The impact of tightening finances on Scotland's universities

Author: Professor Sajjad Hussain and Dr Dely Lazarte Elliot, SPICe Research Fellowship Scheme

PDF Published: Tuesday 24 Feb 2026 (SB 26-12)

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Overview
Report

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Overview
Report
- Executive Summary
- Part I: The strategic importance of universities to Scotland's prosperity
  - The multi-dimensional value of universities as anchor institutions
- Part II: The unfolding financial crisis and job cuts
  - Scale and immediacy of the crisis
  - Job cuts and their root causes
- Part III: Policy context and emerging reform framework
  - Parliamentary scrutiny and government acknowledgement
  - Emerging structural reform agenda
- Part IV: The consequences of unmitigated job cuts
  - Sectoral consequences: The risks to innovation and skills
    
    Research productivity and competitive advantage
    
    Workforce development and access
    
    Programme closures and loss of academic breadth
  - Economic consequences: Regional impact and GDP loss
    
    Direct economic impact on regional economies
    
    Macroeconomic impact analysis
    
    Differential regional impact
  - Reputational and quality consequences
    
    Research output and global competitiveness
    
    Talent retention and brain drain
    
    Access and equity consequences
    
    Irreversibility of reputational damage
- Part V: Literature-based policy considerations
  - Enhance financial management and efficiency
  - Restructure the funding model and streams
  - Considerations for Framework for the Sustainability and Success of Scotland's Universities
- Part VI: Insights and policy considerations from the interviews
  - Methodology
  - Key Interview Insights
    
    Universities as anchor institutions
    
    A ‘perfect storm’ for the HE sector
    
    Groups affected by job cuts
    
    Intertwined impact of job cuts
    
    A possible strategic response
    
    Job cuts as catalyst for a vicious cycle
    
    Inevitable changes in addressing an unsustainable funding model
    
    Aiming for large alternative savings via a planned rather than a reactive mode of responding
    
    Preserving and building on excellent qualities of the sector
- Interview-based policy considerations
  - University leadership and governance
  - Pragmatic financial planning
  - Effective programme planning
  - Working as one sector
  - Dialogue as a requisite among Scottish HE stakeholders
  - Clear and transparent communication
- Potential alternative models to the current setting
- Considerations & conclusions
  - For Higher Education Institutions
  - For the Scottish Parliament
  - Conclusions
- Annexe
Sources

The local, regional, national and international impact of universities.

Image: Figure 1: Universities as anchor institutions

Challenges facing universities include the frozen fees regime, mounting cost pressures, real terms funding decline, over-reliance on international students and structural financial weaknesses.

Image: Figure 2: Challenges facing universities

Considerations for Higher Education Institutions include looking at governance, improving communication and planning, diversifying funding streams, increasing collaboration and protecting research and talent.

Image: Figure 3: Considerations for Higher Education Institutions

Considerations for the Scottish Parliament could include advocating for a more resilient financial management framework, stabilising the funding base, supporting collaboration, supporting national dialogue, providing a welcoming environment for international students and staff and considering regional safeguards in relation to redundancies and course closures.

Image: Figure 4: Considerations for the Scottish Parliament

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Last Updated: 23/2 11:13pm

Image: Figure 1: Universities as anchor institutions

Image: Figure 2: Challenges facing universities

Image: Figure 3: Considerations for Higher Education Institutions

Image: Figure 4: Considerations for the Scottish Parliament

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