University of Edinburgh warns of staff cuts as it faces £140m financial deficit

The University of Edinburgh is facing a £140m black hole that demands radical actions including job cuts, according to its vice-chancellor, as it becomes the latest higher education institution to reveal its financial turmoil.

Prof Peter Mathieson, the university’s leader, told staff that “the magnitude of the financial gap that we need to close” amounted to 10% of its annual turnover.

“Savings of such magnitude cannot be achieved by recruitment restraint or other small-scale measures,” Mathieson said in an email to staff, warning that the rising cost of staff was “no longer sustainable and we must reduce it”.

Edinburgh’s £140m deficit forecast over 18 months outstrips the £30m deficit recorded by Cardiff University, meaning it would be the largest deficit by a British university during the funding crisis engulfing the sector.

Mathieson said: “There are several coinciding factors that have brought about the circumstances our sector is now reckoning with, many of which I have warned of publicly and privately for a number of years in a bid to abate this situation.

“These factors include years of income for teaching not rising in line with costs, steeply rising utilities prices, inflation, recent unexpected announcements on national insurance contributions, and rise in employment costs: these have all contributed to the fragility of the sector’s finances.

“Moreover, across the UK, we are facing a reduction in the attractiveness of the UK as a destination for international students.”

Jo Grady, the general secretary of the University and College Union, said the cuts being suggested were “off the scale” and urged the Russell Group university to dip into its estimated £3bn worth of assets.

Grady said: “The University of Edinburgh is one of the oldest and richest institutions in Scotland with endowments stretching back through the centuries, so management’s threat to make cuts of this size is shocking.

“Prof Mathieson needs to use the billions of pounds the university boasts in wealth to protect jobs, protect provision and protect the university’s global reputation. Scotland cannot afford to allow one of its great public institutions to engage in academic vandalism of this scale.”

Edinburgh’s announcement came as the Scottish government unveiled a £15m bailout fund for troubled institutions including the University of Dundee, which is using job cuts and course closures to meet a £30m deficit.

A spokesperson for Dundee said: “We welcome the announcement of extra funding for the sector. We understand that it will be for the Scottish Funding Council to make decisions about how the additional funding is allocated, and we are continuing to engage closely with them on the development of our financial recovery plan and moving to a more sustainable future.”

Earlier this month the Guardian reported that one in four mainstream UK universities were already undergoing job cuts because of budget strains. A group of universities in England, including the University of Kent, have also failed to file their 2023-24 accounts on time with the Office for Students (OfS), the higher education regulator for England.

The universities of Essex, Sussex, Coventry, Roehampton, Middlesex, Leeds Trinity, West London are among others that failed to file audited financial statements by the OfS’s end of December deadline.