University of Dundee funding conditions

Photo: University of Dundee

Setting the conditions of funding

A year on from SFC being informed of the funding crisis at the University of Dundee, SFC Chair, Professor Cara Aitchison, reflects on SFC’s response within the context of a challenging financial environment.

On 13 November 2024, the Scottish Funding Council (SFC) received the news that no funding body wants to receive: the University of Dundee had identified a £35m deficit and needed to take urgent action to ensure a return to financial sustainability. Over the 12 months that followed, the University has been the subject of considerable media and political attention, with a wide range of views about who and what was to blame and what needs to happen to ensure that the University not only survives but continues to make a distinctive and valuable contribution to the local community, national economy and international reach of Scotland.

Within the melée of public opinion, there has, however, been one constant agreed by all: the University of Dundee plays a vital role in delivering world-leading teaching and research and we are all committed to supporting it through this crisis. That’s why the SFC Board took swift action to approve a request for £22 million liquidity funding in March 2025 so that staff could continue to receive salaries; learners could be supported to continue their studies; and researchers could continue to make ground-breaking discoveries.

Providing longer-term transformational support is more complex, particularly when that support requires considerable additional public funding at a scale well beyond that which could be afforded within SFC’s budget and at a time when both the university and college sectors are facing unprecedented financial challenges.

Our first step was to find out what went wrong to make sure it wouldn’t happen again. The Gillies Report commissioned by SFC was clear that, although there are very considerable financial pressures and challenges affecting the university sector in Scotland, at the heart of the financial failure at the University of Dundee were failures in governance and leadership and failures in financial management.

So when the Cabinet Secretary for Education and Skills announced in late June that financial support of up to £40 million could be provided to the University of Dundee up to the end of the 2026-27 academic year, she did so by exercising a ‘Section 25 direction’. Section 25 of the Further and Higher Education Act (Scotland) 2005, which has never been used before, enables the Scottish Government to direct SFC to provide funding to a particular institution where there is evidence of financial mismanagement.

Section 25 has meant that SFC’s role is not to determine if the funding should be granted, as that decision resides with Scottish Government, but rather to provide analysis and advice to the Scottish Government on what conditions should be attached to the funding. As the funding body, SFC has a statutory duty to provide assurance to Ministers that the additional public monies will deliver best value and a financially sustainable institution in the longer term.

The SFC Board has been clear that the University of Dundee needs to respond to the crisis by providing evidence of new ways of working that will not only enable the University to ride this particular storm but to grow stronger so that it has the resilience to weather any storms ahead. We have now shared draft conditions of funding with the University of Dundee. They focus on five thematic areas: a strategy for financial sustainability; robustness and transparency of governance; capacity and stability of leadership; a pathway to access commercial lending; and meaningful engagement that considers delivery for staff, students, and the wider region.

Financial sustainability is a condition of grant set out in SFC’s Financial Memorandum with all colleges and universities. We expect them to hold credible plans for long term financial sustainability, as well as being financially viable in the short term, to ensure they can deliver a high-qualify learning experience for their students and deliver high-quality research.

The SFC Board takes its governance responsibilities seriously. If that’s what we expect of colleges and universities in normal circumstances, then it should come as no surprise to anyone that we’re looking for greater assurance from the University of Dundee, through the conditions attached to the funding lifeline, given both the level of public funding that’s being offered and the failures of governance and financial management uncovered by the Gillies Review.

We understand that living with uncertainty is hugely challenging for the staff and students at the University. However, taking time to secure significant Scottish Government funding, develop appropriate conditions for that funding supported by legal and financial due diligence, and providing appropriate timescales and milestones for SFC scrutiny of the delivery of improvements at the University of Dundee has been vital. We believe this measured approach will help to ensure the long-term success of the University, supporting learners, researchers, the local community, Tayside economy and the wider world on which the University of Dundee has made, and will, I’m sure, continue to make, a very significant impact.