue to urge Labour’s finance spokesman Michael Marra – who has previously represented the city as a councillor – to support the Budget Bill, telling him: “Dundee is watching.”

Ms Grady said: “This is a step in the right direction and the Scottish Government is to be commended for supporting the university at this time.

“Ministers elsewhere in the UK need to take heed and find funding to stop the cull on jobs and courses.

“For Dundee University this gives a financial injection that should allow the employer to take compulsory redundancies off the table.

“Doing that would allow UCU to stop the current strike at the university and the ball is now in managers’ hands.”

A Dundee University spokesperson welcomed the extra funding and added: “We understand that it will be for the Scottish Funding Council to make decisions about how the additional funding is allocated, and we are continuing to engage closely with them on the development of our financial recovery plan and moving to a more sustainable future.”