Material issues

Material issues have been identified as those that:

• We believe could affect our ability to create value in the short, medium or long-term;

• Are important to key stakeholders;

• Form the basis of strategic discussions and decision-making; and

• Could intensify or lead to lost opportunity if left unchecked.

Insight into how the material issues identified are managed and how they impact the University are signposted here.

The student experience

The University remains committed to improving student satisfaction as measured through the National Student Survey (NSS) as well as how we score in the Postgraduate Taught Experience (PTES) and Postgraduate Research Experience (PRES) surveys.

Our most recent rating in the NSS of 74.3 per cent (2023/24: 70.4 per cent) is an encouraging improvement, as are improvements in the latest PTES and PRES. While pleased to see annual improvements, we recognise that compared to our peers we still have more to do.

It is understood that survey ratings below the levels we strive for have the potential to damage our reputation, affect future student recruitment and retention and therefore potentially impact unfavourably on the University’s financial health. This is particularly the case at this time when, along with the wider sector, we have challenges in attracting new international students.

Student experience is prioritised in line with objectives set out in our Strategy 2030.

This is covered in the Strategic Plan performance framework on page 10, Understanding our Risks on page 15 and from page 30 of the Operational Review.

Political and geopolitical uncertainty

As 2025 nears an end, there remains uncertainty around UK Government direction and policy on matters such as immigration and higher education. More clarity is needed on recent announcements on annual uplifts to tuition fees and a proposed levy on overseas fee income, with uncertainty about what both mean for Scottish Universities.

Recent UK Government budget announcements in November 2025 will lead to an increase in costs from April 2029. The anticipated increase is an outcome of National Insurance costs rising as a result of changes to the relief provided from salary sacrifice arrangements the University has in place. 

Additionally, geopolitical tensions remain from the wars in Ukraine and the Middle East along with uncertainty from decisions and direction that the US Government takes. With approximately half of our student population from overseas markets, unfavourable geopolitical developments has the potential to impact negatively on our teaching income. Our cost base is also exposed to decisions and tensions across the globe.

This is covered in Understanding our Risks from page 13 of this document.

Financial and economic environment

The University closely monitors the changing macroeconomic environment and any challenges it presents. This includes inflation, which increased in the last year adding to pressures on the University cost base.

Interest rates have fallen over the same period, with this resulting in reduced investment income on our treasury funds. Future interest rates are uncertain but the direction is expected to be downwards, with an impact on the income the University generates.

Changes to UK National Insurance effective from April 2025 had a financial impact and resulted in a significant increase in our annual staff costs.

We carefully monitor the financial sustainability of the University through scenario modelling for University Court, taking account of macroeconomic and other known impacts.

This is covered in Understanding our Risks from page 13 and in the Financial Review from page 36.

Financial and economic environment

The University closely monitors the changing macro-economic environment and any challenges it presents. This includes inflation, which has reduced in the last year but the impact of the recent higher inflation period is still reflected in the University cost base and inflation in some types of expenditure remain above the historic trend.

Higher interest rates over the same period have resulted in the University benefitting from increased interest income on our treasury funds. Future interest rates are uncertain but the direction is expected to be downwards, with an impact on the income the University generates.

Changes to UK National Insurance have a financial impact and will result in a significant increase in our staff costs from April 2025. The impact of our current higher cost base combined with slower growth in income from overseas tuition fees requires us to carefully monitor and control the overall financial sustainability of the University in the short, medium and longer term, and we do this through regular scenario modelling for University Court.

This is covered in Understanding our risks from page 14, in the Director of Finance’s foreword on page 38 and in the Financial Review from page 40.

Political and geopolitical uncertainty

As 2024 nears an end, uncertainty remains with regard to the new UK Government direction and policy on matters such as immigration and higher education. Very recent announcements on tuition fees are welcome but more clarity is needed on impact beyond 2025/26 and this will not be known until the Government sets out its long-term plan for universities.

The very recent UK Government budget announcement on employer National Insurance charges serves as an example of how the University can be significantly impacted by Government decisions.

Additionally, geopolitical tensions remain from the wars in Ukraine and the Middle East and the impact of a new US Government in 2025 is unclear. With nearly half of our student population from overseas markets, unfavourable geopolitics has the potential to impact negatively on our teaching income. Our cost base is also exposed to decisions and tensions across the globe.

This is covered in Understanding our Risks from page 14 of this document.

Climate change

The University has committed to become net zero carbon by 2040 and a strengthened approach to achieving this was approved by University Court in April 2025. Hitting this ambitious target is not without challenges that the University must overcome to meet ever growing stakeholder expectations.

Current challenges include the size and age of the University estate, and energy intensive activity such as research and supercomputing where the University plays a world-leading role.

The financial cost of overcoming technical challenges and achieving net zero carbon is significant but the University remains fully committed to tackling the climate crisis.

This is covered in Understanding our Risks on page 16 and in the Operational Review from page 31.

Staff experience and industrial action

Our all-staff engagement survey ran in February 2025 with an improved score of 62 per cent, compared to 59 per cent when last run in 2023. This followed improvements in staff experience in the last couple of years, resulting from positive impacts of grade scale changes in 2024 and policy developments.

Staff costs are the University’s greatest single cost and initiatives to improve our financial sustainability through management of our cost base has resulted in industrial action impacting the University. Additionally, there have also been ballots for national action on pay.

There remains a need to closely monitor developments for potential impact on staff happiness and financial cost to the University.

This is covered in Understanding our Risks on page 15 and Financial Review from page 36.

Digital security

The University is exposed to significant cyber threats, presenting a risk to our data, how we operate and perform our core activities. These threats have potentially significant financial consequences for us and therefore mitigation will remain a key area of focus for the foreseeable future.

A continuing programme of capital investment in core IT infrastructure reduces our IT infrastructure risk in this area.

This is covered in Understanding our Risks on page 17.