Is the University of Edinburgh’s management financially prudent? No!
SLT and then FM in front of Edinburgh Futures Institute
NB: Endnotes are not currently linked, please scroll to the end of the post to view the notes.
On Tuesday 10 December, many of us joined a meeting open to all staff hosted by the Principal and members of the senior leadership team. It was a striking act of misdirection. Partial and sometimes misleading statistics were offered as conclusive evidence. Essential details of a voluntary severance scheme – such as its actual financial goals – were not forthcoming, despite advertising its start to staff. Sensible suggestions – such as where to save money or how to generate more revenue – were swept aside. For instance, nearly 40% of University expenditure (£461.7m) in the most recent year for which they have provided data is subsumed within “other operating expenses” and the University spends nearly 10 percent of its annual expenditure on depreciation and amortisation (£85.4m).[1] Yet in response to questions about what other savings could be made beside cutting staff, management provided nothing more than vague hopes of “efficiencies” in procurement. There was, in other words, no clear statement of what capital expenditures they planned to reduce to provide the financial latitude they claim is necessary for “sustainability” of UoE.
Rather, from the perspective of management, at this point, their mission in addressing their claimed “budget crisis” is overwhelmingly about reducing “staff costs”. UoE’s senior management team aims to make staff bear the cost of the current pressures in the higher education sector through a recruitment freeze and a voluntary severance scheme.
In the coming days, we will provide further details on management’s misleading data and lack of transparency about University finances. However, for now we want to show what the focus on “staff costs” misses.
In this blog, we describe why we believe management’s approach is wrong:
The teaching, research and support staff are net-earners of income while university management are net-spenders. Addressing management mis-spending should be the priority in our budget work.
The University has lost considerable amounts of money over the past few years due to wasteful spending and mismanagement. There should be accountability and transparency over these lost funds.
The University’s financial framework incentivises management to see costly buildings as “assets” and staff as “costs”. This has led the University to overinvest in buildings and underinvest in staff.
University management has committed to extraordinarily expensive capital expenditure. Much of this is speculative, over budget, and sometimes of questionable suitability for what should be the core mission of the University.
Teaching, research and support activities are core to the University’s business
UoE management continues to depict staff as a burden to the institution. After years of deciding to expand student numbers, managers now fret that having sufficient people to actually teach and support those students is untenable. And despite UoE being extraordinarily wealthy and making an operational surplus every year (including 2023-24), management has already begun reducing staff costs. It first did so by imposing “significant constraint on new and replacement staff recruitment for the foreseeable future”. This was imposed institution-wide in summer 2024. It has now extended this to a voluntary severance scheme – for which the goals have not been clearly enunciated. It has also threatened compulsory redundancies (“if unavoidable”) and hired an interim Director of Finance with experience organising such measures at previous universities where he has worked.
The problems with this are manifold. For instance,
1. Reducing staff without reducing workloads will only add to the culture of over-work at UoE.
2. An effective hiring freeze will reduce people in a nearly random manner, not reflecting strategic priorities or actual needs.
3. A voluntary severance scheme will be costly in money (payouts to staff who leave) and administrative time (HR’s time in setting up and administering the scheme, and already-stretched managers at school/unit level assessing applications).
4. Fewer people teaching and supporting students will only further students’ sense of distance from the institution.
Focusing on staff costs asks people to bear the cost of misplaced financial priorities. It is the teaching and research of the university that generates income at Edinburgh. The schools and colleges of the university are obliged to make an operational surplus whereas the operation of the managerial units of the University – Corporate Services, Information Services, and the University Secretary’s Group – principally spend money. Whilst these units spend money, this is no indication that the valued colleagues in these areas are not also making a vital contribution to the workings of the University.
In other words, there is an enormous imbalance in the University’s finances, with administration spending without earning. By only focusing on teaching, research and support staff – saying things like staff costs are 90% of this college’s or that school’s costs – the management is completely ignoring that it is the work of these staff which produces, year over year, a surplus which is spent by entities like the University Secretary’s Group.
Takeaway: The teaching, research, and support staff are net-earners of income while university management are net-spenders.
