Education / ‘Significant’ deficit still faced by UHI Shetland
With the college having already reduced its costs, principal and CEO Jane Lewis said there is a wider ‘structural funding problem’
UHI SHETLAND is warning it still faces a “significant” financial deficit despite reducing its costs.
Principal and CEO Jane Lewis said UHI Shetland’s board view it as a wider “structural” issue and will take up the matter with the Scottish Funding Council.
It comes as two recently published reports shone a light on the financial challenges facing colleges in Scotland.
A Scottish Funding Council report said 24 out of the country’s 26 colleges are expected to have more expenditure than income this year, with Lewis saying UHI Shetland is one of them.
She said it comes against a backdrop of 20 per cent less funding in real terms since tertiary education in Shetland merged in 2021 under the UHI banner.
Last year UHI reduced its workforce and took other measures such as closing learning centres in a bid to cut a sizeable deficit.
Accounts for UHI Shetland for the year ending 31 July 2024 appear to show an adjusted operating deficit of £1.48 million for 2023/24.
Lewis said UHI Shetland has now reduced staffing by nearly one third, but there is a feeling that the college has done as much as it can.
“We’ve reduced the staff by 29 per cent, we’ve got rid of our learning centres, we’ve cut our operating costs, we’ve gone out to get external funding for various things that we do,” Lewis told Shetland News.
When asked if more staff cuts could come, she said the college is coming to a point where “there is no fat to take out”.
“Every single vacancy that we get, we look at really, really closely and we frequently don’t replace like for like,” she said.
“So we frequently reduce our FTE [full-time equivalent] or our headcount depending on what the role or responsibility is.”
The college chief added that the organisation continues to look at its bills for ways to reduce expenditure.
“We’re very, very careful about what we do spend, and we consider it really carefully,” Lewis said, adding that there is an emphasis on looking for external funding for projects.
She added that there has been a community benefit fund application submitted for a new boat, for example, while nearly 14 per cent of the workforce is funded externally.
Lewis said there has been an improvement through reducing the deficit “by about a third, but there’s still a substantial deficit” left.
She added that UHI Shetland receives just over half of its funding from the Scottish Funding Council, compared to a nationwide average of 77 per cent.
The plans for the current financial year – which runs from July to July – include more income generation, while Lewis said “we’re going to be doing more cutting back”.
“We still can’t close the deficit this coming year,” she said.
“But the board has reached the conclusion that there is a structural funding problem here. It’s not that we’re not doing things as efficiently as we can, there is a fundamental problem here.”
UHI Shetland board chair Stephen Leask said a “significant” factor is that the college does not get funding for distant islands allowance, which is paid to staff on top of salaries.
If the college did get funding, it could be better off by more than £300,000, he said.
Lewis also said UHI Shetland receives some “rurality” funding, but that has not changed since 2018.
“We believe that it is vital that Shetland continues to have a college,” she added.
“We can point to the excellent work that the staff have been doing. Our student outcomes have been excellent.”
Leask added that he thinks UHI Shetland plays a “vital part in Shetland’s young people and their educational abilities”.
He said positive statistics from the college highlights “not only the ability of the young folk in Shetland, but also the staff and the lecturers”.
Last year a decision was made in principle to move the UHI to a single campus in Scalloway. At the moment the UHI also has its Lerwick base in Gremista, in addition to Port Arthur in Scalloway.
Lewis said this is an area which can result in savings, “but even that won’t get us out of deficit”.
“It’s a complicated business because of the specialist teaching that we have, and the fact that neither of the campuses are ideal really for the delivery,” she added.
“So the board is thinking very long and hard and balancing up the options. They haven’t reached a decision on that.
“But yes, we will need to cut our campus footprint, but what I’m highlighting is even if we do that, we won’t be closing that deficit.”
In response to its recent report on college and university sustainability, Scottish Funding Council chair professor Cara Aitchison said: “The trends we’re seeing indicate the serious implications of the tight fiscal environment in which colleges and universities are operating and the need for action to address the challenges they face.
“We are encouraged by the proactive steps being taken by institutions as they adapt and build in resilience for this changing environment, recognising that this may include difficult decisions to secure long term financial sustainability which is a requirement of our financial memorandum.
“We continue to engage closely with Scottish ministers on the case for investment in colleges and universities which are the drivers for economic growth, addressing child poverty, supporting the transition to net zero and delivering excellent public services.
“We are also increasing levels of engagement and monitoring activity for those institutions facing the highest risks to their financial health and are working with them to understand and assess plans to bring them back to a sustainable position.”
Meanwhile the Scottish Government’s higher and further education minister Ben Macpherson said: “We are investing over £1.1bn in teaching and research at Scottish universities as well as providing a 2.6 per cent sector increase in teaching funding to colleges and a 4.9 per cent increase to support college maintenance in 2025-26.
“Free tuition also means that access to higher education is based on the ability to learn and not the ability to pay, with a growing number of Scots from the most deprived areas entering university on full-time first degree courses in recent years.
“These reports recognise the high levels of pressures on our colleges and universities which is why we are collaborating closely with the higher and further education sector to ensure a successful and sustainable future.”
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