Dundee University has been given access to a £15 million emergency loan – but will the package help bosses balance the books, or is this just a step on the road to recovery?
That’s the question as the struggling institution tries to pull itself out of a £30m hole while up to 500 jobs could be on the line.
How will the loan work?
The £15m lifeline funding – announced on February 25 – will be available to universities through the Scottish Funding Council, the public body that supports the higher education sector.
SNP finance secretary Shona Robison’s statement was carefully worded to avoid too direct a mention of Dundee.
That’s because of a little known convention that means government can’t just hand money directly to any university.
The Haldane principle, which dates back to 1918, is a policy which states that researchers and universities should decide how to administer their funds – not politicians.
So the government cannot hand the loan directly to Dundee University, it has to go through to SFC who will administer it.
Privately, it is clear the cash is for Dundee University, which Dundee City East MSP Ms Robison singled out as “one institution facing an immediate challenge.”
Whether some of it might be made available to others universities facing financial challenges will be up to the funding council.
How much will the funding help?
New principal Professor Shane O’Neill says the cash will act as a “bridging loan”, giving the institution some breathing room to develop a recovery plan.
The next stage of this is expected to be presented on March 10.
Mr O’Neill said it will be of “critical importance”. But he also warned it is “not the solution” to the institution’s ongoing financial woes.
Insiders were cautiously optimistic. They said the show of support by the government will “hopefully” aide negotiations to secure a loan from its bank.
Mr O’Neill says “difficult decisions” still lie ahead.
There is still a need to “resize and restructure” the university.
That will alarm staff at risk of losing their jobs.
Trade union bosses want the university to “take compulsory redundancies off the table” following the cash injection.
It’s been claimed this could help bring an end to the ongoing staff strike.
North East Labour MSP Michael Marra says the funding will be of limited help until a full recovery plan is put forward.
“This doesn’t really touch the sides of the structural deficit at all,” he said.
“This is just to get them through and keep the lights on.”
When does the loan need to be paid back?
Given the cash from the SNP is just a loan, the university will be expected to pay it back once on a more solid footing.
But as of yet there is no set deadline for when that will be.
Nor has there been any timescale as to when repayments are likely to begin.
Read more about the Dundee University crisis on our dedicated page here.
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