The interim boss of the University of Dundee has resigned after an external investigation blamed a?¡°hierarchical and over-confident¡± leadership style on the institution¡¯s cash crisis.?

Shane O¡¯Neill, who was appointed interim vice-chancellor in December after the former principal resigned, has apologised for the financial problems at the institution.?

A highly anticipated report found that?a lack of financial management and transparency, compounded by a ¡°top-down¡± failure in leadership, resulted in the university breaking various of its banking covenants, forcing the Scottish Funding Council (SFC) to intervene to prevent bankruptcy.?

Earlier this year, the university announced plans to cut 632 full-time equivalent jobs as it looked to plug a ?35 million deficit for 2024-25 ¨C up from the ?30 million figure quoted following former principal Iain Gillespie¡¯s shock resignation in December.

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Dundee¡¯s senior management team had previously said that the extent of the university¡¯s financial trouble only became apparent in November. O¡¯Neill told MPs that?the university court had been given ¡°misleading information¡± that meant the university¡¯s financial situation went undetected.?

Although many universities are facing difficulties, the investigation into financial oversight and decision making at the university, which was led by Pamela Gillies, former vice chancellor of Glasgow Caledonian University, found that the ¡°financial failures¡± were ¡°largely specific¡± to Dundee due to its leadership and decision making.?

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The report criticises ¡°poor financial judgement, inadequate management and reporting, poor monitoring of the financial sustainability key performance indicator, lack of agility in responding to a fall in income by the university leadership and weak governance in relation to financial accountability by the Court. Financial oversight was lacking when most needed¡±.?

It continues: ¡°These failings were compounded by the top-down, hierarchical and reportedly over-confident style of leadership and management, a lack of transparency and clarity in respect of financial data, the promulgation of a positive narrative around financial matters and a culture in which challenge was actively discouraged.¡±

The report notes that there were various ¡°warning shots¡± that the institution¡¯s finances were deteriorating, ¡°which should have signalled an immediate change¡± to budgets and operations. One such moment occurred in January 2024, when the university¡¯s international student numbers fell from 1,230 to just 393. However, ¡°the narrative within the university for investment and growth continued¡±, it said.?

The report criticises the actions of Gillespie, who wrote to staff following the drop in student numbers: ¡°We have improved our resilience over the past two years, moving into a surplus position after a decade of financial deficits. This allows us to feel more confident, not only in meeting those challenges, but in investing in our strength and continuing on a path of growth.¡±

Gillies, on behalf of the SFC, writes that this ¡°set the tone¡± within the university for investment and growth ¡°at a time when savings should have been rapidly implemented¡±. She continues: ¡°The University had no effective processes for cash management through FY24 and was overcommitted on its capital expenditure.¡±

There was simultaneously a ¡°failure to control costs¡±, with the report noting that recruitment vastly expanded during this period. Staff costs, excluding adjustments for the USS pension, increased year on year from ?167.5 million in the 2022 financial year to ?192.6 million in the financial year 2025.

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The number of full-time equivalent staff members increased 8 per cent from 2,984 to 3,230 from 2022 to 2024. Meanwhile the number of full-time equivalent students dropped from 14,924 in 2022 to 11,975 in 2025.

¡°The university was not controlling its cash in a meaningful way¡±, resulting in the institution breaching two of its banking covenants in 2024, the report says.?

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The investigation concludes: ¡°Whilst the University was obliged to comply with the [SFC¡¯s financial memorandum], it did not. Whilst the Scottish Code provides a framework for adequate?and effective management and governance arrangements, the university failed to operate effectively in practice (both governance and management).¡±

O¡¯Neill said he was ¡°truly sorry¡± for the impact of the financial crisis.

¡°It is evident from the report that there have been clear failings in financial monitoring, management and governance,¡± said?Ian Mair, deputy chair of court, the university¡¯s governing body. ¡°While there were significant external factors, which have affected the higher education sector across the UK to varying degrees, the University¡¯s response to these, and responsible management of our finances, has fallen well short of the standards that everyone should have expected.

¡°I have done all I can to set the university on a path to recovery, engaging with internal and external stakeholders to find the best way forward,¡± he continued. ¡°I had hoped that we would be further along that path by now, and it will now be for others to steer that course into the future.¡±

Two members of the court have also resigned.

SFC chief executive, Francesca Osowska, said:?¡°The report has identified a range of issues that contributed to the financial challenges facing the University, however, it is quite clear that there have been failures in financial monitoring and reporting, and failures in governance. We will now take the time reflect on the actions, both immediate and longer-term, that should be taken to minimise the risk of this situation happening again.¡±

Scottish university leaders are set to appear before the Scottish education committee next week, followed by an appearance in a separate session by Gillespie.

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