Exclusive:Prestigious Scottish university with £30m deficit hit by new budget blow over 300-student shortfall

Dundee University recently announced that job losses were “inevitable” as a result of the scale of the hole in its finances, in a move that left staff angry and demoralised.

Now it has emerged the institution’s troubles are likely to worsen as it expects to have to pay back a chunk of its funding for the tuition of Scottish students, after it failed to meet its recruitment targets for this year.

Amid scrutiny of the university’s recent spending, The Scotsman has also revealed the institution’s under-fire principal, Professor Iain Gillespie, racked up a £131,000 bill for travel and accommodation in the past three years.

The bill included multiple trips to China, as well as several visits to Africa and Iraq, with stays in five-star hotels also listed in invoices.

A spokesperson for the university said the travel reflected the extensive nature of the university’s national and international activity.

Dundee University confirmed the under-recruitment of Scottish students was likely to add to the institution’s financial woes.

“We experienced a recruitment shortfall of just over 300 Scottish students for semester one of the current academic year, against a target of around 2,400 Scottish undergraduate entrants,” the spokesperson said.

“This was due to several factors, including a particularly competitive round of clearing in the summer. The full financial impact of this shortfall will become clearer later in the academic year, but we anticipate it will be a financial detriment which further impacts on the significant challenges we are facing.”

However, the university said it was “seeing some positive indications for the next academic year”, with applications from Scottish students “currently up year-on-year”.

The Scottish Funding Council (SFC), which oversees the sector, allows universities to under recruit by 3 per cent for “controlled” subjects like medicine, dentistry, nursing and teaching, and by 2 per cent for the rest.

Beyond that, SFC rules say it “will recover main teaching grant equivalent to that associated with the recruitment below the tolerance threshold”.

The issue was highlighted at a meeting of Dundee University’s ruling court in September. A minute of the discussion said: “The court was advised that the university expected its rUK [rest of UK] recruitment to be just under that of last year, but that it was currently projected to fall below its targeted intake of Scottish domiciled students.

“This failure to fill all of the institution’s SFC-funded places could result in financial clawback. The university would require to demonstrate its ability to recover and to meet funded number targets next session in order to avoid the possibility of SFC removing funded places in future.

“The court was also advised that the university was conducting a full process review and would develop its plan for responding to the situation within the next month.”

The additional budget pressure has emerged just weeks after Prof Gillespie wrote to staff highlighting the difficulty balancing the books.

He said it had been an “extremely challenging period”, as a result of a drop in the recruitment of international students, the long-term decline of Scottish Government funding, and other rising costs.

Despite a recruitment freeze and spending controls, the principal said the university could still be facing a deficit in this financial year in the range of £25m to £30m.

Prof Gillespie wrote: “Therefore, we must take further action now to address our financial stability and long-term future. Given the profile of our costs, it is inevitable this will mean a reduction in our staffing levels.

“This will be a very difficult period, certainly for this financial year and next. We must meet this challenge together as a mutually supportive community. The decisions we take will be in the interests of the future health and sustainability of the university, but they will not, in many cases, be easy ones.”

Dundee is not the only Scottish university facing job cuts and and a spending squeeze.

Aberdeen University, the third oldest in Scotland, admitted earlier this year there was “significant doubt” about its ability to continue as a going concern, although it has since said its financial position has improved.

Neighbouring Robert Gordon University announced in November that it plans to make a further 135 redundancies to ensure its long-term “viability”, with the announcement coming after 130 workers had already left in the previous few months under voluntary severance schemes.

Edinburgh University has been controlling recruitment and cutting spending since the summer, but has also now told staff it would “need to take a series of actions, which will include selective voluntary and, if unavoidable, compulsory redundancies”.

Its principal, Sir Peter Mathieson, highlighted the impact of the UK government’s decision to raise employers National Insurance contributions.

Meanwhile, a recent study by the Institute for Fiscal Studies (IFS) said that per-student funding for teaching Scottish students is 22 per cent lower in real terms than in 2013/14.

The real-terms cuts have left universities reliant on the fees of international students, but numbers have dropped in the past year.

Umbrella body Universities Scotland has called for “swift intervention” from the Scottish Government to deliver sustainable funding for the sector.

The Scottish Government says it continues to invest more than £1 billion in teaching and research, maintaining free tuition as a result, which has seen the number of Scottish students entering university increase by 27 per cent since its implementation.