Scottish universities near ‘critical’ state as alarm grows over international fees

They are also calling for a spending boost of nearly £172 million in the next budget to protect against a deterioration in standards that could result in lucrative overseas learners shunning Scottish campuses.

It comes as concern grows over the impact of a relentless funding squeeze.

According to analysis from representative body Universities Scotland (US), teaching grants are on course to be cut by 37.4 per cent in real terms over the ten years to 2024/25. Principals also face a 41% reduction in research cash, fuelling worries that institutions north of the Border are rapidly falling behind English counterparts in terms of research competitiveness.

Fears have been further stoked as new projections reveal overseas students are set to provide a greater proportion of university income than the Scottish Funding Council (SFC), which invests public money in HE institutions on behalf of the government. US chiefs said it would be the first time such a shift has occurred since they began gathering records in the current format.

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Figures also show China has become by far the biggest source of overseas students in Scotland, with 17,165 full-time learners hailing from the Asian superpower in 2020/21. This compares with 5,745 from second-placed India and 5,285 from the United States.

International learners pumped more than £790m into university coffers in the 2019/20 academic year. Other revenue comes from fees paid by individuals domiciled in the rest of the UK, from UK and privately-won research grants and contracts, from conferences, events and other income-generating activities, and from endowments.

In an evidence paper for Holyrood’s Education, Children and Young People Committee, US leaders warn the HE sector has entered dangerous territory. Their report states: “Cross-subsidy from international student fees is the only reason that underfunding hasn’t yet reached a critical point. But, without action, Scotland is approaching that.

“Scotland’s funding model now bakes in a structural reliance on international fees to such an extent that this source of revenue is forecast to overtake Scottish Government funding as a percentage of the sector’s total income in 2023/24, reaching 27% of the sector’s average income compared to 25% for SFC grants. Some institutions are better placed than others to grow international income.

“Even without the perpetual risk of a geopolitical shock, the extent of cross-subsidy now jeopardises the quality of education, experience and support that universities are able to offer. When that happens, international students will exercise their choice to go elsewhere.”

Professor Dame Sally Mapstone said the challenge facing Scottish universities was huge. (Image: Newsquest)

Professor Dame Sally Mapstone, principal of St Andrews University and US convener, said a long-term investment structure would be vital. She added: "Scotland’s universities give a massive return on investment for taxpayer’s money and are ambitious for the nation’s future.

"For every £1 of taxpayer’s money spent on research we return £8 worth of benefits to Scotland’s society. Yet we’ve seen a cut of 31% to our research budgets despite a sector-best performance in the Research Excellence Framework (REF), with 84.8% of our research judged as world-leading or internationally excellent.

"We appreciate the public finances are difficult but to continue to deliver a return for Scotland we need a longer-term plan for sustainable multi-year funding. The scale of the financial challenge facing the sector means we cannot continue to engage with it on an annual basis.”

Professor George Boyne, Aberdeen University principal and US funding policy group convener, said: "Higher Education is the only part of the Scottish education system that has suffered significant reductions in the value of public funding since 2014, and can't absorb further cuts without real risks to the quantity and quality of our education and research.”

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Jamie Hepburn, minister for higher and further education, stressed the Scottish Government was investing almost £1.9 billion every year in colleges and universities.

He added: “This investment ensures Scottish domiciled students benefit from free tuition at our world-class universities – and in near-record numbers too, with almost 30,000 Scottish-domiciled students securing a place at a Scottish university according to UCAS data.

“International students who come to our world-class institutions make an important and valuable contribution to our economy, educational environment and society. We will continue to work closely with the Scottish Funding Council to deliver sustainable funding for our universities and colleges.”

An SFC spokeswoman said: "Universities have a range of sources of funding. The SFC invested over £1.1 billion of public funds in Scottish universities last year. They are huge assets for this country, enabling students to get good jobs, conducting world-class research, diffusing that new knowledge into innovation, and contributing immense economic and social value at local, national and international levels. They are all different and, as autonomous organisations, each university makes its own decisions about its mission, finances and future direction.

"We continue to work with the sector through challenging financial times to distribute government funds in ways that support students, research and sustainability.”