Lack of financial accountability
Even worse, the units spending-without-earning lack financial accountability. The lack of accountability on financial matters has been a repeated concern at the University of Edinburgh. This starts at the top: after an all-staff email in November 2024 suddenly announced the threat of compulsory redundancies, generating panic at the institution, the Principal sought to distance himself, referring in an all-staff meeting to “the email that was sent in my name” and disclaiming expertise in accounting.
Financial imprudence costs the University, and it comes at the expense of teaching and research. Consider a few examples of the lack of financial accountability.
1. For ten years (2005-2015), the lack of proper financial governance allowed an administrator and supplier to collude in a procurement fraud that cost the UoE £3.3 million.
2. More recently, senior management approved and implemented a disastrous software system called People & Money that has cost the university a reported £37 million, as well as enormous disruption and difficulty for staff. (It was originally advertised in 2017 for £14 million—meaning the University is approaching a trebled increase in its planned expenditure on the project.[2]) The damage, however, went well beyond the financial costs, according to an external report commissioned by University Court.
3. In 2024, another large-scale financial loss was reported: £31 million already spent to prepare for a government-sponsored supercomputer was thrown into question when UK policy shifted. While some of that may be re-purposed, it reflects an enormous outlay for a project that the FT reports “made little strategic sense”.[3]
We are aware of no meaningful measures to hold management to account for these boondoggles.
But these are big numbers with big consequences: The £37 million spent on People & Money is equivalent to 4,000 students from England paying £9,250 in tuition. It’s even more costly when considered in terms of the £7,500 paid by the Scottish government for home students — equivalent to 4,933 students.
Or consider it another way: simply the overspend on People & Money of £23m is equivalent to the entire annual salaries budget of a large school like Social and Political Sciences (projected at £23.1 for 2024-25). And, of course, SPS and other teaching and research schools are a net-earner whereas People & Money is merely a cost.
Takeaway: Massive financial misspending reflects mismanagement and a lack of accountability.
A building spree
There are also long term strategic financial decisions that add stress to the University finances and reflect the priorities of management more than those of staff and students. As part of its 2017-2027 Estates Vision, the University is undertaking a truly dizzying amount of capital expenditure amounting to a planned sum of at least £1,500 million.[4]
In recent years, UoE has been on a building spree. A cynical observer might note that buildings make for good photo opportunities. There are also perverse financial incentives: from the management’s perspective, having a strong “balance sheet” is the result of owning lots of assets like expensive buildings. In contrast, the financial accounts frame staff as a “cost”. Seen from this perspective, we can understand why even though the University Court began instituting sudden budget cuts in June 2024, it still encouraged management to begin the process towards another large property purchase, approving the initial funding package for it.[5]
Takeaway: The university’s financial framework incentivises management to see costly buildings as “assets” and productive staff as “costs”.
While more teaching and office space can be justified — and is desperately needed in some parts of UoE — many of the projects are speculative, reflecting ambitions to become a hub for entrepreneurship rather than the core mission of educating students. The University also lacks transparency on these matters, with decisions taken without consultation and financial figures difficult to locate or simply “closed” and exempt from public scrutiny.
A key driver of the University spending has been the City Region Deal for Edinburgh and South East Scotland, a public-private initiative that began in earnest in 2018. Among other things, this committed the government to large investments in infrastructure, but it also locked the University of Edinburgh into costly spending at precisely the same time government was failing to continue support for core teaching costs at universities.
Consider the Edinburgh Futures Institute, the fancy building which was originally intended to open in 2021 but finally did so in 2024. When the University of Edinburgh committed to this, they did so to the tune of a more than £63 million capital contribution plus £10 million raised from an anonymous donor. The University also agreed to contribute £32.5 million in revenue to the project.[6] In contrast, the government only funded around £57.9 million of the required investment. Moreover, the ongoing operating costs fall on the University’s budget, despite the building having a variety of public-facing roles.[7] A linked initiative, the Edinburgh International Data Facility, involved the University contributing more than £30 million in capital and more than £30 million more in revenue.[8]
The Usher Building was another part of the University’s large obligations under the City Region Deal. In this case, the University of Edinburgh management committed to spending £18.8 million for the new building and funding ongoing operating costs.[9] Similarly, the University’s Easter Bush Campus was projected to cost £73.9 million, of which £16.6 million was to be underwritten by the University.[10]
These are enormous sums, often committed by managers who shortly thereafter leave for other jobs. Many of these projects have been delayed. This is particularly concerning because construction is among the most inflationary sectors in recent years (unlike staff costs which have been below inflation, due to more than 15 years of below inflation higher education pay offers). For instance, the Easter Bush development was classified in the most recent City Region Deal annual report as delayed and subject to a budget over-run requiring “immediate action” by “senior management”.[11] Delays happen, but who should bear the cost of such imprudence?
