Nigel Seaton was sailing around the Mediterranean when the call came through on a Thursday evening: would he take over as principal of the crisis-hit University of Dundee?

Three years had passed since the chemical engineer had ended his decade-long term as principal of Abertay University, but the interruption to his June holiday wasn’t completely out of the blue, with Seaton having joined Dundee a month earlier as interim provost.

“I didn’t think twice,” said Seaton, and he was back at his desk the following Monday to preside over graduation ceremonies – and then to draw up a plan to save the university from an unprecedented insolvency.

Dundee’s last substantive principal, Iain Gillespie, was forced to quit last December when it emerged that the institution was facing a £30 million budget black hole, and his deputy Shane O’Neill stepped down as interim principal when a report blamed the university’s financial woes on wide-ranging failures in governance and leadership.

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A year on since Dundee’s predicament became public, Seaton appears to be on the brink of securing the university’s future, with terms set to be agreed on a £40 million bailout from the Scottish government, which would take total support for the provider to £62 million.

Securing this funding, Seaton told ����Vlog, would “normalise the situation of the university”.

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“We’re at the moment an organisation that’s not a going concern, so we need the support of the Scottish government to avoid insolvency…but once we’ve got that funding, we then become actually quite a lot like other universities in the UK,” he said.

“That is, we’re under financial pressure, we need to cut our cost of operating, but we will not be on the edge of insolvency. So it becomes a challenge for us – a challenge for the whole university community – but it then becomes quite a familiar challenge of the kind we can see all around us in most Scottish universities and universities across the UK.”

While the financial cost of saving Dundee is high, what remains to be seen is whether policymakers and staff are prepared to stomach the further job cuts that Seaton is adamant are crucial to putting the university on a sustainable footing.

Some 245 full-time equivalent staff have already left under a voluntary severance scheme and ministers are understandably wary of being seen to throw public money at a rescue plan that is perceived to bankroll another round of redundancies, especially ahead of a Holyrood election next year.

Earlier this year the Scottish Funding Council told Dundee that future bailouts would be contingent on the university “restrict[ing] further job losses”, probably until a permanent leadership team was in place and a new strategic plan had been adopted after consultation with staff and students. Yet achieving these goals could take the best part of 12 months.

Speaking to THE in Edinburgh, Seaton said he expected that the grant conditions would be “a bit intrusive”, and rightly so given what was at stake, but that they would “give us the room we need to lead the recovery of the university”.

“I quite understand how uncomfortable it is for the Scottish government,” Seaton said of the prospect of further job losses. “They fund the whole university sector, of course, [and] they’re providing extra funding to us, for which we’re very grateful.

“It secures our survival in a way that nobody else could. And it’s understandable there should be discomfort about job losses, particularly when there’s specific funding being allocated in addition to the normal routine funding of higher education institutions.”

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But he added: “I think the Scottish government accepts that we cannot – in fact, I know that they accept that we cannot – maintain the university’s current level of expenditure, simply because the level of expenditure is greater than the income.”

Seaton explained that capital expenditure and the university’s running costs had already been “cut to the bone”, meaning that staffing costs were the only thing that can give, although he said he could not put a number on how many roles would have to go, “partly because the situation evolves with time, but also because it’s important to emphasise that the objective is not a reduction in staffing.

“The objective is the survival and then thriving of the university, which involves cutting costs. We’ll stretch every sinew to cut other costs before we cut staffing.”

Early this year Dundee announced plans to cut 632 jobs across academic roles and professional services, before rolling back under pressure from the government and the funding council. But Seaton was also clear that not being able to resize the university’s workforce would open up further, perhaps greater, risks to Dundee.

“I think if we were to delay…several things would follow,” he said. “Firstly, our staff will be left in a kind of limbo, knowing that jobs will be lost but not knowing when it’s going to happen. I think that wouldn’t be a humane way to run the university.

“Every month that goes by where we have a cost higher than the income puts us a bit deeper into the hole so that if we delayed, the reduction in operating costs would [have to] be greater.

