Dundee University’s Deficit: Fact or Fiction?

The Paradox of Known Unknowns and Unknown Unknowns

The 13th of November 2024 sealed the fate of the previous Principal, Professor Iain Gillespie. After announcing the “inevitable” job losses following the sudden appearance of a deficit “in the range of £25 million to £30 million,” he resigned without notice on the 6th of December.

This was the last publicly available financial information provided by the University. Now, four months on, mystery still surrounds the actual deficit facing the institution. The annual Financial Statement for 2023-24 failed to be presented to the Court at its December meeting and was not published as expected in January 2025.

Since then, no details have been shared about the actual deficit, required savings, recovery timelines, or any strategic plan for the University’s future.

The situation worsened with the University Secretary taking extended leave in January 2025 and the Chair of Court resigning in February, and continuing resignations from the University Executive Group (UEG) a governance vacuum highlights the institution’s inadequate leadership during this crisis.

Known Unknowns

The UEG insists that falling student numbers — both home and international — are at the root of the financial crisis, claiming that a shrinking intake has rendered current staffing levels unsustainable. Yet, this argument feels incomplete, even convenient. If recruitment declines were truly the driving factor, why has the University failed to publish its 2023-24 Financial Statement? The financial year closed in July, meaning any dip in student numbers wouldn’t have significantly affected the accounts until 2024-25. The timeline doesn’t add up, raising doubts about the veracity of this explanation, and whether a focus on students is merely a distraction from deeper financial mismanagement. It has been long documented, for instance, that the funding of the failed Public Private Initiative with Dundee Student Villages continues to be a drain on university finances. Similarly, statements by the Scottish Funding Council and the Scottish Government have indicated that there are unique aspects to Dundee’s crisis not evident across the whole sector.

Capital Expenditure

Previously, we identified the extent of capital expenditure as central to explaining the financial crisis, particularly as this occurred before the decline in student numbers. The Tay Cities Deal, and the timing of the associated expenditures, appear to be a major factor in Dundee’s current difficulties. External contractor costs surged to over £30 million — a threefold increase in just two years (2022-24). Annual capital expenditure on fixed assets also rose from £18 million in 2021-22 to £43 million in 2023-24. Over the four years from 2020-21 to 2023-24, the University has spent more than £109 million on capital projects, all without significant borrowing.

This raises serious concerns about the UEG’s ability to undertake financial planning. For instance, in 2024-25 alone, the University remains committed to an additional £10.2 million of capital expenditure for the final stages of the Tay Cities Deal. There is a lack of transparency from the UEG regarding both past capital expenditure and future spending. It is understood that additional expenditure exceeding £30 million per year is expected in coming years, and that these plans pre-date the costs associated with repairs linked to aerated concrete (RAAC). The University’s assumption that surpluses of around 10% of income — over and above what is required to finance research and operational costs — undermines the credibility of UEG’s strategic planning. If such surpluses are unrealistic, then the financial crisis appears to be one of mismanagement rather than necessity.

Unknown Unknowns

For an institution with assets exceeding £330 million — and, even after accounting for liabilities, net assets of £280 million — it is perplexing that Dundee University is facing financial difficulties. Historically, the University has had little to no significant debt, and even today, it remains largely debt-free.

This makes it all the more puzzling why the University is pushing for drastic cuts to student provision and staff when the financial challenges likely stem from the timing of transactions rather than any deep-rooted structural deficit. If the issue is indeed cash flow rather than insolvency, then simple financial mechanisms — such as securing a mortgage against a small portion of its assets — could easily cover short-term gaps without resorting to damaging cost-cutting measures.

The failure of transparency and accountability within the UEG suggests a leadership team that is more focused on generating surpluses for capital projects rather than safeguarding the core mission of high-quality education and research.

Leadership Collapse and the Need for Governance Reform

Dundee University faces an unprecedented leadership collapse, leaving governance in disarray. The resignations of the Principal followed by the University Secretary’s extended leave, the immediate departure of the Chair of the Court, along with other UEG members, has created a credibility vacuum at the highest levels of the institution. The executive model of higher education leadership is often justified by its ability to manage crises and complex financial matters. However, the UEG at Dundee has failed on both fronts. It has mismanaged finances while avoiding accountability for its decisions. Members of UEG have distanced themselves from responsibility. Interim Principal Shane O’Neill said that, when previously serving as Deputy Principal, stated that he was not “in the kind of role that… had the primary responsibility around [University finances].” If those at the highest levels don’t take responsibility for financial oversight, then who does?

Reforming University Governance: A New Model

Dundee’s crisis isn’t just about money — it’s about leadership and governance. The sudden collapse at the top has laid bare the dangers of concentrating control in an isolated executive group, cut off from the very people it’s meant to serve. Decisions made behind closed doors, without accountability, have led the University to this breaking point. If there’s any hope of restoring stability and trust, leadership must change course. Transparency, accountability, and genuine democratic governance must be the foundation of how the University moves forward. Staff-student councils with real decision-making power should be established to ensure governance reflects the needs of the University community. More decisions could be put out to a direct vote of staff and students.

The executive model must be reconsidered. Some executive roles could be abolished altogether. Leadership roles could be elected or filled through fixed-term secondments from staff, keeping decision-makers connected to academic and student life. Additionally, a salary cap linked to the median University salary would prevent excessive pay and misaligned incentives.

Dundee must decide: continue with a failed executive model or adopt a transparent, democratic governance system. The choice is obvious.