Dundee University will be 'out of cash' in weeks after financial mismanagement

Dundee University will be “out of cash” by the end of June, according to bosses who have admitted that financial mismanagement led to a £35m funding shortfall.

University chiefs appeared before the Education, Children and Young People Committee at Holyrood on Wednesday morning amid the ongoing financial crisis and impending job cuts.

Dundee is planning to cut 632 jobs across departments.

Professor Shane O’Neill, interim principal and vice chancellor, owned up to “inadequate financial discipline and control”, “inadequate oversight”, and “gaps in the competence” of school leadership.

Without a significant bailout, Tricia Bey, the university’s acting chair of court, said the institution would be out of cash within three months.

“It’s very clear to me that we are actually in a very grave cash crisis,” Ms Bey told the committee on Wednesday.

“Without the very welcome liquidity support from Scottish Funding Council, we will run out of cash at the end of June.”

University bosses were summoned to face scrutiny after confirmation of an independent external investigation into the situation.

Professor O’Neill opened the session by apologising to all those who are being affected by the situation.

He then described the internal and external factors to blame for the current crisis.

Externally, he said the university has struggled to close the financial gaps associated with decreasing numbers of international students and had struggled with Inflation, increasing National Insurance contributions, and ongoing cost of living pressures.

Internally, he owned up to financial mismanagement and “gaps in the competence” of school leadership.

“There has been inadequate financial discipline and control for investment decisions – including in IT systems, weak compliance at times in financial control, lack of accountability, and also inadequate oversites at executive and court levels of our financial position,” Professor O’Neill said.

Under questioning from committee convener Douglas Ross, Professor O’Neill admitted there had been “gaps in the competence you would expect in the leadership”.

“Certainly, mistakes have been made,” he said.

“I think there were poor investment decisions. There was a Lack of discipline. There probably wasn’t the rigour of following through on savings commitments that were expected to be delivered in budgets. And there wasn’t the appropriate oversight at executive and court levels of some of those decisions.”

The recovery plan, which has been presented to both the Scottish Funding Council (SFC) and the Scottish Government, aims to stabilise the institution and get the university to the right size, shape, and structure to allow it to continue in a “recognisable form”.

However, Mr O’Neill warned the committee that if the recovery plan is unsuccessful, the University will be forced to consider more unpalatable options – such as mergers or completely ceasing to exist.

Ms Bey added: “Our advise from our lawyers has been that we have to bear in mind the possibly that we become insolvent, and that is a real possibility.”

The school has made a request for £22m worth of support funding from the Scottish Government. However, this money is simply “liquidity” that will buy the school time to restructure itself.

The money will not save any of the 632 jobs that the University is planning to cut.

The university is also still planning to rationalise the courses and modules that it currently offers.

Professor Blair Grubb, vice principal of education, said that any “uneconomical courses will have to be closed”.

There will be an external independent investigation into Dundee University’s financial situation in the very near future. It will scrutinise how the university found itself in the current position and who, or what, is to blame.

Without pre-empting the outcome, Mr O’Neill expects the investigation to say “we wouldn’t be sitting here if better decisions had been made”.