Explaining the Gillies Report: Income and Expenditure

By Bean Counter

Most students will be aware of the Gillies Report, or to give its full title: “Investigation into financial oversight and decision making at the University of Dundee”, which was published on June 19^th 2025.

It is a very comprehensive and detailed document running to 64 pages. This is the first of a planned series of articles which will attempt to communicate its findings in simple language.

The report answers 16 questions and this article will deal with the first of these:

“What were the causes of the worsening financial situation, and in particular the balance between external factors affecting income generation and internal factors around governance and cost control ?”

I am a qualified accountant which means I had to pass a large number of exams but the basic job of an accountant is to quantify and report on the income and expenditure of an organisation.

The graph below shows the development of these two numbers for Dundee University. It covers actual results for the academic year 2021/22 through to the forecast for 2024/25.

In very simple terms the blue income line needs to be above the orange expenditure line.

The University had income of £326m in 22/23 and went into the next academic year with:

“a growth agenda and an ambition for £500m revenue”.

I cannot find anything in Gillies Report which gives details of any plans to achieve this “growth agenda”. In reality, the income started to decline, dropping to £323m in 23/24 then £301m in 24/25.

The University has various sources of income and the most unpredictable of these is “tuition fees and education contracts”, which is driven by student numbers. This increased from £96m  in 21/22 to £118m in 22/23 but dropped to £116m in 23/24 then £92m in 24/25.

The Gillies Report identifies the drop in number of international students as the key factor leading to this deterioration. The recruitment of such students per semester is shown in the graph below.

The fundamental question is “Why did overseas postgraduate numbers drop off a cliff in January 2024 ?” and there are 3 main factors:

• Change in government policy on dependents, known to have a disproportionate impact on students from Nigeria, which was announced in May 2023
• Devaluation of Nigerian currency in June 2023
• Drop in rankings, notably fall outside Times Top 250 University Ranking in 2024 which directly impacted recruitment from China and India

As referred to throughout the Education Committee enquiries, it reflects badly on the senior management. They did not appear to understand how each of these factors would impact overseas student numbers and, consequently, the finances of the University.

What is even more damning is that, when the drop in recruitment became apparent they remained committed to increasing expenditure, i.e. hiring new staff, at a time when income was dropping.

It appears that in December 2023 the University “recognised the need for at least £8m in savings” which was classified as “Betterment”.

In 30+ years of working in finance, I have never come across this term before. My conclusion is that it:

is some sort of wishful thinking that £8m would be found down the back of the sofa without any plans being made to cut jobs or save money in other areas.

In March 2024 the then-Principal Ian Gillespie sent a message to all staff and students stating: “We have improved our resilience … this allows us to feel more confident … in investing in our strength and continuing on a path of growth”.

Did he fail to  grasp the implications of the drop in overseas recruitment or was he deliberately misrepresenting the financial position ?

Total undergraduate numbers were also dropping around this time, as the graph below demonstrates.

The reduction of undergraduate students by 1,015 between 21/22 and 24/25 is largely due to EU students dropping by 797, from 963 to 166. This was directly related to Brexit so should not have come as a shock to senior management.

When the impact of the reduction in income became clear early in academic year 23/24, the sensible course of action would have been to abandon the “growth agenda” and stop recruiting staff.

This did not happen and 949 new staff were hired in 23/24 before a recruitment freeze was implemented in September 2024.

The ratio of students to staff fell from 7:3 in 21/22 to 5:5 in 24/25. One would have thought this would have been a key metric which senior management would have monitored.

Had the ratio been maintained at the 21/22 level then the University would have required around 900 fewer FTE (full time equivalent) staff saving at least £40m per annum in payroll costs – this is the “black hole” referred to in the media.

The fundamental cause of the University’s financial problems is very simple to articulate – it continued to recruit staff when its income was dropping.

Had the recruitment freeze of September 2024 been implemented a year earlier, then the “black hole” would have been smaller, and the job cuts announced in March 2025 could have been carried out on a smaller scale.

Future articles will address questions related to WHY this situation developed:

• Were senior management corrupt or incompetent ?

• Were the Finance Department producing information which showed the true financial position or works of fiction based on wishful thinking ?

• How is it possible that the University Court appeared not to grasp the gravity of the situation?

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