Bosses at Dundee University are in negotiations to secure a bank loan to fund a redundancy scheme, The Courier can reveal.
The university currently has access to a multi-million pound drawdown facility from its bank but because of cash-flow issues has been forced to renegotiate terms.
Securing the fund for a redundancy scheme would allow the institution to lay-off staff and make the savings required to close its £30 million deficit.
Such schemes usually allow staff to apply for redundancy in return for pay-offs.
Loan ‘critical’ to financial recovery
Sources at the university described the success of the discussions as “critical” to any financial recovery.
“If they don’t secure the loan they need then a recovery just won’t be possible without the government stepping in,” a senior insider said.
But some staff have been critical, saying it is “extraordinary” that the university will have to take on a significant amount of debt just to make staff redundant.
The value of the loan has not been confirmed but it’s understood it could top £10 million.
“This shows how bleak the situation is but they are still to explain to staff and students how they got it so badly wrong.
“How can they talk about a recovery without honesty about how they managed the university into chaos?” one angry member of staff said.
The Scottish Government was previously asked by North East MSP Michael Marra whether it could provide a bridging loan to the institution through the Scottish Funding Council.
Higher education minister Graeme Dey said at the time: “The SFC would want to satisfy itself that the plan is robust and that it gets the university to a sustainable position.
“Part of sustainability is ensuring that it is a vibrant, viable concern going forward, there may be short-term pain but it is still a thriving university.”
Deficit ‘can’t be cut’ without staffing reduction
But a source said the recovery plan Mr Dey says the SFC will want to see would be meaningless without the money to back it up.
“Bluntly, you can’t cut a deficit of this size without reducing spending on staffing significantly and that comes at a cost,” a source said.
A University of Dundee spokesman said: “We are involved in discussions with a range of external stakeholders as we work towards bringing forward a recovery plan and associated proposals in a matter of weeks, to address significant financial challenges and ensure the long-term sustainability of the university.”
North East MSP Maggie Chapman said: “We know it is not lecturers, researchers, lab techs or the many who support the work of the university who have caused this crisis.
“The idea that it is going to be their jobs on the line is outrageous. Why should they have to pay for the university’s bad decision making and bad governance?”
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