UCUG Finance working group blog #1 May 2026

Safe but too safe: excessive prudence as a form of institutional self-harm?

The first in a planned series of blogs about university finances at Glasgow

We all know that Higher Education in Scotland and in the UK as a whole is in crisis, but this crisis is not evenly spread across the sector. The University of Glasgow’s Senior Management assure us that Glasgow’s finances are not under threat…yet, but we are seeing budgets verging on austerity. We are working in an environment of ever-increasing workload, not least because an effective recruitment freeze means departing colleagues are never replaced. Management renege on promised pay spine restructuring using the sector’s difficulties to justify successive below-inflation pay rises. Meanwhile, PhD studentships and personal research allowances are slashed and buildings and services are allowed to crumble around us taking their toll on morale and productivity. Fixed term contracts are not renewed, a “hidden” redundancy?  GTA budgets have been slashed. What impact will these cuts have on Glasgow’s ability to raise research funding? How will individual subject areas and the University maintain their global rankings?

UCUG set out to understand the University finances, with expert advice, to discover whether you should be worried – you may be surprised by what we learned.

University finances as for any large organisation are complex and opaque to those who are unfamiliar with them. There are many accounting games that can be played and some staggeringly large numbers involved when the value of the physical assets (buildings & land) and endowments (money given for some specific purpose) are considered. However, the current financial health of the University is dependent on the balance between its income (largely from teaching, grants for research and from government) set against its expenditure (staff salaries, infrastructure maintenance, new buildings & interest on borrowing). Over time an institution can build up reserves when income exceeds expenditure (called a surplus) or eat into its reserves when in deficit. The “available funds” are a university’s equivalent of cash in the bank – money that they can use to cover unexpected dips in income. A yearly surplus and a comfortable reserve are indicators of sound financial health, but excessive surpluses and reserves mean that the income is not being put to good use by hiring enough staff to teach the students and carry out the research that are the University’s missions.

Glasgow riding high in stormy waters?

The situation at Dundee, as well as recent press coverage of Edinburgh and Strathclyde, feeds a narrative that the HE crisis is existential for Scotland’s universities old and new. However, the University of Glasgow is in a very strong financial position with turnover of over a billion pounds last year, has increased annual income continuously for the last 10 years (including the last two when international student numbers declined), and reported £1.3 billion in unrestricted reserves in 2024-25.

Glasgow’s annual report 2024/25, p. 30 notes that: “Available funds (cash and cash equivalents and investments) increased by £7.5m to £645.7m (2023-24 £638.2m).” These are liquid “reserves” that can be utilised to meet demand for payments. Since the university also has access to revolving credit facilities providing up to a further £200m, it is well-positioned against shocks. If the University’s income dried up overnight, these funds would allow it to run for over 200 days (“liquidity days”) before dipping into its overdraft. At present, most universities aim to have 110-150 of “days” of liquidity and only when this falls below 60 is it likely to cause issues.

This scale of reserves, credit and endowment mean the university could withstand severe income losses over multiple years before it came anywhere close to Dundee’s situation.

Glasgow’s income from overseas students increased markedly in 2024/25, when others saw severe downturns. An additional 1500 international students registered last year driving the overall increase in income recorded for 2024-25: tuition fees increased by £69.8 million as part of a total increase income of £93.2 million with increased in research income (£19.2 million) being the other significant component.

Although the annual report suggests that 2024-25 PGT numbers were lower, it also notes that income met or exceeded budget forecasts. Both PGT numbers and income are in a volatile state and downward trend, but the degree of this decline matters. An overly negative assessment of the downside (as happened for the last two years in a row) leads to aggressive cuts and damaging savings targets.

Staff costs as a proportion of income show UoG is several %age points below the sector average (HESA DT031 Table 1, Academic years 2015/16 to 2024/25). This ratio was the fourth lowest of all Russell Group universities above only Cambridge, Oxford and Bristol (and noting that the first two of these have such high income their staff cost ratios are consistently low compared to other RGs).

Prudent borrowing at low interest rates is another feature of Glasgow’s current financial position. In the past the University borrowed roughly £250m at interest rates below 3% with capital repayment deferred until the end of the next decade at the earliest (2024-25 financial statement). This is the kind of mortgage deal that you would kill for.

The dangers of excessive prudence: Money in the bank is money not working for the institution

Large chunks of the University’s income depend on its reputation.

• The Research Excellence Grant from SFC (£53.6m in 2025-26 https://www.sfc.ac.uk/publications/university-final-funding-allocations-2025-26/) depends on performance in REF combined with research power, which quantifies the number of staff and PhD students engaged in research.
• Overseas fee income depends on particular metrics of the University’s reputation such as the QS World University Rankings. Being in the top 50 or top 100 has a dramatic impact on how keen overseas Governments and Scholarship funders are to send students to Glasgow.

The University is also a registered charity and whether it can justify its reserves level with its charitable purpose is a theme we expect to cover in a later blog.

Spending too little on staff and their environment hurts morale & productivity as well as delivering a less good student experience. We wouldn’t argue for more shiny new buildings but research & teaching staff time spent dealing with water (and worse) damage from leaking drains & roofs, with collapsing ceilings, and shivering in winter and boiling in summer due to failed heating or air conditioning is not time spent writing 4 star outputs or delivering an excellent student experience.

QS rankings depend on the opinions of others who know us. Will PGT numbers and income be negatively affected by current austerity measures? How will cuts to personal research allowances and recruitment freezes impact on the University’s ability to increase research income? Do your invited seminar speakers remember their visit to the University with envy or because they had to trek from building to building to meet colleagues in the same School before walking across campus in the rain to a randomly allocated lecture room with half functioning projectors and a disgusting toilet next door?

Questions you should ask in staff meetings

What specific savings target is my College/School/Service being asked to make this year and next year?

Are you as Head of School/College/Service satisfied with the assumptions underlying the need to make this level of savings?