“And finally, I think it would be difficult to recruit a [permanent] principal to a university that is not seen as being on the path to recovery. I don’t think anybody will worry about the fact that the recovery is incomplete – it’s a work in progress, everybody will see that and understand it – but if it is seen that we can’t for whatever the reason get to grips with our current situation, I think it would make it less attractive as a university to come to work at, because anybody who wants to come and work at the University of Dundee as principal has alternatives.”

Seaton was adamant that whoever does become Dundee’s next principal would inherit a “tremendous” university with excellent teaching and research, albeit one whose staff have been through a “traumatic” experience as “victims” of “a crisis caused by poor leadership and inadequate governance oversight”.

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He recalled speaking to prospective students at an open day and being asked by a parent about “the elephant in the room” – will the university still be here in a few years’ time? Seaton’s answer was a confident affirmative.

“This is a wonderful university where things have gone terribly wrong in head office. It’s my job to fix what’s gone wrong in head office with my colleagues. I know how to fix it and we will fix it,” he said.

“It’s much harder to run a university that on the face of it seems to be running well in head office but doesn’t do a great job in supporting and teaching its students, and that’s not our situation.

“So I think, as we come out of this crisis and become an ordinarily financially challenged university, like the other ones, then I think it will be seen as a tremendous opportunity.”

Students seem to agree, with Dundee’s recruitment of Scottish-domiciled undergraduates to uncontrolled subjects up 7 per cent year-on-year – an outcome that Seaton said he would have described as “unimaginable” if he had been asked a few months ago but saw it as a testament to the university’s enduring strengths – while international enrolments are ahead of forecast.

This suggests that prospective students have not been deterred by the independent report into Dundee’s downfall, led by former Glasgow Caledonian University principal Pamela Gillies, which says that the failure to respond adequately to a significant drop in income was down to poor financial monitoring “compounded by [a] top-down, hierarchical and reportedly over-confident style of leadership and management”.

Dundee’s £35 million shortfall might be large but it is by no means unique among Scottish campuses in facing financial stress: 11 of the country’s 19 universities are expected to post deficits this year. Some 350 jobs went earlier this year as the University of Edinburgh battles to save £140 million, while the University of Aberdeen is among those that have been forced to make several rounds of cuts.

Leaders of those institutions might ask: where was Dundee’s £62 million when we needed it? Furthermore, cynics might point to the city’s status as a Scottish National Party stronghold and the upcoming election.

Seaton said he did not believe this was the reason why the support had been forthcoming, describing Dundee’s situation as the first British university to be “so close to insolvency as to not be a going concern” as “unique”.

But he added: “I know one of the challenges for the Scottish government – I think for everyone actually – is the risk of moral hazard that a university that’s been very badly run, and we have, should get bailed out, and universities that haven’t been very badly run and therefore are in difficulty but not on the edge of insolvency do not get bailed out. I think we all recognise that’s not a satisfactory situation.

“It’s difficult to think of an alternative to it though. That’s my main reflection but I understand all these points and agree with them; and in particular I would agree with them if I were sitting in the shoes of another university principal.”

Even if Dundee’s experience is on the extreme end of the scale, Seaton argued there were lessons for other universities, particularly in terms of viewing income projections through “rose-tinted spectacles” in an environment where funding per domestic student has dropped 22 per cent since 2013-14.

On Scottish funding, and the absence of tuition fees in particular, Seaton said that there were “really only two ideas: one is to allow more private money into the system. The other one is to increase the amount of public funding, and I can see that both of those are politically difficult.”

And he warned that, even though one more year of real-terms cuts might not push more Scottish universities over the edge, the long-term cumulative impact would be significant, particularly on physical and digital infrastructure.

“I think the point is being reached where, if something isn’t done, it [will] become more difficult for Scottish universities to recover in the future,” Seaton said.

Reflecting on his time at Dundee, Seaton said that in some ways he felt “my whole career has led towards this”.

“I live in Dundee. I love Dundee. And so I find myself as an experienced university principal, living in a city that I love and being able to help to save a great institution that is absolutely central to the life of the city,” Seaton said.

“I’d be lying if I said every day was stress-free, because it’s not. But I’ve got a great senior team and my colleagues and I know in broad terms what to do and we know we’ve got the support of the Dundee community.

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“It’s been an extraordinary privilege to be invited back to spend a bit of time running the University of Dundee.”

chris.havergal@timeshighereducation.com