Staff at the University of Edinburgh have been warned of job cuts, with the Principal blaming the UK Government’s National Insurance hike for "a multi-million pound increase to our salary bill".

In an email, seen by Holyrood magazine, Sir Peter Mathieson — who recently saw his pay jump by £20,000 — said there would be "selective voluntary and, if unavoidable, compulsory redundancy" measures to come.

He wrote: "I realise that this will be a difficult and unsettling message. However, it is important that we are honest about the scale of the challenges that we need to address, the reasons behind the course of action that we are taking, and the impact that this will have on our operations and on everyone in the university.”

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In her budget, Chancellor Rachel Reeves announced an increase to employers’ national insurance contributions while also lowering the threshold at which they start paying contributions.

The rate will rise by 1.2 percentage points to 15% from April next year and will now be paid on staff earnings from £5,000, rather than the current £9,100 level.

Earlier this month, Universities Scotland told The Herald they believe the Labour Chancellor's change could add £45million to the wage bill for Scotland's universities. 

Both Dundee University and Aberdeen's Robert Gordon University (RGU) have also warned of job cuts. 

Prof Mathieson — who is the UK’s best-paid principal, with a yearly package in excess of £400,000 — told his colleagues costs make up 60% of annual outgoings, higher than in "comparable universities".

He said Edinburgh’s running costs now stand at £120 million per month.

As well as the hike to National Insurance, he told staff the institution had failed to meet targets for student recruitment in 2023-24.

With tuition fees making up 37% of the university’s income, that had left a significant shortfall.


(Image: Neil Hanna)

 

He told staff the university's outgoings were "consistently growing faster than our income and that we require to change our operating model to ensure we remain financially sustainable."

In a statement to the press, Prof Mathieson said: "The university costs £120m each month to run.

"In the context of the recent sector challenges around international student recruitment, increasing staff costs since the pandemic, and the unsustainable levels of funding for Scottish and other UK students, our outgoings are consistently higher than our income.

"In response to this situation and recent developments with regards to National Insurance, we have concluded that we need to take a series of actions, which will include selective voluntary and, if unavoidable, compulsory redundancies."

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He added: "We will be offering staff the opportunity to find out more through a variety of online and in-person meetings, and we will continue to work with our unions and managers to help colleagues through these changes.

"I don’t underestimate how unsettling this news will be, however, it is important that I am honest about the scale of the challenge we have and transparent about the actions we need to take to address it."

Mary Senior, Scotland official UCU, said : “This will be a deeply worrying time for staff at the university of Edinburgh who be worried about their jobs in the run up to Christmas and the New Year. As well as staff, this news today will also be concerning to students at the university who’ll be concerned for the staff who teach them but also for their future studies and their courses.

"Coming on the back of cuts announced in the summer it's imperative the university takes every step possible to retain jobs and to avoid compulsory redundancies. UCU will fight to defend every job."

SNP MSP Michelle Thomson said the UK Government needed to fund what she described as a "backdoor tax hike."  

“We’ve known for some time now the destructive potential of Labour’s National Insurance hikes – with Universities Scotland warning of a £45m bill if the cost of this policy was not met by the UK Government.  

“The impact won't just be felt by Scotland's Universities either - Labour's NI tax hike could cost the Scottish Government £500m, and Scotland's voluntary sector £75m.

“Today’s announcement from the University of Edinburgh is the tip of the iceberg as the impact of Labour's budget becomes clear. I again urge the UK Government to fully fund their National Insurance tax hike for Scotland's universities.” 

Scottish Tory Shadow cabinet secretary for education and skills Miles Briggs said: “Scotland’s universities are facing a double whammy as a result of Labour’s National Insurance hikes and the failure of the SNP to properly fund them.

“The prospect of job losses is devastating news for workers at Edinburgh University ahead of Christmas and the financial situation facing universities is increasingly unsustainable.

“As a result, Scottish students find it harder to attend their own universities, which are being denied the resources to compete. We urgently need a common-sense approach that will protect our world-class universities and give Scottish students the chances they deserve.”

The UK Government has been approached for comment.