Thousands of Edinburgh University staff face pay freeze and furlough due to £150m Covid-19 black hole

In a bombshell email seen by the Evening News, university Principal Peter Mathieson has warned the institution will need to undergo an aggressive cost-cutting programme.

Tuesday, 5th May 2020, 10:38 am
Updated Tuesday, 5th May 2020, 10:39 am

Thousands of staff at Edinburgh University will today be told they face salary freezes and being placed on furlough as the institution confronts a £150m a year black hole caused by the Covid crisis.

In an email due to be sent to over 15,000 members of staff, seen by the Evening News, university Principal Peter Mathieson has warned the institution will need to undergo an aggressive cost-cutting programme just to survive.

University modelling predicts a loss of income of £70 million - £150 million next year alone, with losses to continue for at least the next four to five years too.

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In a bombshell email seen by the Evening News, university Principal Peter Mathieson has warned the institution will need to undergo an aggressive cost-cutting programme.

To mitigate costs Mathieson has today signalled he will be:

- Furloughing an unspecified number of staff who are unable to work remotely due to the nature of their job or because they have caring responsibilities.

- Ending all pay increments due August this year for staff currently on salaries of £100,000 and above, with promotions to continue in title only.

- Signalling that internally funded new staff recruitment will be limited to mission-critical posts only.

Page one of the email due to be sent out on Tuesday

- Suspending all construction projects due to begin, bar where they address health and safety concerns, amounting to £92 million in savings.

- Creating an 'Adaption and Renewal team' tasked with finding savings and steering the University through its challenging years ahead.

In his email, Mathieson blames a predicted loss of income from international students’ fees and University accommodation, catering and events, for the anticipated black hole. These two primary sources of funding for the University have been significantly impacted by the Covid-19 pandemic.

Mathieson writes: "Our modelling suggests that this could be in the region of £70-150million next year. The loss of international undergraduate students in one year would of course also impact over multiple years so we expect the financial shock to be sustained, possibly with cumulative losses if intakes in future years are similarly affected.

Page two of the email sent to University staff

“An obvious question we have asked ourselves is whether we can use our cash reserves to help cushion this blow. The answer is that it might help us in smoothing some of the immediate effects, but it does not provide a long-term sustainable solution. In addition to the £90m per month required to run University operations referred to earlier, we are also required to hold a further £90m in cash (30 days’ operating costs) to meet requirements for proper financial governance given our scale and charitable purpose.”

The bombshell email comes just one day after the umbrella organisation representing higher education in Scotland, Universities Scotland, warned of a £500m hole in finances.

Yesterday Professor Andrea Nolan, convenor of Universities Scotland, warned that financial support from governments in both Westminster and Holyrood over and above existing Covid-19 support schemes will be essential to future-proof the quality of education in Scottish universities, as well as to protect jobs in thesector.

The UK government has pledged a series of measures to assist universities across the UK, including a Research Sustainability Taskforce which will examine how best to sustain research related work. The government has also announced £100m in funding for research in universities in England, but Universities Scotland says it is notyet clear what further assistance, if any, will come for Scotland.The University of Edinburgh has been approached for comment.

Page three of the bombshell email
University Principal Peter Mathieson has warned the institution will need to undergo an aggressive cost-cutting programme just to survive