More money than ever for buildings, while threatening compulsory redundancies
By Balise42 - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=114587855
University management is planning to spend more money on capital expenditure this year (2024-25) and again next year (2025-26) than in any year in the past decade, while continuing to threaten compulsory redundancies. In fact, we are not aware of any year at any point in the past when they spent as much money on capital expenditure as they have budgeted to spend this year. It is outrageous for management to be spending so much money on capital expenditure while claiming there is a crisis which may require mass redundancies.
Management plan to spend more than £200m on capital expenditure this year and again next year. Many members from different schools, colleges, and service groups have reported attending all-staff briefings in their area in which local managers showed graphs like the one below. In this graph, we can see that the amount management has budgeted for capital expenditure this year 2024-25, and again next year 2025-26, is above £200m. The capital expenditure figures for previous years are available in the annual reports. The reports for different years do not consistently report the same capital expenditure figure for each previous year, but, in the table below, we have gathered the most recent figure for each year’s capital expenditure from the University’s annual reports. None of these reach £200m.
Management’s budget for capital expenditure and cash inflow. Note that management plan to spend more than £200m in 2024/25 and 2025/26.
University of Edinburgh capital expenditure 2016-2024. Source: Annual Reports.
All other things being equal, there would be good reason for the University to spend significant sums on capital expenditure. Capital expenditure primarily refers to spending on building new buildings or major refurbishment of old buildings, but it also includes major equipment that is expected to last many years. The number of students has grown from about 33,100 in 2013-14 to 49,485 in 2024-25, and staff numbers have also grown significantly in those years, so there have been good reasons in recent years to build more classrooms, offices and labs.
However, if management truly believe there is now a cash crisis, then now is not the time to be accelerating the amount spent on capital expenditure. Of course, the level of capital expenditure is not the only problem. Although these are one-off expenses in a given year, they tie us into significant recurrent depreciation costs the following years, as well as further commitments to lenders and to unsustainable growth to ensure that our assets generate a ‘return on investment’, as explored in a previous post. We will explore these aspects in a later post.
Despite plans for increased capital spending, management say their projections show that the trajectory for the University’s finances is so dire that there will need to be major job losses. They have said they aim to cut £140m overall, with £90m in cuts from what is spent on staff currently. According to the 2023-24 annual report, there were about 18,924 staff working at the university, which corresponds to about 13,102 full-time equivalent jobs, because so many work part time or on guaranteed-hours contracts with work far less than full time. The total spending on staff that year was about £750m, if one excludes a one-off cancellation of debt to the USS pension fund.
While management has refused to quantify the potential job losses, cutting £90m from the £750m spent on staff corresponds to a 12% cut, and cutting 12% of 18,900 would mean cutting more than 2,000 jobs. An alternative method for estimating job losses is that management reports that the voluntary severance scheme will mean the loss of 350 jobs and a saving of £18m; from this, it would suggest that to save £90m would mean cutting 1,750 jobs, of which perhaps 350 have already gone through the VS. Management have refused to give a number for job losses, but based on these figures, the number at risk is likely well over a thousand. A 12% cut would mean about 1 in 8 staff losing their jobs.
We do not believe it is acceptable for management to be budgeting to spend more than ever before on capital expenditure—new buildings and the like—while planning for mass redundancies. We do not believe this is acceptable to staff, students, politicians, or the general public. Savings should first come from scaling back capital expenditure, and, in the current situation, the capital expenditure should certainly not be growing. Management should commit to ensuring job stability, including for staff on precarious contracts.
Joint Unions Finance Working Group
