Universities on the edge: How can we solve the funding crisis?

Sitting in the midst of the usually buzzing Strathclyde University campus you might be forgiven for forgetting that – with three weeks to go till polling day – a general election campaign is raging across the country. Term finished last month and very few students are still here. 

Traditionally party leaders are concerned about the student vote. Some woo (think Jeremy Corbyn) with eye-catching pledges while others attempt to dodge the issue by timing elections, like this one, outside term dates (see also Boris Johnson).

Then there are those who make promises on student issues which they don’t keep. Who can forget the Liberal Democrat u-turn on abolishing fees when it agreed to form a coalition government with the Conservatives in 2010?

Almost 13 years ago Strathclyde University’s Collins building – just down the steep hill from the step where I’m sitting in Rottenrow Gardens – was occupied by furious students, protesting the decision by the university to impose annual fees of £9,000 for students from England, Northern Ireland and Wales. The fees were in line with the cap raised by the Conservative and Lib Dem coalition south of the border.

For Scottish students studying at home the situation has been very different. When fees were introduced in England by the Labour government in 1998, Scotland brought in a graduate endowment set at £2,000.

It was abolished in favour of free tuition by the SNP Government. “The rocks will melt with the sun before I allow tuition fees to be imposed on Scotland’s students,” then first minister Alex Salmond famously boasted at the time.

A piece of public art – bearing that legend – once graced the grounds of Heriot Watt University but it was removed in 2020. Last year that institution received 40 per cent of its income from fees paid by international students, an essential source of funding for almost all Scottish universities.

Universities in deficit

But with the number of international student declining dramatically last year following restrictive Home Office immigration rules, a decade of real terms cuts by the Scottish Government and growing research and capital costs, Scottish universities now find themselves in the midst of a growing financial crisis. 

Those un-melted rocks are suddenly in the sun’s full glare. 

At least 10 of 19 institutions are expected to be in deficit in 2023-24. This week Universities Scotland took its concerns to the Scottish Parliament’s Education, children and young people committee, with a submission it claimed was its “most candid assessment of the financial pressures on universities” it had ever given.

The sector body says the real challenge is coming down the track in three-to-five years. It’s called for “thoughtful engagement” that avoids the trap of the “free versus fee” discussion. 

So how did Scotland – with its historic reputation for excellence in higher education –  find itself here?

“Until about ten years ago the funding for each student’s place was roughly in line with what it actually cost to teach that student,” explains the National Union of Students(NUS) Scotland president Ellie Gomersall, whom I’ve come to Strathclyde University campus to meet. 

“That was increasing with inflation each year and it was workable,” she explains. But then the funding level stalled while inflation rose. “That was felt as real term cuts,” she adds.

Last year the Institute of Fiscal Studies found there was a gap of £2,020 per year between what Scottish universities receive for each Scottish student they take on compared with what English unis receive for an English student.  Here that shortfall has been subsidised to a greater extent by the growth in international students who pay fees of £30,000 and upwards.

The sector is still reeling from some recent shocks. Last November Aberdeen University – founded in 1495 and considered one of Scotland’s four “ancients” along with Edinburgh, Glasgow and St Andrews – consulted staff on scrapping degrees in French, Gaelic, German and Spanish and making compulsory redundancies. It later agreed to keep joint honours in place and offer voluntary severance packages instead.

In its most recent annual report the university laid out “significant doubt” over its ability to continue as a going concern. It has since confirmed it has made savings, putting it on firmer financial footing. 

But according to social science and languages staff who spoke to The Ferret on the condition of anonymity, all is still not well. “The fact that the decision about modern languages was being made because it was unprofitable meant that immediately others working in humanities and social sciences started looking at the progress of their modestly funded degree programmes with terror,” said one staff member.

Vacancies are routinely not filled, he said, meaning students are being taught by non-specialists “and the quality of education therefore is going to decrease”. “It also means less contact time, larger groups and more standardised assignments,” he added.

The extent of the challenges are not lost on staff at Aberdeen. Yet there’s also a distrust of management. “As a group, university managers are singularly ill-equipped to address this crisis,” one humanities lecturer told us, claiming staff in the sector, who have seen a real terms cut of 17 percent in pay are “angry and demoralised”.

