Edinburgh university principal announces university planning £140million of cuts

The principal of the University of Edinburgh, Professor Sir Peter Mathieson, announced today (Tuesday 25 February) in an email* to all staff that senior management at the university are looking to make cuts of around £140million.

The announcement follows previous staff emails where he announced that "nothing was off the table".  Today's email adds detail including the £140million figure and that cuts at this level will include reducing staff numbers beyond those expected to leave through the current voluntary severance scheme.

Members of the University and College Union (Scotland) recently voted that they had no confidence in the principal and senior management, and earlier this month the union lodged a failure to agree with the University as a result of senior managers' refusal to rule out the use of compulsory redundancies.  A similar refusal by managers at the University of Dundee saw staff there begin 15 days of strike action this week.

The union said that the level of cuts at Edinburgh were off the scale and questioned the actions of management in getting the university into a position where it was looking for cuts of this magnitude.

The union also said that the university should consider using some of its reserves - the university's accounts show net assets of £3.1billion - rather than cutting staff.  Last week the Welsh higher education minister, Vikki Howells, called for universities in Wales to look at using their reserves to prevent job losses.  The union said that universities in Scotland and the Scottish Government should encourage the same approach in Scotland.

UCU general secretary Jo 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. Professor 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. The Scottish Government also needs to call on university management to halt these devastating cuts. Scotland cannot afford to allow one of its great public institutions to engage in academic vandalism of this scale."

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*On 25 February, the Edinburgh university principal emailed all staff saying: "As outlined in my previous all-staff e-mails (18 July & 3 November 2024 and 11 February 2025) the UK university sector, largely due to external circumstances beyond our control, is in severe financial difficulty. This is even more so in Scotland because of the longstanding inadequate funding of home undergraduate places. Flat cash (at best) government funding, inflation, post-Covid supply-chain issues, steeply rising utilities costs at least partly attributable to war in Europe, recent unexpected announcements on national insurance rises: these have all contributed to the fragility of the sector's finances.

All of this has been exacerbated by the reduction in the attractiveness of the UK as a destination for international students. Inclusion of students in net migration numbers; new legislation especially around dependent visas; geo-politics and economic factors including the currency crisis in Nigeria have all led to falls in international student numbers and increasing competition amongst UK providers. The outcome is that universities can no longer rely on recruiting ever-increasing numbers of international students.

For the last 15-20 years, Edinburgh has been able to grow itself out of financial challenge because we have been in such demand from international students. This response is now no longer sensible, practicable or sustainable. Furthermore, in our Strategy 2030 we adopted the popular mantra of "no growth for growth's sake" in view of the impact of previous growth on accommodation, teaching facilities and staff workload.

We are currently forecasting to be in operational deficit in the forthcoming years: this must be reversed so that we are generating an operational surplus again, allowing ourselves to continue to invest in our staff, students and infrastructure. The magnitude of the financial gap that we need to close over the next 18 months is about 10% of our annual turnover, which is a similar percentage to the position of many other universities. This has to be a recurring and sustainable reduction in our cost base. For us this is of the order of £140million. Whilst this might sound a dauntingly large number, it costs around £120million a month to run the University of Edinburgh so we are talking about saving not much more than a month's expenditure annually. The size of the gap is a function of the size of the University.

Savings of such magnitude cannot be achieved by recruitment restraint or other small-scale measures. We do not yet know the outcome of the existing Voluntary Severance scheme but we do know that it will not be enough on its own. We must, therefore, reimagine the future of our University, changing how we work. This will require University-wide actions which will also result in a smaller staff base. Taking action now will protect our world-leading reputation, and ensure we continue to be in a position to invest in our future, resist further external shocks and seize opportunities when they arise. 

Our programme of work will focus on five workstreams aiming to deliver required changes to our ways of working, restoring the University to a secure sustainable surplus position by financial year 2026/27. The workstreams will focus on teaching & learning; research & innovation; staff; estates; and other operating expenditure. Each will define the current situation and where we need to get to, with a series of specific measures to get us there: details of these are available on the Finance SharePoint pages.

By far the biggest component of our expenditure is on staff costs. Our employment costs per member of staff have risen through pay awards and grade reviews in recent years; this together with steadily rising staff numbers for the last two years means that our expenditure is no longer sustainable and we must reduce it. Our staff workstream will focus on work to identify the right size and shape of our academic and professional staff body, informed by a strategic rationalisation of our current educational portfolio. We will also undertake functional reform of our professional services; comparisons with other similar universities consistently show that we have some of the most devolved services in the sector. We can no longer afford to run duplicative services across the University, often with inconsistent practices which create inefficiencies, increase staff workload and impact our student experience.

We are also reviewing our capital expenditure on Estates (including all previously approved projects) with a renewed lens of affordability in the current financial context. We need recurrent savings: although recent publicity has focused on our capital expenditure, reducing this would only be a short-term measure to improve our cash position: it would do nothing to address the underlying issues. That said, better utilisation of our estate, improved heating management, and acting to dispose of assets that are no longer a strategic priority for us, all have the potential to reduce our sizeable annual estate maintenance and operating costs.

We are also working hard to lower other operational costs, including looking at our procurement practices. Savings are already being delivered through more active management of our purchasing, including in the areas of software and licences, laboratory and electrical supplies, with further reductions possible through enhanced equipment sharing. Similarly, we are looking at opportunities to reduce costs of printing, thus also lowering our carbon emissions, and to rationalise the overly large number of systems supporting delivery of our teaching and research. 

We fully recognise the anxiety and uncertainty that the current circumstances will be creating for all of you: there are answers to frequently asked questions and other sources of support available via the Finance SharePoint pages. We believe that bold and decisive actions now are key to reducing the uncertainty for the future.

It is essential that whilst doing all this we maintain our ability to address our strategic priorities, seize opportunities when they arise and plan for a distinguished future to match our distinguished past. It is important to remember that the University of Edinburgh is and will remain a highly significant provider of excellence in education, research, civic and economic impact locally and globally, and an organisation that we hope people will continue to be proud to be part of. Our shared responsibility is to lay the foundations for that to continue to be true for the next decades.

*For more information on university finances and cuts see the University of Edinburgh UCU branch article on their blog.