Deficit, Cuts, and Controversy: Understanding Dundee University’s Finances.

Eighteen months after the institution revealed a £30m deficit, the University continues to implement huge cost cutting measures to stabilise its finances. No accounts have been published in two years.

Warnings of insolvency have been raised, earlier this week Chair of Court, Esther Roberton said:

“[there is] an urgent need to make considerable further cost reductions – in the region of £20million annually – if we are to achieve a position of financial sustainability.”

Tricia Bey, former Acting Chair of Court, said insolvency was “a real possibility” when giving evidence before Holyrood’s Education Committee.

Earlier this year, at an SRC meeting, Interim-Principal Professor Nigel Seaton said:

“If we get that [£40m grant and £12m loan from the SFC] and dont reduce the running costs, the University will be bankrupt at some date in the middle of 2027.”

Dundee’s financial year ends in July. The Scottish Government have recently approved a £40m in grant and a £12m loan in funding from the SFC, which Dundee University has accepted. Last Spring, the University received £10m in emergency funding from the SFC.

With the University supporting 1 in 12 jobs in the city, the institution is now relying on the state and major cost-cuts for survival.

To date, the cost-cutting measures include:

• Faculty Restructuring (reducing 8 schools to 4 faculties)
• A 2nd round of Voluntary Severance
• Recruitment Freeze and Tighter Financial Controls The exact measures by which a further £20m will be cut is yet to be announced.

How Did We Get Here?

The financial crisis began publicly in November 2024, when the £30m deficit was announced. Since then, management have failed to lodge the financial accounts for 2023/24 and 2024/25.

In February, Interim-Director of Finance, Lee Hamill delivered a financial briefing. The core message was that the University remains in a severe and ongoing financial crisis as a result of:

Cash Position

As Hamill discussed, the University currently has zero unrestricted cash. While the institution holds cash balances, almost all of it is restricted, meaning it can only be used for specific research projects, grants, or donor-funded activities.

Restricted cash is money the university has, but it’s legally or contractually tied to a specific purpose. This cant be used to cannot cover general expenses like salaries or utilities. Whereas unrestricted cash refers to flexible money which can be used for anything.

So when Hamill says there is “zero unrestricted cash”, he’s saying there is no financial cushion, even though bank accounts show cash balances, none of its available for general use. It’s like having £1000 in the bank, but £900 is reserved for rent and bills, leaving you with little left to live on.

Cash is needed for salaries, suppliers, pensions, HMRC payments, research delivery and infrastructure. As Hamill said, cash is essential to “give the University the independence to shape and invest in its own future.”

Even with the £12m loan and £40m grant included, the University’s own forecasts show cash falling below minimum safe levels, with extended periods of negative cash expected.

Operations and Deficit

In the 2024/25 financial year the operating deficit was £31.5m. In 25/26, the forecasted deficit was £15.8m.

Without major action, the university estimates it would require £20m+ per year in government support, hence this week’s announcement.

As Hamill outlined in the briefing, the money coming in includes:

• SFC Grants £83.3
• Tuition Fees £90.7m
• Research Grants £73.5m
• Other income £44.9m

*other income includes; residences, services rendered, NHS pay recoveries, and VAT recoveries.

This money goes toward staff costs, operating expenses, depreciation, and interest on loans.

Earnings before interest, taxes, depreciation, and amortisation (EBITDA) is used as a substitute for cash generation.

Dundee’s EBITDA remains extremely low, meaning the University is not generating enough cash to reinvest or rebuild reserves.

How Much Does it Cost to Run the University?

The University is spending close to £330 million a year to keep its operations running, according to Hamill’s briefing.

The table shows that the university generated about £296.8 million in total operating income, drawn from a mix of tuition fees, research grants and other funding streams. However, this has been outweighed by rising costs across multiple areas.

The biggest expense is staffing. Staff costs are roughly £189.1 million, covering salaries, National Insurance and pension contributions.

Beyond payroll, other operating expenses totalled £116.4 million. These include essential everyday spending, such as energy bills, travel, IT systems, insurance, teaching materials, scholarships and payments to international recruitment agents.

Additional financial pressures come from £21.3 million in depreciation, reflecting the long-term cost of maintaining buildings, equipment and infrastructure, and £1.5 million in interest payments on borrowing.

Altogether, expenditure exceeded income, left he university with an operating deficit of around £31.5 million in 24/25.

In 25/26 a large operating deficit remains; in December it was forecasted that the operating deficit was reduced to £15.8m.

Hamill reiterated that without further action, the University needs £20m in government funding yearly.

Why Previous Financial Statements Remain Unapproved.

Dundee University haven’t published financial accounts in over two years.

Previous financial statements remain unapproved because auditors are still assessing the institution’s financial position through to July 2027.

When financial concerns were made public in November 2024, audit work was still relying on projections that included major savings targets which had not yet been achieved and lacked a clear delivery plan.

As a result, external auditors paused a key part of their review until a credible recovery strategy is agreed and there is sufficient assurance over the university’s liquidity.

The university has also been reclassified into a higher risk category, triggering stricter audit requirements and additional scrutiny.

Voluntary Severance

The recent voluntary severance (VS) scheme sought to cut 160-180 full time equivalent (FTE) roles, in a bid to save around £10m.