“Part of the solution has to be that we end the regime of secrecy and talk openly about the best way to tackle this,” another staff member said. “This is in the interests of both students and the Scottish public.”

Aberdeen University said it was proud of the “outstanding education and student experience” its staff provide “despite the challenging financial circumstances” 

Part of the solution has to be that we end the regime of secrecy and talk openly about the best way to tackle this

Staff, Aberdeen University

A spokesperson said it had been “very open” with its community about its difficulties, holding all-staff meetings, and sharing actions being taken.

But high pay in the upper echelons doesn’t help engender good relations. Like most principals George Boyne, the Aberdeen principal is paid a lot – his package was worth almost £300,000 per year, including pension and free university accommodation. Edinburgh University’s Peter Matheson earned £418,000 last year.

Finding solutions is thorny. Most acknowledge tackling high pay – might be desirable, but will not fix the bigger issue. 

There are also calls for reforms to immigration rules if a new government is in power next month, which would make the UK more attractive to international students again. 

“The way the UK immigration system operates when it comes to international students is really regressive now,” says Professor Alison Phipps, UNESCO Chair in Refugee Integration at Glasgow University. “The simple solution is to take international students out of the migration count.” But that requires Home Office approval.

Others believe there’s a need to reconfigure public money so that wealthy institutions like Edinburgh University, which has reserves of about £2.5bn (some of it restricted) receive less and the most cash-strapped – such as the so-called ‘post-92’ unis, which were formerly colleges – get more.

Scottish Green’s education spokesperson Ross Greer, says: “There is a clear case for reducing the public funding given to institutions with excessive reserves and redistributing that money to the universities who are teetering on the edge of financial viability.”

But the controversial prospect of reintroducing fees, graduate taxes or endowments is one response that’s been repeatedly touted. 

According to Dr Gavan Conlon, a partner of consultancy London Economics, who gave evidence to the Scottish Parliament earlier this month, the Scottish Government puts five times as much into university education as the UK Government does in England. Despite that institutions are less well funded.

“There has to be some form of additional cost passed on to graduates,” was his conclusion following a comparative study of the differing approaches of UK nations to higher education (HE) funding.

“Scottish students studying in Scotland do not pay enough in comparison with those elsewhere in the UK,” he told the committee. “By introducing the English system in Scotland, that would, overnight, save the Scottish Government 40 per cent of its total cost for higher education.”

It’s not a new position. In August 2022 Scottish think tank Reform Scotland launched a paper claiming that Scottish student numbers were being “capped” artificially because they did not pay fees and argued for “deferred fees” to be repaid once they were earning more than the Scottish average salary. 

In fact there are more student places for Scottish students than ever before.

In May 2023, Edinburgh University principal Peter Mathieson said there was a need for “calm consideration” of student fees. Then last week Paul Grice, Queen Margaret’s University principal and vice-convener of Universities Scotland backed the idea of a cross-party commission to take forward discussions – including on the reintroduction of fees.

Like his colleagues, Universities Scotland convenor Iain Gillespie is keen not to be drawn into a binary conversation on the issue. It’s complex, he says, because if the Scottish Government were simply to go back to funding each student to the tune of what it really costs, that wouldn’t address all of the universities’ woes. 

“In terms of research we are still structurally underfunded,” he says. “We get significantly less for our research dollar than we did. We also have an ageing estate and a need for capital investment.” 

But he insists there are questions about whether it is in fact “just and equitable” for unis to be funded only by the taxpayer. “Who benefits?,” he asks. “Firstly the state and the country as a whole benefit, secondly, it’s the individual and thirdly it is the employer who benefits from the education of graduates. I think there is discussion to be had about how those actors pay for the benefits.”

Gillespie, who currently earns £316,000 as principal and vice chancellor of Dundee University, has “a very personal example”. His son is at Glasgow University benefiting from Scotland’s universal free education. “Why is it fair that I get subsidised by the public purse?” he asks. 

If Scotland didn’t provide tuition fees, I would not be in university at this time.

Shannon, student

Despite criticism of the high pay culture, he insists universities “do a brilliant job in making efficiencies” and says there is a need to “attract the right talent, skills and experience”. 

The Scottish Government, however, has no plans to introduce fees. On Thursday’s ITV debate SNP Westminster leader Stephen Flynn made a point of positioning himself as the only candidate on the podium backing a position of free tuition, which he said was “life changing” for young people in Scotland. 

