UK universities must take charge of their financial destinies

As I near the end of a professional career spent in universities, mostly in the UK but also with an eventful interlude in Hong Kong, the present situation causes me considerable distress.

The university sector, one of the jewels in the UK’s crown for centuries, is in severe and urgent financial jeopardy. Justin O’Brien’s report analysing its current financial state makes sobering reading – and the public funding situation is worse in Scotland than the rest of the UK because of the inadequate funding of “home” students, recently quantified in a report jointly authored by Universities Scotland and the Scottish government.

I take no satisfaction from the fact that I have been predicting this for years. In Scotland, political and public minds were focused by the major challenges of the University of Dundee, which became publicly known about two years ago, but the signs were there before that. Flat funding for Scottish-domiciled students and rising costs (salaries, national insurance, utilities, war-related supply-chain complexities, immigration rule changes and a litany of external events beyond the control of universities) led me to observe that the problems were not confined to Dundee and even a financially strong, international, highly regarded university like Edinburgh was not immune. The Gillies Report into Dundee focused far too much on the (undoubted) mismanagement that had precipitated the crash and far too little on the underlying fragilities right across the sector, which made the consequences of that mismanagement so much more serious.

At the University of Edinburgh, we reasoned that our fate is in our own hands: no one is going to come to our rescue. So we started taking radical steps to address the situation. Initial measures were necessarily reactive and tactical: staff recruitment restraint, suspension of academic promotions, voluntary severance schemes and slowing of capital investments. At the same time, we started planning a range of actions that were more strategic and sustainable, with the potential to bring real benefits for future students and staff.

We aim to do things differently, to do things better. It is not just about doing less. The trade union and media reaction has been to focus on cuts and reductions, and we fully understand that it is a human reaction in times of uncertainty to fear the worst – but there are so many reasons for feeling positive and optimistic about the future.

Ten years from now, the [!University of Edinburgh!] will continue to be highly international in its composition and its outlook, attracting the brightest and best students and staff from Scotland, the rest of the UK and all over the world. Edinburgh will continue to offer a wide choice of high-quality education and research programmes, addressing societal needs for skills and new knowledge and built on disciplinary and interdisciplinary strengths. Importantly, financial resilience will allow the university to thrive despite geopolitical and other complexities, investing in its students and staff and seizing opportunities when they arise.

Indeed, Edinburgh will be an even better place to study or work than it is today because things will be done differently, embracing modern technologies but not being dictated to by them, supporting students and staff with more efficient and people-friendly methodologies. The university will continue to be one of Scotland’s biggest employers, able to recruit and develop people’s careers at all stages.

Uncertainty and pessimism in the current circumstances are fully understandable. Misinformation and disinformation are not acceptable, however. As an institution devoted to the pursuit of knowledge and truth, we have a duty to challenge falsehoods and explain our intentions openly so that our students, staff and supporters – including those who may join us in the future – understand where we are going and why.

For example, suggestions that the [!University of Edinburgh!] is turning its back on its Scottishness couldn’t be further from the truth. Our role in the study and teaching of Scotland’s past and present is an important element of our vision and our contribution to the wider world. The changes being made across our programmes are intended to give students greater flexibility and encourage them to explore subjects and disciplines they might not otherwise have considered. As a result, more of our students, not fewer, will have the opportunity to study Scotland’s rich history, literature, cultures and languages – including Gaelic – as part of their degree pathway.

Equally, our focus on internationalisation will remain a priority. Recent claims that we will reduce or downgrade international opportunities for students are misinformed. The reforms to the organisation of incoming and outgoing international student experiences, including changes to the way we support exchanges, are designed to make things better and more inclusive, not to stop them happening. Our aim is to offer students improved and different ways to develop global perspectives, intercultural understanding and relevant skills.

Students studying at Edinburgh now and those planning to join in the near future can be confident that the disciplines they wish to study will continue and that, if they seize the opportunities presented to them, they will graduate with Edinburgh qualifications that are respected all over the world.

When I am confronted with “but we are not in a deficit”, my answer is, “True – but the only reason we are not is that we have been taking tough decisions for the last couple of years that have prevented a deficit”. It is a fact that in the financial year 2025-26 we made savings worth £73 million by measures such as voluntary severance, restraint on staff recruitment, and freezing of promotions. At the end of the year our financial surplus was £16 million. The numbers speak for themselves: without the savings, the deficit would have been £57 million, and we would have been in a similar position to the 38 universities listed in the O’Brien report as being in immediate financial peril.

Responsible leaders must aim to safeguard the future as well as taking care of the present. That is what we have been doing, and I am optimistic that the [!University of Edinburgh!] will remain strong, not only in the short to medium term, under the leadership of my successor, but also in the coming decades and centuries. Universities are highly robust and resilient organisations: Bologna is more than a thousand years old, Oxford more than 900, Cambridge more than 800, Edinburgh more than 440. They can only have survived all the intervening wars, plagues and revolutions – social and technological, as well as political – by being adaptable. Darwin taught us that to fail to adapt is to become extinct. The universities that emerge from the current crisis in the strongest position will be those that have evolved quickly and effectively without unduly damaging their central missions. Edinburgh will be one of them.

It is gratifying that despite the challenges of recent years, we continue to make huge contributions to knowledge and to improving lives locally and globally. Our Strategy 2030 is underpinned by a stringent set of key performance indicators: we are making good progress against these, with the red-amber-green rating having only one “red”, and that is around environmental sustainability, which for a highly international university with an ageing and historic estate does pose formidable hurdles. Our researchers make world-leading discoveries, our teachers contribute to the development of future leaders, our social impacts are many and varied. The steps being taken at the moment are aimed at ensuring the continuation of such manifold contributions to society.

At the same time, the rapid advance of technology poses another set of urgent and potentially existential challenges. Artificial intelligence is already changing the way we teach, assess and research. Again, adaptation is key: universities need to focus on the human aspects of our pedagogy, our student and staff support. We have to accept that we are no longer the primary source of knowledge; we have to be more about the understanding and application of knowledge. We have to accept that many of the benefits of a university experience arise outside the classroom: social, teamwork and communication skills, sport, life experience, taking risks. AI replaces none of these.

Universities still have much to offer generations of the future – but they must first ensure their futures by taking charge of their own destinies. In the UK, the most immediate priority is financial resilience. Yet survival also means embracing technological change, not fearing it, and majoring on the aspects of our offering that remain intensely and exquisitely human.

Based on the experience of the past, I am optimistic that the required adaptation is possible. It does have to be more rapid and nimble than any previous adaptation but for the sake of humanity and society, everyone that loves and cherishes universities must rise to the challenge.

Peter Mathieson is principal and vice-chancellor of the University of Edinburgh.