Dundee University will be told by the Scottish Government how it can spend a £40 million bailout.
SNP education secretary Jenny Gilruth said the government will provide the much-needed financial support over the next two academic years.
It will be in addition to the £22 million in support already provided.
But she is taking the “unprecedented” step to use legal powers after a damning review of the financial crisis by Professor Pamela Gillies.
It means government ministers have the power to issue the money directly to Dundee University and set “conditions” about how the cash is spent.
Dundee University crisis requires ‘unprecedented’ response
Ms Gilruth told parliament on Tuesday: “This is a unique and unprecedented set of circumstances, which requires a unique and unprecedented response.
“Where there has been the appearance of financial mismanagement at an institution, Scottish ministers are obliged to consider whether it is necessary or expedient to issue a direction to the SFC about the provision of financial support.”
She said it is a necessary step, adding: “The use of this power is unprecedented and has been made necessary by the exceptional circumstances at the university, as set out in the findings of the Gillies Report, which recount ‘poor financial judgement’ and ‘weak governance’.”
Further support may be needed
In addition to the £62 million, Ms Gilruth said the university says it may also require additional support of between £35 and £60 million.
She said no decision has been taken on this with further examination of the figures required.
The SNP MSP added: “This figure is also likely to be impacted by progress at the university to reduce expenditure and stabilise income.
“The SFC has been advised by Dundee University that whilst this is not an immediate cash need, it will need to be addressed before the end of this financial year.
“It is, therefore, vitally important that the university works to secure a plan which will allow for commercial lending to support some, or all of the liquidity ask.”
How will Dundee University find cash to repay loans?
Dundee-based Labour MSP Michael Marra told parliament he fears further cost-cutting will be necessary.
“Where is the university going to find the money to repay up to £60 million of loans, whether it be from the government or from a commercial source?” he asked.
“The Scottish Government has already given the green light for 300 job cuts, but without income growth, will that not make further cost-cutting inevitable?”
North East Scotland MSP Maggie Chapman – the university’s rector elect – welcomed the support.
She said: “The benefits of this financial support must be directed toward staff and students. Current leadership has failed to offer that – potentially excluding court members from relevant discussions, and not including student and staff unions in planned conversations over the summer.”
Ms Chapman said she looked forward to starting the process of “real scrutiny” at the upcoming education committee hearings with former executives.
Potential criminality
Ms Gilruth was also asked by Conservative MSP Douglas Ross whether government would co-operate with any criminal probe into failures at the university.
She said: “I’ve sought assurance from the Scottish Funding Council and Professor Pamela Gillies, they were both clear there was no evidence of criminality.
“Of course the government would co-operate with any inquiry in that regard.”
North East Fife MSP Willie Rennie welcomed the funding, but warned that without significant growth in funding he fears the crisis could be repeated.
Ms Gilruth added: “We must jointly across this chamber endeavour to support Dundee University to rebuild, to thrive and to once again flourish. The City of Discovery should expect no less.”
Professor Nigel Seaton, interim principal of the university, said he is “extremely grateful” for the support and that the institution would continue to engage on a full recovery plan.
He added: “This is invaluable in helping us reach a more sustainable position and will provide welcome reassurance to staff, students and our wider stakeholders.
“We do not take lightly the responsibilities which come with this level of additional public support. We have to be better as an institution than we have been and I and my colleagues are absolutely determined that we will be.”
The university’s first graduations of 2025 also got underway on Tuesday at the education secretary spoke in parliament.
But some were said be “snickering” as they discovered a message from departed interim principal Shane O’Neill urging them to “stay in touch”.
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