NUS’s Ellie Gomersall takes comfort in both the Scottish Government and Scottish political parties’ support for free tuition. 

“Free tuition for Scottish undergrad students is non-negotiable for us,” she says. “Any party that proposes or puts in place any form of tuition fees, should know that the student movement will do to that party what we did to the Lib Dems in 2011. There’s a principle behind universal free tuition, which is that a more educated society benefits everyone.”

Students, she points out, are already getting into huge amounts of debt due to maintenance loans – used to pay for costs at University and paid back with interest when students are earning. Student accommodation in Edinburgh, for example, ranges from £180 to £295 a week.

If fees were introduced they would be met for some students by affluent parents, she says, while students from less well off families will have to pay off debts, potentially for 30 years. Instead, Gomersall suggests, “progressive taxation” would ensure those “with the broadest shoulders” contribute the most.

There are concerns too that hard won progress on widening access would be lost if fees were introduced. In 2020 research by University and College Union (UCU) Scotland found two-thirds of university applicants living in Scotland would delay starting if fees were introduced. More than a quarter (26 per cent) said they simply wouldn’t be able to afford to go. 

That chimes with Glasgow University medical student, Shannon. People at her school in the relatively deprived Rutherglen, to the south east of Glasgow, didn’t study medicine. But following Shannon’s example more kids from her school have now gone on to study the degree.

She was supported through Reach, a widening participation programme, supported by the Scottish Funding Council and running at the universities of Aberdeen, Dundee, Edinburgh and St Andrews and Glasgow. 

She did not get a maintenance grant, which wouldn’t need to be paid back, and will graduate with debt from student loans. “I can confidently say that if Scotland didn’t provide tuition fees, I would not be in university at this time,” she says firmly. “I would have had to come to terms with another route, and maybe returning as a mature student.”

However to Jim Dickinson, associate editor at online higher education site Wonk HE, the division between the cost of tuition fees and the cost of living while at university, is a false dichotomy.

“In the Republic of Ireland students pay a contribution of €3,000 (£2,532) that goes towards student welfare and other costs and the government there still talks about free tuition,” he told The Ferret. “The same is true in Germany and elsewhere in Europe.” In theory, he says Scottish Universities could ask for a means tested contribution in the same way – which only the better off would pay. 

The tuition point is political, he says. “With a bit of political bravery the Scottish Government could try really interesting things. But because of the symbolism of that policy it apparently won’t shift.”

High pay – he says, is a red herring in terms of the sustainability crisis. “But senior pay looks egregious,” he says, when you start asking employers and graduates to start paying their way. “There are other countries, such as the Netherlands where quasi-public sector pay is capped,” he adds. 

Mary Senior, Scotland official for the UCU union, thinks that in the debate over fees an important point has been missed. While English students pay fees “the reality is there are even greater challenges there”. 

“So many staff in England are facing redundancies,” she says. “Universities are also facing a real terms cut because the tuition fee level in England has not really changed. I think we can see from the English experience that the marketisation approach doesn’t work.”

Not only does UCU fully support free tuition for students living in Scotland – it would like to go further. Along with others she would like to see an end to the way international students are treated “like a cash cow”. 

She would like employers to contribute more. “In England we are actively campaigning against tuition fees and looking at an employer levy of one percent on employer contributions for graduates or a three percent on corporation tax,” she explains. That, the union argues, could support the scrapping of tuition fees at no cost to the exchequer.

In Scotland an employer levy is also one of the ideas raised by University principals like Iain Gillespie as a potential solution to explore.

Back on Strathclyde University campus Ellie Gomersall is also keen to find solutions. It’s an issue we have to get right, she says. “Education lifts people out of poverty. Is absolutely essential to a lot of people being able to lead a fulfilling life, to be able to contribute to society in whatever way they want to do. Whatever happens next, we have to remember that.”

The Scottish Government said it was “resolute in its commitment to free tuition and claimed universities played a pivotal role in Scotland’s economy.

Additional reporting by Paul Dobson

This Ferret story was also published in the Sunday National. Our partnerships with other media help us reach new audiences and become more sustainable as a media co-op.  Join us to read all our stories and tell us what we should investigate next.

Main image: chrisdorney/iStock