The previous round of VS aimed to cut 350 FTE roles, however only 290 staff members left, equating to 245 FTE roles.

The scheme denotes a rough benchmark of £10m savings for 160-180 FTE roles, which works out at about £55k–£62.5k per FTE. Applying that same range to 245 FTE roles would mean that around £13.5m to £15.3m per year, assuming similar cost structures per role.

In summary, £13-15m was saved from the previous VS scheme, and £10m is hoped to be saved from the most recent round.

A Summary:

The University of Dundee:

• Is spending more money than it brings in each year, leading to a financial shortfall.
• Has very little useable cash, making it hard to cover day-to-day costs.
• Is relying on millions in support from the SFC.
• Is cutting staff jobs because staff wadges are the biggest cost.
• Isn’t generating enough spare money to invest or save for the future.
• Has delayed financial reports because auditors are not yet confident about the institutions long-term financial strategy.
• Around £13–15m has already been saved, with another £10m in cuts planned.
• Without more changes, the university may need £20m+ every year from the government to keep going.

How Much Money has been Saved/ Granted?

• £13-15m in first VS scheme.
• £62m from SFC since last spring.

The potential savings include:

• £10m from latest VS scheme
• £750k from faculty restructuing
• Unannounced cost-cuts expected soon, to save £20m.

DUCU Challenges the University:

The Dundee branch of the Universities and Colleges Union published a paper opposing the new VS scheme and accuracy of the forecasts being used to justify further cuts. It can be found here.

In a detailed position paper published in March, DUCU argue that the University’s financial modelling is based on “unjustifiably pessimistic projections of income and cashflow” and that the institution is already on a path to recovery without the need for additional staff reductions.

DUCU’s analysis highlights discrepancies in the University’s own reporting of staff numbers.

The paper notes that the University told staff in 2024 that it employed 3,259 FTE, yet in correspondence to the Scottish Parliament’s Education, Children and Young People’s Committee it reported only 3,092 FTE for the same period.

DUCU writes that this inconsistency “demonstrates that data on staff numbers at the University of Dundee continues to be opaque and could potentially misinform strategic decisions.”

Using the University’s parliamentary submission as the baseline, DUCU calculates that:

• 489 FTE staff left between August 2024 and October 2025
• An estimated 65 FTE have left since October 2025
• The current VS scheme is expected to remove 145–150 FTE
• Total staff loss could reach 700 FTE, (22% of the workforce).

According to DUCU, these reductions alone should have already delivered £40m per year in staff‑cost savings, enough to eliminate the structural deficit without further cuts.

Cashflow Forecasts Under Scrutiny

A central claim in the DUCU paper is that the University’s cash modelling has been systematically pessimistic.

The paper states that the University Recovery Plan submitted to the SFC in August 2025 predicted cash falling below £20m by September 2025. In reality, the University held “£50m” at that point. Even after subtracting an early £10m SFC payment, DUCU notes a £20m gap between forecast and reality.

The paper also argued that Interim Finance Director Lee Hamill’s February 2026 forecasts show a cash level declining faster than the rate it would have been if staffing had not been cut. DUCU writes that:

“Despite the loss of 489 FTE… the University is still predicting to run out of cash in the next couple of years.”

Alternative Modelling

DUCU presents its own cashflow model, which applies the same linear forecasting method used by the University but incorporates the actual staff losses to date.

Their conclusions state:

• Accounting for the 500 FTE already lost, the University should be “on par with the University Recovery Plan (URP)”, contradicting Hamil’s forecasts.
• Including the expected 150 FTE from the current VS round places the University on a trajectory to reach £60–80m in cash reserves by mid‑2030, even without new income‑generating initiatives.

The paper continues:

“There are no justifications for further staff reductions, whether through voluntary or compulsory means.”

DUCU argues that the University’s modelling fails to account for:

• The impact of staff losses already realised
• The risk of cutting income‑generating academic areas
• The long‑standing imbalance between high‑cost research and teaching income
• The historically low staffing levels now reached

Their position is that the University is already on the path to recovery, and that further cuts would be both financially unnecessary and academically damaging.

A University spokesperson said, “we disagree with the DUCU analysis and reiterate that we remain confident in the validity and accuracy of our financial information and forecasts.”

What Now?

After two years of emergency interventions, staff losses, and restructuring, the University remains in a fragile financial position.

In the short term, its survival depends on delivering a further £20 million in cost reductions while maintaining enough income to avoid worsening the deficit. At the same time, auditors must be satisfied that the University can operate as a going concern beyond 2027; a judgement that will shape access to future funding and borrowing.

But the longer-term picture is less clear. A central question is whether continued cuts (particularly to staff) risk undermining the University’s ability to generate income through teaching and research.

DUCU are questioning the accuracy of the University’s financial modelling. If the projections used by management are overly pessimistic, as the union argues, further reductions may prove unnecessary. If they are accurate, however, the scale of the challenge may be even greater than publicly acknowledged.

Ultimately, the institution’s future rests on two, ongoing, unresolved issues:

1. Whether it can return to sustainable cash generation without further damaging its academic core
2. Whether leadership can rebuild trust with staff and stakeholders after a prolonged period of uncertainty.

Failure to resolve either risks prolonging the crisis or pushing the uni closer to the scenario it has warned of: insolvency within the next two years.