Scottish university finances facing ‘perfect storm’ – IFS

Scottish university finances are facing a “perfect storm” amid higher costs and reduced income from international students, the Institute for Fiscal Studies (IFS) says.

New commentary from the respected think tank highlights that per-student funding for teaching Scottish students is 22% lower in real terms than in 2013–14.

While universities have used increased income from international students to make up for this in recent years, changes to visa rules have meant there are fewer overseas postgraduate students.

The recent change to employers’ national insurance contributions will also push up costs for universities, though this is expected to be offset by slower wage growth.

Earlier this week Edinburgh University became the latest institution to announce it is cutting back on staff to balance its books, following a similar move by Dundee University.

Kate Ogden, senior research economist at the IFS, said: “A fall in the number of international postgraduate students, together with rising staff costs as a result of upcoming increases in employers’ National Insurance, represents something of a perfect storm for Scottish universities’ finances.

“Universities in England will be grappling with the same challenges. But after a long-running freeze in fees, they will be allowed to increase tuition fees by 3.1% in the coming year, which will provide some help in addressing financial challenges.”

She continued: “With tuition free for Scottish students in Scotland, if the Scottish Government wants to provide more funding to universities it will need to look to its own Budget.

“Despite a much-improved funding outlook for the coming year following the UK Budget, this could still prove challenging given the number of competing priorities facing the Scottish Finance Secretary Shona Robison.”