Demands for 30-year vision to secure future of Scottish universities as new crisis looms

SNP ministers have already held preliminary talks with the umbrella body, Universities Scotland, on ways to try to “future proof” the way higher education institutions are funded north of the Border, with more meetings in the diary.

It comes amid growing demands in recent weeks for action to develop a new financial model, as several universities face industrial action over moves to cut their workforce. Opposition parties have been calling for cross-party talks or an independent review.

The number of the nation’s universities reporting an operational deficit doubled from four to eight last year, while Edinburgh University is seeking £140 million of savings and Dundee University is battling for survival.

The crisis has also led to fresh questions about the future of “free tuition” for Scottish undergraduates, although the policy is still backed by all the main parties.

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The financial pressures in the sector have largely been put down to real-terms funding cuts from the Scottish Government and a fall in fee-paying international students linked to the immigration policies and rhetoric of the former Conservative government at Westminster. This has been made worse by rising costs, including Labour’s decision to raise employer National Insurance contributions.

However, universities in Scotland claim any talks on funding should not only look at measures to ease the financial challenges.

They also want to focus on action to address looming demographic challenges that are likely to lead to significant new pressures for the sector in the future.

Official forecasts from National Records of Scotland predict a 9 per cent fall in the number of under 15-year-olds in Scotland between 2022 and 2047, and a 6.2 per cent drop in 16 to 29-year-olds.

There are about 62,739 people in Scotland who are 18-years-old, and that number is expected to keep rising until about 2029, when there are expected to be 65,256. However, the number of 18-year-olds will then drop almost every year to 2041, falling below existing levels in 2032.

By 2041, there are projected to be 53,936 in this age group, a reduction of more than 17 per cent compared to 2029.

Such a scenario would be likely to mean a significantly lower number of school leavers from Scotland would be going to university in ten to 15 years, leading to even greater competition for places, and potentially additional financial pressures on institutions that miss out on these students.

While there is not expected to be any impact in the near future, the cost of funding the Scottish Government’s “free tuition” policy could also reduce if numbers were to drop in this way.

Other demographic changes are also being discussed by senior figures in Scottish universities, including projected migration from west to east, and the role institutions are to play in addressing depopulation concerns in rural areas.

Meanwhile, universities believe they will have to adapt to meet the changing needs of the economy in an era of an ageing population, including increasingly serving older and more mature learners who are already in the workforce, but are looking to retrain or change their career.

Claire McPherson, director of Universities Scotland, said: “Scotland’s demographic forecasts are hugely challenging on all fronts and will require every part of Scotland to adapt.

“There’s growing weight behind calls to take a strategic look at how to fund universities sustainably and aside from the acute funding pressures facing institutions, demographic change is another major driver catalysing the need for long-termism.

“Scotland needs to take a 20 to 30-year look ahead and design a university funding model that will serve Scotland’s people well into the future.

“Fewer school leavers, an ageing population, but the enduring need for economic growth will shift the locus for Scotland’s skills needs onto those already in the workforce to a far greater extent.

“Universities already deliver upskilling and reskilling for the current workforce, but there is very little in universities’ current funding or student finance model to meet the scale of change coming our way. As a sector, we want to help co-design an evolution from where we are now to where Scotland needs to be.”

Last week, Higher Education Minister Graeme Dey faced questions in Holyrood over the future funding model.

He denied the system was “broken”, but said he was “absolutely open to exploring the future funding model with our universities, albeit starting from the position that we will not reintroduce tuition fees”.

Mr Dey said: “For our part, the Government is committed to engaging constructively with the sector to future proof the funding approach.

“The University of Dundee situation is uppermost in all our immediate activity, but the Cabinet secretary [Education Secretary Jenny Gilruth] and I have had a preliminary conversation with Universities Scotland on the funding approach and have agreed to return to the subject before the summer.”

The Scotsman understands the demographic pressures are likely to feature in these discussions.

A Scottish Government spokesperson said: “Ministers have been clear that the Scottish Government’s position on tuition fees will not change. The policy ensures that access to higher education is based on the ability to learn and not the ability to pay.

“Latest UCAS data shows that a record number of Scots were accepted to study at a Scottish university through the 2024 cycle, increasing by 7 per cent from 2023.

“The Scottish Government recognises the vital roles universities play in Scotland’s economy and wider society, which is why we are investing over £1.1 billion in the sector this year.”