While these new buildings have provided some new spaces for teaching, in their design, these prestige projects may not meet the needs of staff and students. For instance, many have wondered why too few EFI rooms are being used to address the shortages of teaching space and staff offices around central campus. Challenges for staff at the new Usher Building include its distance from central campus (where undergraduate teaching is timetabled) and the move to open plan office working (which may save money but is hardly conducive to the work of academics, such as reading and writing, or meeting students).
Such projects are often quite speculative deals, as well, with major commitments by the University without guarantees that the model will work, especially in rapidly changing market conditions. For instance, the University has spent millions on the Usher Building discussed above, which is part of Edinburgh BioQuarter (a partnership of the University of Edinburgh, Edinburgh Council, NHS Lothian and Scottish Enterprise). The idea is to use the Royal Infirmary and the University’s facilities as an anchor for a new, 167-acre health sciences campus, referred to in future plans as a “Health Innovation District”.
However, such dreams have confronted cold reality: just last month, the partnership discontinued its procurement process after failing to find a commercial developer willing to spend the £1bn necessary to bring the project to fruition.[12] Hitching the University to speculative industrial policy is precisely the sort of financial imprudence we should question!
Takeaway: University management has committed to extraordinarily expensive capital expenditure — much of which is speculative, over budget and of questionable suitability.
So, here’s a question to ask: What cost savings from the capital expenditure is the management at the University of Edinburgh making as part of the drive for financial sustainability? No answers were given at the all-staff meeting, and none have been provided in response to repeated requests from the Joint Unions on this subject, starting in the wake of the budget cuts in the summer.
We await serious responses to these questions, as well as those we outlined in our previous post.
UoE Joint Unions Finance Working Group
Endnotes
[1] 2022-2023 University of Edinburgh Annual Report, p.68.
[2] https://www.bbc.co.uk/news/uk-scotland-65067767
[3] The University’s messaging has shifted since the news broke. In 2023, it announced “a new £31m wing of the Advanced Computing Facility has been built for the exascale supercomputer.” However, after the government change, University responses to one Freedom of Information inquiry tried to reframe the spending, suggesting only a portion was due to the supercomputer specifically.
[4] https://edwebcontent.ed.ac.uk/sites/default/files/atoms/files/estates_vision.pdf
[5] See item 10.2 here, https://www.docs.sasg.ed.ac.uk/GaSP/Governance/Court/2023-2024/20240617-Court-Minute-Web.pdf
[6] See the government’s accounting here: https://www.gov.scot/binaries/content/documents/govscot/publications/foi-eir-release/2022/01/foi-202100254369/documents/foi202100254369---annex/foi202100254369---annex/govscot%3Adocument/FOI202100254369%2B-%2BAnnex.pdf
[7] See the funding commitments on p.20: https://static1.squarespace.com/static/55c87967e4b05aa55020f656/t/635159aabef1b81b611e4e39/1666275755472/EFI+Project+Summary+110219.pdf
[8] https://www.gov.scot/binaries/content/documents/govscot/publications/foi-eir-release/2022/01/foi-202100254369/documents/foi202100254369---annex/foi202100254369---annex/govscot%3Adocument/FOI202100254369%2B-%2BAnnex.pdf
[9] https://democracy.edinburgh.gov.uk/documents/s5686/6.3%20Usher%20Project%20Case%20Joint%20Committee%20Report_2019%2009%2003.pdf
[10] https://democracy.edinburgh.gov.uk/documents/s32168/Item%205.3%20-%20Easter%20Bush%20BC%20with%20app.pdf
[11] City Region Deal Edinburgh & South East Scotland, Annual Report 2022/23, p.10
[12] https://www.partnershipsbulletin.com/article/1897822/edinburgh-bioquarter-ends-partner-procurement
