Report highlights bleak future for higher education funding

Scottish universities may soon feel the financial pressure of the economic downturn as budgets struggle to accommodate the rapidly increasing number of applicants.

A recent SFC report predicted universities will face a significant decline in funding that usually comes from charities, investments and businesses.

Income from university investments has already been affected this year, dropping from £58 million last year to just £28 million due to worsening interest rates.

The report stated that “the economic conditions are already starting to impact on the university sector and the financial prospects are less certain. Looking ahead, the challenge for institutions is to maintain financial and institutional sustainability in the light of the economic downturn”.

The SFC made 77,000 places available to Scottish universities last year, with over 89,000 potential students having filed their applications so far, many fear over 10,000 students could be left without a place.

In response to the worrying financial situation shown in the SFC report, a Scottish government spokesperson stated: “The purpose of the Scottish Funding Council’s report is to look to the future and identify ‘risks’ so that we, as a government, can plan ahead and address them accordingly.

“Of course there are pressures due to the economic climate and the cuts from Westminster. However, funding for universities continues to increase under the Scottish government.”

Last Friday, the education secretary announced £1.07 billion for universities in the next budget, a £40 million increase.
 
A spokesperson from the SFC told The Journal that the “SFC will use [the Scottish Government’s Draft Budget] to set a budget for academic year 2010-11,” hinting a potential increase in higher education funding. 
 
However, the recent decision to cap the number of students recruited into science, technology, engineering and mathematics (STEM) subjects has highlighted the financial problems faced by the sector.

This cap comes as a surprise, as the Scottish Executive has encouraged universities to accept as many students as possible in STEM subjects since 2007-8, as it was seen to stimulate the economy.
 
A Scottish Government spokesman justified the move, saying: “An uncapped system for places does not encourage universities to maintain the quality of the learning and teaching experience for the entire student body.”

Heriot-Watt is likely to be hit hardest by fines for over-recruiting as it draws most of its students in STEM subjects and has already accepted 11 percent over the set limit.  
 
The potential merging of the University of Edinburgh and Edinburgh’s College of Art in 2012 also lends credence to a financial crisis amongst Scottish universities.

The University of Edinburgh’s statement read: "A combined institution would be likely to provide greater opportunities and security in the current and future economic context, with each currently enhancing what the other has to offer."