Edinburgh fights fear of deficit with bond

October 20, 2000

Edinburgh University is negotiating a £40 million bond from a major financial institution to combat a potential £12 million deficit within four years.

Principal Sir Stewart Sutherland said the university would have a surplus on last year's turnover, but feared it faced a £3 million deficit next year. It was in a position of academic and financial strength with "decent" reserves. But as public funds continued to dwindle, it had decided to be "bold and innovative" to maintain its international standing.

Sir Stewart this week began consulting the university's 6,500 staff over radical restructuring, which will include cutting jobs, courses and buildings. He has not ruled out compulsory redundancies, but he promised voluntary job losses backed by retraining and redeployment where possible.

Edinburgh must expand its annual income of about £0 million or cut its spending by £3 million for each of the next four years, Sir Stewart said.

The more successful the university is in raising money, the less severe any cuts would be. Sir Stewart has told staff that some jobs will have to go, but that the scale will depend on the financial situation.

The university's provosts (deans) have embarked on an overhaul of subjects, which, Sir Stewart said, was likely to involve "new approaches and selective discontinuation".

Edinburgh plans to expand the number of full-fee overseas student by 40 per cent, recover more indirect costs on research and boost fundraising. It is also considering selling property.

It is expected soon to reveal the "household name" finance house from which it is obtaining the £40 million bond. Deputy secretary Melvyn Cornish said this was in effect a loan with "very favourable" interest and repayment terms. The bulk will be repaid in the second half of the 30-year term.

"This is only possible as an arrangement because of the positive view they take of our underlying strengths and financial management, and the purpose to which we intend to put (the money)," Mr Cornish said. "It is not in any sense a private finance initiative. There are no strings attached."

David Bleiman, assistant general secretary of the Association of University Teachers, said Edinburgh's move would open a big debate: "Partly, of course, it will be about restructuring, about courses, jobs and the way change is managed. But there will also be a debate about how to get resources into the university system to meet the challenges we face. This debate will go much wider than one university."

Mr Bleiman said the biggest resource of any university was its professional staff and now that Edinburgh was mobilising "big money" it must address the three main issues that concerned the AUT: "scandalously inadequate" pay, insecurity of short-term contracts and the need for effective equal opportunities.

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