Dundee University is in the headlines every week just now and its future seems in real jeopardy, with over 600 potential layoffs in the pipeline and a demand for a £10m bailout from Scottish Government. Meanwhile the University of Edinburgh has plans to lay off over 100 staff to balance the books, and the entire Higher Education sector appears to be struggling – with many having gone through (less high profile) voluntary settlements, early retirement and recruitment freezes leaving fewer and fewer staff to manage the same or increasing workloads, across the UK.

Why are these long standing and august institutions struggling? Is it as simple as financial mis-management? Or is this over-simplistic? If it’s a lack of funding, is the answer to simply allow Scottish Universities to charge Scottish students fees? And if it’s as simple as charging students fees directly, why are the English Universities also struggling?

In 1998 the UK Teaching and Education Act was introduced, which for the first time introduced tuition fees, set at an initial level of £1,000 per student. It was part of Labour’s commitment to make university more ‘fair’, opening it up to 50% of the population, and not the previous level of 10-20% and is arguably part of the root cause of this current crisis. Recognising that this was an expensive option, Universities were given permission to start charging students, albeit at this modest level.

In Scotland the Scottish Government intervened, and opted to continue to fund domestic students for their university tuition fees. It represented an important and radical divergence of policy- where England would charge their young people, Scotland would pick up the bill for theirs.

Fairly quickly, fees in England increased from the initial level of £1,000 to £3,000 in 2004 and to a level of £9,000 per student per year in 2012. Currently this is capped at £9,250 but Universities have long argued this does not cover actual per capita costs for undergraduate teaching, especially when public and research funding have not increased.

Scottish Government pays Universities £7,610 per student per year – a lot less than the level English institutions can (and do) charge their students, but in effect a quota for domestic students each year. Neither the Scottish Government allowance nor English student fees have kept up with inflation, so the budgets have been getting more and more squeezed as the years have gone on.

This has put pressure on universities to secure more overseas students for undergraduate and masters programmes, because they were not capped, so they were able to charge significantly higher fees (sometimes as much as three times higher). However, as the UK has become more hostile to overseas students post-Brexit and with the rise of anti-immigration parties, the market for non-EU overseas students (largely drawn from three core markets : China, India and Nigeria) has become stagnated, and is shrinking, exposing the lack of funding from other sources. The number of overseas students coming to Scotland fell by 10,000 in 2023-24, adding to the financial pressures and increasing competition between universities.

Attracting overseas students is not without costs either – it requires investment in more and more facilities, putting capital pressures on universities, but also putting accommodation under huge pressure (often ending up overpriced and/or of poor quality). But reliant though we are, many potential overseas students are being put off by the UK’s increasing xenophobia.

It is true to say that our University sector has become dependent on overseas students to cross subsidise domestic students and in some subjects which are more expensive to deliver, like medicine, the domestic fees are even more stretched.

In Scotland around two fifths of university income on average comes from tuition fees, around one fifth each from public funding and from research grants and the rest from donations, endowments, investments or student accommodation and conference earnings. However research grant awards can be a double edged sword as UK research funding agencies often only pay 80% of the full cost of research, putting further strain on monies from elsewhere within the University.

The system is struggling and almost every university in the UK is feeling the heat. Academic staff are being asked to do more with less, budgets everywhere are being cut, and cracks appearing throughout.

The SFC claimed in 2021 that the Scottish university sector was under-funded by £328 Million/year. And an IFS report stated that the main teaching grants are 19% lower in real terms than they were ten years previously. So all the signs are that a lack of available money is clearly the fundamental problem. Some financial mis-management or poor decision making clearly can’t help, and may tip already fragile institutions over the precipice, but it feels like we are in danger of blaming one or two people short-term for a long-term systemic failure which is not of their making.

Most academics I speak to think there are too many students – making the degrees worth less than they once were, and by no means guaranteeing a job at their conclusion. Not everyone in society needs a degree, and many apprenticeships are being overlooked.

Maybe the era of four year degrees has run its course – clearly four year degrees were seen as educationally preferable, but three years is obviously cheaper for the student, but if that was the answer why are there similar problems in England and Wales? The only two main political alternatives being openly considered are to fund more fees from general taxation across the UK, or to introduce a graduate tax, applicable to past graduates and applied retrospectively. Maybe there are simply too many Universities, certainly a view held by some academics.

Increasing student fees may seem like a simple answer, but in Scotland it may simply replace public funding and at what cost? Is the only answer to balancing the books in our university sector to charge even more money from the young people who seek further education? We are surely just bailing out Universities by making the next generation borrow the money. I cannot imagine the harm we are doing by asking half of our young people to start out on the career ladder with debts hanging round their necks of anything from £30-90,000 each. Do we not feel we should invest in our young people?

Dundee University is struggling, but it is not alone, and others will surely follow. Many have already had less public reductions in staff numbers through voluntary severance etc. If we don’t come up with a better plan for the whole of the UK higher education sector than relying on overseas students, whilst simultaneously seeming not to welcome them, we are not only going to undermine the core principle of Higher Education, we are going to damage our national reputation for education that is already starting to lose its shine.