Scotland’s crisis-hit universities support nearly 73,000 jobs, a major new analysis has revealed.

For years the 19 institutions have been seem as the engines for the Scottish economy, churning out graduates and ideas as smart as each other.

But new research for the University and Colleges Union reveals just how economically vital the institutions are their own right, including for Scotland’s two big cities.

Universities generate £4.6 billion in gross value added for the Scottish economy every year, employing 36,850 directly or indirectly through their supply chain, and nearly as many again through a knock-on effect.

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That is more posts than are supported by North Sea Oil north of the border.

Edinburgh’s universities generate £2bn alone for the local economy and support nearly 29,000 jobs, the study said. That is nearly as much as Oxford and Cambridge. Glasgow’ institutions chalked up £1.4bn and 21,500 jobs.

The study, meanwhile, also demonstrated how important smaller universities could be to small towns and cities. St Andrews University, for example, supports nearly 5000 jobs and generates £300m for the local economy. Eastern Fife is an academic pit village.

The study, by Hatch Regeneris, was published just as higher education plunged in to one of its biggest crises as international students - whose fees cross-subsidise partially unfunded free tuition for Scots - failed to materialise.

UCU General Secretary Jo Grady said: “This review shows how significant Scotland’s universities are to local economies.

“Universities are vitally important to our society, but their important role in the economy is often overlooked.

“This study shows that they have a huge impact in creating local jobs, supporting local businesses, and attracting people and organisations to the area.”

Scottish universities have seen their financial model collapse in recent months.

The Scottish Government, through the Scottish Funding Council, covers something like 90p in the £1 for every Scottish student who gets free tuition.

Research grants - including those which come from the UK - are also thought not to cover full costs.

Institutions make up the difference with income from commercial activity - such as conferences and catering on their campuses - and international students. These sources have been devastated by Covid and the lockdown.

Mr Grady believes universities - which have been unable to furlough core teaching staff - should get more help from governments at various levels.

He said: “The Westminster government needs to come up with a comprehensive financial support package to support universities as anchor institutions in their local economies, so as universities are driving the recovery and not shedding jobs. “Equally the Scottish Government - and the current Scottish Funding Council Review, needs to be empowering universities to continue to provide the education, research and knowledge exchange that supports our social, environmental and economic renewal.”

Several Scottish universities have imposed cuts or warned of cuts. Dundee has called for staff to consider career breaks or early retirement as it looks to close a blackhole of £15m. Heriot-Watt has launched a review of its modern languages offering - considered Scotland’s best - as it seeks to slice £9m from its payroll.

As The Herald on Sunday reported last week, these vulnerabilities date to long before the Corona crisis. Universities, for example, have reported a maintenance backlog of £850m on their estates. The Scottish Funding Council had calculated that universities should be spending £250m a year on the upkeep of their current buildings. Scottish Government capital investment, however, was just £37.5m in 2019-2020.

Late last year Scotland’s public finance watchdog Audit Scotland said that the aggregated financial position of the 19 universities was good but that surpluses were concentrated at three ancient universities, Glasgow, Edinburgh and St Andrews, with high numbers of foreign or English students.

Its snapshot, based on 2017-18, measured total income in the sector at £3.8bn. That number - thanks to fee-paying foreign students at Glasgow, Edinburgh and St Andrews - was up.

But success at the “rich three” concealed problems elsewhere. Only £1.3bn came from the Scottish Government to support students, including £1.1bn from the Scottish Funding Council. This SFC budget had fallen seven per cent in real terms since 2014-2015, the watchdog said. Now it is the ancient universities - which depend most on foreign students - which are facing the deepest problems.

David Lott, deputy director of Universities Scotland, the umbrella group for all 19 institutions, echoed UCU calls for government support.

He said: “The Scottish and UK Governments should put universities at the heart of the economic and social recovery and the plan to build back better and fund universities at levels that allow them to deliver on this.

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“We’ve seen very positive encouragement of this in Benny Higgins’ review for the Scottish Government. Even before the pandemic, the Sustainable Growth Commission had identified universities as having a central role in Scotland’s growth strategy. It will be vital that the Scottish Government and universities take stock together after enrolment in September, when universities will have a solid sense of the impact on the September intake and the implications for financial sustainability.”

The UK Government has linked extra support to a shift in academic focus towards STEM, medicine and teaching, through a “restructuring regime”.

Scotland last week rejected this approach. But Scottish officials are still eager to work with British authorities later in the process under way in England.

Mr Lott said: “There’s still an opportunity to help shape the second phase of the UK Government’s restructuring regime to something that recognises that considered strategic change is preferable to supporting institutions on the brink.
“The main message to Government is keep the close engagement with universities going and recognise that managing the impact of the pandemic is a challenge we both face for the medium to long-term. The impact on universities was never going to be short and sharp with a quick bounce-back as possible for some other sectors because of the four-five year nature of undergraduate degrees. If the student entrant numbers drop this year, that means four or five years of cumulative losses.”