Anton Muscatelli: Universities are in a fragile state – MSPs must not play political football

“There is a funding gap…and it does create significant fragility in the sector,” Professor Anton Muscatelli tells Holyrood ahead of the publication of his analysis of the financial state of Scotland’s universities.

The report, published today, forms part of the Future Framework for the Sustainability and Success of Scotland’s Universities programme.

That initiative was set up by the Scottish Government, in collaboration with Universities Scotland, to address the mounting concerns about the sustainability of Scotland’s higher education sector.

The project team led by Muscatelli, the former principal of the University of Glasgow, was asked to establish the current financial position of Scotland’s 18 universities (it excludes The Open University) – covering teaching, research, and capital. The findings were stark: in 2023/24, there was a £200m gap between what universities spent and what they made.

And looking across all the data between 2016/17 and 2023/24, Muscatelli found the same “bleak” picture. Only in one of those years was there a surplus – and that was 2020/21, when there was “extraordinary funding for all organisations, not just HE, like the furlough scheme and other short-term subsidies” due to the coronavirus pandemic, he explains.

It leads to underinvestment in IT, in facilities, human capital

The impacts of that are already being felt, he says. “£200m in the context of £5bn [of total revenue] might not sound like a large percentage, but actually in reality its leading to real outcomes: universities having to cut costs and therefore you see staff reductions, you’re seeing a £1.1bn backlog in infrastructure, and that impacts on student learning, student support, research, et cetera. It is a fragile state.”

This report was just the first of the series expected to come out of the Future Framework project, and Muscatelli is clear that his job was not to “come up with solutions” nor predict what might happen if this funding gap exists. “What we can point to is real things that are happening at the moment,” he says.

“The sector has not recovered sufficient income to cover all its costs. So what does that lead to? It leads to underinvestment in IT, in facilities, human capital – it impacts on staff as well.

“Basically, what we are doing is we are trying to maintain a sector at the level of activity where, simply, we’re not putting enough resources in to do all its teaching and research and other activities. That’s the problem.

“And you can only do that for so long before things begin to happen. Either universities are going to have to cut costs, and they are doing that, or facilities will not be up to scratch, they will not be at the level they need to support teaching and research. These are the consequences.”

If there isn’t public subsidy, then Scotland will not have a role in driving its economy through innovation

The impact of these funding gaps does look slightly different at different institutions. The University of Edinburgh, for example, has had to make over 950 redundancies to cover a £140m blackhole, while the University of Dundee has announced plans to cut 154 jobs.

But Muscatelli is keen to highlight that these are “systemic issues” across all institutions – from the ancient universities to the small specialist ones – and not just one part of the sector “where we need to address some issues”.

“There’s a tendency to say ‘it’s this institution or that institution’; this isn’t. It’s a systemic issue. Of course, that will manifest itself differently at different institutions because of their size and scope and the size of their asset base, but it isn’t an issue that’s effecting a small number of institutions,” he adds.

Muscatelli, who was the principal and vice-chancellor of the University of Glasgow for 16 years until retiring last September, says these findings won’t come as a surprise to anyone with knowledge of the higher education sector.

And this funding gap must be addressed if Scotland is to retain its reputation for world-leading research – or risk the situation getting even worse. “Research reputation is what ultimately drives international league tables, and therefore if you are unable to continue to invest in research because you don’t have the cross-subsidy… there is a risk there, absolutely. That is well understood not only by the sector, but also by other stakeholders.”

Without it, cities, towns, industries and economies would be much, much poorer

He says there must be a concerted afford to “find public support for research and innovation”, because universities are competing in a global marketplace and industry “can choose where it goes”. “We have a choice to say we either won’t play that game – in which case Scotland won’t be a very attractive place for industry to come – or we can say we’ll recover as much as we can.”

He continues: “If there isn’t public subsidy, then Scotland will not have a role in driving its economy through innovation and through research, which is not a good basis for any economic or industrial strategy.”

Plugging that £200m gap would “at least stop the deterioration”, he says, but more is needed because his report also identifies a £1.1bn backlog in estate maintenance issues. And that infrastructure bill is only going to climb in light of government ambitions to decarbonise and the need to address RAAC risks.

And it’s not just the universities themselves that are put at risk, given how these institutions are often central to the cities and town in which they reside. Students, for example, have an “absolutely massive” impact on city economies, both in the immediate term but also longer term for those who are highly skilled and choose to stay in Scotland after graduating.

Then there’s also the “civic impact”, Muscatelli says, pointing to museum exhibitions, adult learning courses and outreach to schools. “These are activities where universities aren’t recovering full cost but without it, cities, towns, industries and economies would be much, much poorer.”

All these issues stem from a combination of problems plaguing the sector, including rising costs, declining real-terms public funding, increasing regulatory requirements, and growing uncertainty in international student recruitment.

That, Muscatelli says, is why Scotland’s politicians must come together to deliver the solution. “It’s really important for it not to become a political football, to say ‘all this stems from one decision we took 10 years ago or five years ago’. What I hope political parties will draw from this is that this has to be a shared endeavour.

“It’s a challenging situation, but it will require all the thinking from all the parties to find a solution, because it’s such a substantial funding gap… To address something like that requires cooperation from across the political spectrum.”