‘North of the border: I think you oughta…?’: Taking a look at the Future Framework (and how Scotland has 21% more to spend on each school pupil but 24% less to spend on each undergraduate than England)

HEPI CEO, Nick Hillman OBE, takes a look at today’s report on Scotland’s university funding crisis.

Welcome to 2026/27

For those of us who live elsewhere, it is easy to forget that the academic year is already well underway in Scotland. For example, schools returned in mid-August and Scottish universities are now gearing up for the much earlier return of their students than occurs in, say, England.

So it makes sense that today sees the long-awaited publication from Pillar 1a of the ‘Future Framework for the Sustainability and Success of Scotland’s Universities’. Overseen by both the Scottish Government and Universities Scotland and very ably led by Professor Sir Anton Muscatelli, President of the Royal Society of Edinburgh, it is a bureaucratic mouthful for a very important project.

Building a consensus

The general idea behind the Future Framework is to find a shared consensus on the scale and makeup of Scotland’s higher education funding challenges and then, at a later stage, to work towards solutions.

This is all much more important than it might initially sound. Policymaking in Scotland is shaped by the size of its relatively small polity, meaning the political class is tighter and universities have more direct engagement with their political overlords, at least compared to England. This changes the nature of the debate, in some good ways and some bad.

Most notably, the dominance of the ruling Scottish National Party and their long-standing ‘free’ higher education policy, meaning Scottish-domiciled undergraduates who attend Scottish institutions do not have to pay tuition fees, has tended to stifle debate on alternatives. No major political party, with the possible exception of Reform UK, have promised to change tack – at least, not recently or not yet.

The Future Framework enjoys broad cross-party support and might just offer a Get-Out-of-Jail-Free card for policymakers and those running Scotland’s universities. But this is not a foregone conclusion – responding to today’s report, the Education Secretary, Màiri McAllan, yet again stressed the perceived benefits of free education:

Our joint commitment to the protection of free tuition means that Scottish students are not hampered by the levels of debt we see elsewhere in the UK, and they are able to go to university based on their ability to learn and not their ability to pay.

Funding the future

On the Future Framework’s website, today’s report is described as an ‘ambitious and evidence-based review … looking at funding of university teaching, skills development, research and innovation to ensure it is fit for the future.’ This it does admirably. The other pillars will look at ‘Future Needs to 2045’, ‘Sector-led Transformation’ and ‘Evidence-led Options for a Future Framework’.

Today’s report shows that Scotland’s higher education institutions face an overarching funding gap of £200 million a year, that the gap has existed for a while and is therefore best understood as ‘structural’ and that the gap affects the whole sector – though individual institutions (or groups of institutions) are not all affected in exactly the same way.

In short, Scotland’s institutions make money from international students, but lose even more money from a combination of shortfalls from teaching home students and conducting research. The picture is not an entirely static one: for example, in less than a decade, the proportion of total teaching income coming from international students has risen from under a third to around one-half (amounting to £1.25 billion).

The consequences

It bemuses some people that the UK higher education sector, including Scotland’s higher education institutions, complain so much yet seemingly continue to thrive – for example, in the global league tables. But as Anton Muscatelli writes persuasively in The Times today:

The consequences of financial strain are often gradual rather than dramatic. Universities do not suddenly stop functioning when budgets tighten. Instead, investment is deferred, vacancies are left unfilled, infrastructure projects are delayed and institutions look for efficiencies wherever they can. For a time, much of this can pass unnoticed from the outside, even where institutions are sounding the alarm bells. But there comes a point when pressures can no longer be managed without affecting capability. Scotland’s universities have objectively crossed that threshold.

That all seems increasingly undeniable. So if I had any criticism of today’s report, it would not be on the substance; it would focus more on the spin. I wonder if the focus should have been a little less on the headline £200 million shortfall, as I am not convinced the average voter in Scotland or elsewhere is likely to find it an especially easy figure to get their heads around. What they may want to know more is how such a sector-wide shortfall hits their children and grandchildren. The BBC have, however, helped to fill in the gap, as their calculations on the back of today’s report show ‘there was a shortage of £2,703 per Scottish student’.

It is possible to take this further by contrasting the amount spent educating Scottish school pupils with the amount spent educating Scottish undergraduates. According to the Institute for Fiscal Studies, schools have over £10,400 per pupil (21% higher than in England). In contrast, universities in Scotland receive something like £7,800 to educate each Scottish-domiciled undergraduates (24% less than the number in England, according to London Economics).

These may not be exactly comparable numbers (and I look forward to discussing the details when I am in Scotland next week), but the broad comparison certainly holds true. We used to think higher education needed more resources than schooling; we now operate as if the opposite is true, though if we have stumbled into this position more by accident than design.

Another striking comparison – one that is included in today’s report – is that Scottish students have just 82% of their true costs covered while international students pay 150% of theirs. If nothing else, this is a reminder that Scotland’s universities have done all they can to respond to their funding woes on domestic students by acting entrepreneurially in relation to other income sources.

Going it alone?

These challenges are not just a Scottish problem, however. The same sort of issues (such as losing money on home students and having to stretch international students’ fees to cover shortfalls in teaching home students and research) exist elsewhere, if not always to quite the same degree, in every other part of the UK too.

Moreover, one of the factors that has brought the funding problems to a head in Scotland are the UK-wide migration rules. The fall in international students prompted by changes to migration rules is, obviously, a particularly big problem when you are especially reliant on their fees.

So even though today’s report does not suggest specific solutions, which are left for another day, it should be read south of the border in England as well as in Wales and Northern Ireland just as much as it is pored over by policymakers in Edinburgh.

The side dish

Finally, the report is not primarily written for those, like many HEPI readers, who live and breathe higher education every day. For them, the story it reveals will already be familiar because, for example, they will already know about the sector’s funding shortfalls.

Nonetheless, elements of the report may still prove useful to the cognoscenti, and none more so than the list provided under ‘Regulatory and reporting burden’.

Running to six pages, this provides a top-level overview of the burdens on Scottish institutions (most of which will sound familiar elsewhere too). Each single point on the list makes perfect sense on its own of course, which is why regulatory bonfires are always so hard to achieve in practice, but together they add up to the most ridiculously costly and time-consuming burden imaginable. For the Higher Education Statistics Authority (HESA) alone, ’10 main returns are required each year, covering millions of data items for each institution.’

Given how many datapoints are collected from institutions, it is ironic that this report, which lays bare the true challenges facing Scottish institutions, rests only on a very limited set of the more heavily-used indicators (above all TRAC) rather than on all the other data that we collect and then, as this report shows, often tend to do next-to-nothing with. Some of that information may not be needed at all; some may not be entirely useless but may still come with an unacceptable opportunity cost.

I wonder if it might make sense to seek a quick win here while the rest of the Future Framework continues to roll the pitch for what could, in time, produce the most significant changes to higher education funding in Scotland for decades.