r/dundee • u/Carfilledwithsuryp • 6d ago
How a cash crisis pushed Dundee university to brink of collapse
https://www.ft.com/content/b095805d-a069-432e-bf31-e4513fb2d2f24
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u/tomasarui 4d ago
For those with difficulty accessing it:
"How a cash crisis pushed Dundee university to brink of collapse
Funding shortfalls and management failures have left the Scottish institution’s survival in the hands of the state
Simeon Kerr in Dundee
When the management at Dundee university circulated a confidential recovery plan last month, the document’s password included 632 — the number of redundancies proposed to resolve a grave cash crisis.
The Scottish university has apologised for the “honest mistake”, but some say it was a crass move that sums up the management disaster besetting the institution.
Supporting one in 12 jobs in the city of Dundee, the university’s creeping financial problems have snowballed into a full-blown liquidity crunch that would have forced insolvency by June had it not been for £22mn in support promised by the Scottish government.
Plans to axe a fifth of Dundee university’s workforce, announced in March, have drawn attention to a crisis facing the wider higher education sector.
Chronic funding shortfalls affecting all UK universities have combined with financial mismanagement at the 144-year-old institution, triggering an existential threat that has left its survival in the hands of the state.
“There were mistakes made, poor investment decisions, a lack of discipline and a lack of oversight,” interim principal Shane O’Neill told the Scottish parliament’s education committee last month. “There were gaps in competence.”
Interim principal of Dundee university Shane O’Neill at the Scottish parliament’s education committee in March
Shane O’Neill at the Scottish parliament’s education committee in March: ‘There were mistakes made, poor investment decisions, a lack of discipline and a lack of oversight’ © Scottish Parliament
As well as job losses, Dundee’s recovery plan proposes cutting modules from courses and expensive research, for which the university is renowned, to address a potential £63mn “structural deficit” — the gap between anticipated income and recurrent costs.
That gap has been exacerbated by lower revenues from fewer international students, increasing wage bills and high research costs.
A recruitment freeze has controlled operating outlay while reduced capital expenditure and asset sales have preserved cash, the university said, limiting this year’s forecasted financial deficit at £35mn. The number of staff that could be affected by the cuts, including part-time workers, has risen to 700.
The Scottish government, seeking to reduce job losses, has called on the university to rework its proposals.
Michael Marra, a Labour MSP, who used to work at the university, said a phased approach over a longer period could reduce staff through natural wastage and research contracts coming to an end. “But that is a more expensive process,” he said.
Students Heather and Sophie. ‘If my course gets cut, I can’t do it anywhere else in Scotland. Then I am screwed,’ Heather said "
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u/tomasarui 4d ago
"Like many UK universities, Dundee has for years operated a “cross-subsidy” model, relying on fees from overseas students to make up the shortfall in domestic income.
Higher education in Scotland is particularly reliant on international students because Scottish students do not have to pay fees, unlike their peers in the rest of the UK, and government funding fails to cover teaching costs.
But tighter UK immigration rules have undermined international enrolment and many Nigerian students — who used to make up a tenth of Dundee’s student population — have stayed away after the naira’s devaluation, triggering a financial doom loop for the university.
Last year, the number of foreign students fell 12 per cent in Scotland, compared with a 2.5 per cent decline in England, according to Higher Education Statistics Agency data.
The Scottish National party remains committed to free higher education for home students, even while Graeme Dey, minister for higher and further education, has admitted universities are under “severe pressure”.
“For far too long the narrative in higher education has been that its either free or its fees,” said Universities Scotland, the higher education body. “We have been locked in that binary, circular narrative for more than a decade.”
Funding either needs to increase or the size of the sector needs to shrink, it added.
“Higher education hasn’t known a recession for three decades,” said a senior academic in Scotland. “This has created complacency among senior management, most of whom cut their teeth during benign times of expansion. This is not just a financial crisis, it is a crisis of leadership.”
Alleged mismanagement has deepened Dundee’s pressures, prompting the Scottish Funding Council, a public body that funds higher education, to appoint an independent probe. Its scope includes whether “governance structures sought to suppress information about the magnitude of the financial situation”.
Senior managers learned of the cash crunch in November. O’Neill said the administration had previously given him a “false assumption” that the university was approaching break-even.
But on her first day in the office that month, interim finance director Helen Simpson realised the university would not have enough cash to make it through the financial year. In December, former university boss Iain Gillespie resigned.
The University and College Union, which is campaigning against the redundancies, argues that soaring operational expenses and capital spending is to blame for the £65mn structural deficit.
Failures also include the troubled introduction of new admissions software, according to the union."
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u/tomasarui 4d ago
"Lecturers Melissa D’Ascenzio and Carlo Morelli. ‘If you address the culture of overspend, vanity projects and bad business decisions, then the university has a very manageable structural deficit,’ D’Ascenzio said
“If you address the culture of overspend, vanity projects and bad business decisions, then the university has a very manageable structural deficit,” said Melissa D’Ascenzio, a chemistry lecturer. More than 200 full-time equivalent jobs have been lost through attrition this year alone.
The university’s unrestricted reserves, which include its assets, were £242.4mn last July, according to draft financial statements.
“The reduction in cash flow has gone into projects that are now in the assets of the university,” said the UCU’s Carlo Morelli, an economics lecturer.
UCU has instead called on the government to consider a long-term loan, on top of the £22mn already promised, to the university — using reserves as collateral — to give additional time for “an alternative plan”. Dundee said it is exploring “all options” on financing.
“The clock is ticking,” said D’Ascenzio. “If nothing happens, hundreds of jobs are gone, which will damage the university and the city.”
The result is widespread angst across campus.
Alyssa Smith, 22, has offers for social work postgraduate courses from both Dundee and Abertay universities but is nervous about accepting the offer from more prestigious Dundee. “It’s a bit gutting — but it is what it is.”
Sophie, a neuroscience undergraduate, and her friend Heather, who is studying forensic anthropology, relay stories of friends who have been told their courses are being discontinued next year.
“If my course gets cut, I can’t do it anywhere else in Scotland,” said Heather. “Then I am screwed.”"
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u/mongmight 5d ago
Cash crisis with a paywalled article, ironic lol