Another brutal budget in Scotland – for universities and students

Those students are now graduating – so some argue there is “scope” to remove that bulge of 2,500 funded places in academic year 2025–26. The withdrawal of those places has been supported by the sector – if the money is redirected into the spend per student.

The good news is that in the 2025–26 Budget, the Scottish government seems to have responded to the sector’s request to re-direct that £14million of existing spend from Covid-era student places to increase the amount which can be spent on each student place.

When combined with new investment of £12.9 million in the budget, that could mean a 3.5 per cent increase in the investment made in each Scottish student.

It’s “could” rather than “will” because it’s not yet been confirmed that the full £14 million redirect will be spent on the unit of teaching resource.

Conformation one way or the other will follow in the Letter of Guidance from the Scottish government to the Scottish Funding Council in the coming weeks.

But as Universities Scotland points out:

The overall resource budget for universities is not rising by 3.5%. Today’s outcome represents a 0.7% real terms cut in HE resource.

It calculates that the increased cost of employers’ national insurance is estimated to come in at upwards of £45m in FY 2025–26. After the cash increase to the HE resource budget, that means that universities will still need to find over £32 million to stand still:

The backdrop to today’s budget is significantly rising costs and job losses at several institutions. Universities won’t have enough resource to cover increases to national insurance, but our funding pressures run much deeper than that. The last decade of public funding decisions has left the sector in a precarious state with no scope to insulate our students or staff from these pressures any longer. It’s an immensely difficult place for the sector to be in. Universities are an integral part of Scotland’s future, but a weakened university sector will put the Scottish Government’s ambitions at risk.

We welcome the 3% cash increase in university capital. This supports university research and innovation and is the second year in a row the Scottish Government has protected this budget in cash terms, as part of driving purposeful economic growth.

Meanwhile, there was no formal announcement on student support – the main document merely says that:

…we continue to support students with free tuition and provide packages of support for vulnerable higher education students, through bursaries for eligible students… this ensures that those who need it most can access and stay in education, improving their life chances and economic outcomes.

It also says that:

The budget prioritises financial assistance to students, supporting them to complete their studies in the face of significant cost-of-living pressures.

To work out what will actually emerge in student support terms, you have to be brave enough to be ploughing through the “Equality and Fairer Scotland Budget Statement”. Deep in those weeds at Annex B, we learn that the higher education student support budget will:

…provide bursaries, student loans and free tuition, supporting young people and adult learners to access educational opportunities and transition to future employment. The budget includes an uplift to the higher education student support package, making it equivalent to the Student Living Wage for students from the lowest income households.

That does make it sound like the rates will be going up, doesn’t it? Let’s look at it again:

…provide bursaries, student loans and free tuition, supporting young people and adult learners to access educational opportunities and transition to future employment. The budget includes an uplift to the higher education student support package, making it equivalent to the Student Living Wage for students from the lowest income households.

But then another bit of the document reveals what looks like a fairly outrageous slight of hand – when it says “includes an uplift”, it appears to mean “includes the uplift that we saw in 2024/25” rather than any actual uplift between 2024–25 and 2025–26:

With free tuition, various packages of support including a higher education student support package of £11,400 targeted at the most vulnerable students, bursary support for further education students and provision of Education Maintenance Allowance targeting 16-19 year olds from low-income families, we ensure that funding is targeted towards those who need it most.

That’s a cut, in real terms.

That matters because the SNP election commitment was to get the maximum basic maintenance (loan and bursary) package notionally up to an anchor in the Real Living Wage, which it did for 2024/25:

• 2024 Real Living Wage = £12
• Notional hours of study per week = 25
• Weeks in a standard academic year = 38
• Total = £11,400

So if we take the now known increase to the RLW, which has already been announced as £12.60, the freeze means that the poorest students will be £570 short.

It’s hardly as if the SNP said it would hit that RLW anchor just for one year then freeze it again. It’s even more baffling given that it’s hard to believe that Scotland couldn’t eke some more subsidy in a budget managed by Westminster, as discussed on the site here.

But it’s actually worse than a £570 real terms cut. And that’s because of our old friend, fiscal drag.

One of the factors contributing to Wales’ inability to stick to its previous undergraduate student maintenance principles has been its abandonment of the means test.

Its Diamond review established a principle that the other three nations never have – that young students are to be treated as adults, and everyone has access to the same loan.

In marked contrast, Scotland maintains quite a sharp means test – one that is increasingly rendering the headline “maximum” loan figures meaningless.

As it stands, that maximum loan and bursary is £11,400 – but the problem is that hardly anyone gets that magical figure.

The household income threshold – over which the these days unspoken assumption is that parents will make up the difference – is just £20,999.

The rates and thresholds have chopped and changed over the years, but until very recently for much of the last decade that threshold was down at £18,999.

The threshold for maximum support in Scotland was actually reduced from £19,300 to £16,999 in 2013, rising back to £18,999 from August 2016, and then to £20,999 in 2019/20.

To put that into context, a single parent on the national minimum wage working 40 hours a week as of April 1st will be earning £4,001 more than that threshold – but would be expected to contribute £1,500 of that income to top up their kid’s loan. And that loan isn’t growing in line with RLW calculated earnings as promised.

It’s hard to believe that that will change when Scotland announces the detail of what’s buried inside the Scottish budget properly – more likely that ministers will trumpet the maximum amount for the “poorest families”, without making clear that the number of families that are that poor is reducing every year.

The bottom line is that having taken seven years to get from recommendation in its independent review to delivery, its manifesto promise on student financial support only held for a year. So much for an anchor.