Annual Report and Accounts

Finance Director's foreword

Director of Finance Lee Hamill introduces our financial results.

"At the end of what has been another challenging and uncertain financial year, we can all be proud of the resilience that The University of Edinburgh continues to show as we report a positive and encouraging financial position.

For the second year in a row we saw the Covid-19 pandemic increase costs and reduce revenues across much of our sector and the economy as a whole. A number of our key income streams were adversely affected by the Covid-19 pandemic, in particular the income from our residences, catering and events was reduced by £34 million compared to pre-pandemic levels (2018/19). That said, income from both tuition fees and research held up, reflecting demand for places to study at Edinburgh and underscoring our reputation as a world-leading research-intensive university.

During the year, we continued to focus on controlling expenditure to help offset the downward pressure on income and give us some headroom for investment in strategic projects and initiatives. In-year actions included a temporary reduction in recruitment activity and the completion of a limited voluntary severance scheme. We also saw cost savings from our revised ways of working including reduced travel expenditure.

The University also received £3.9m support from the UK Government’s Coronavirus Job Retention Scheme for those staff placed on furlough during this difficult period. Despite the pressures we were experiencing, we continued to pay our furloughed staff 100% of their salary and employer pension contributions, topping up the funds received from the Government scheme.

...our financial and strategic decision-making will always be guided by our purpose and values as we step up to current and future challenges.

Lee HamillDirector of Finance

Headline figures for the year

Our headline financial performance in 2020/21 was positive. The University’s total income grew to £1.18 billion and our Operating Surplus for reinvestment was £113 million. In calculating our Operating Surplus figure, we have excluded non-cash accounting adjustments relating to provisions held on our largest pension scheme.

These figures do however include £52 million of restricted capital grant funding from the Edinburgh and South East Scotland City Region Deal. This money can only be spent on specific City Region Deal projects and as such our adjusted Operating Surplus for reinvestment was £61 million or 5.4% of total income (2020: £9m, 0.8% of total income). This is a more robust way to assess our ability to meet the £90 million per month that it costs to run the University as well as our ability to generate additional cash from core operations to reinvest back into University activities. We have achieved all of this despite unprecedented external stresses and challenges, demonstrating our financial resilience and overall financial sustainability.

This sort of financial result does not happen by chance, rather it is down to clarity of purpose, deliberate actions and the hard work and fortitude of a great many colleagues and stakeholders. We should all be proud of our University’s finances and what we have collectively achieved over the course of the past year. Our full financial results for 2020/21 are reviewed in more detail from page 61, expanding on the table below.


Category 2021 total £m 2020 total £m
Income 1,187 1,125
Expenditure (1) (1,074) (1,077)

Operating surplus

Restricted City Region Deal Capital Grant





Operating surplus (adjusted for City Region Deal) 61 9

Notes to table: 1. Excludes £14.5 million decrease in USS provision in 2020/21 and £144 million decrease in USS provision in 2019/20 (both are non-cash movements).


Pensions & Investments

We provide a more detailed account of the main developments on University pensions in the Financial Review. Our largest pension scheme, the Universities Superannuation Scheme (USS) began the process for its triennial valuation and, as pensions is a long term issue, we remain committed to finding a long term, sustainable and affordable solution for the scheme. Consultations have taken place over the last year, with the University emphasising the importance of a robust scheme and affordability for both members and employers. Recent agreement has resulted in a new schedule of Contributions effective from October 2021, however there remains the possibility that final agreement is not reached following consultation with scheme members. We also reported a non-cash actuarial surplus of £22 million this year, largely relating to our second biggest pension scheme, the Edinburgh University Staff Benefits Scheme (EUSBS) as a result of updated actuarial assumptions. Large movements for USS and EUSBS are non-cash in nature and are no reflection of the University’s operational financial performance. Note 30 Events After the Reporting Period provides an update on the very latest position on the USS.

Our endowment fund performed remarkably well during the year achieving capital growth of £81 million in strained market conditions with a total fund valued at £565 million at yearend. Like the annual movements we see on pensions, the growth achieved in the value of our endowment is not realisable and does not represent free cash flow for the University to spend on business as usual. Rather, the financial benefit returns to the endowment to support the long-term disbursement of restricted funds for a variety of University purposes in line with t

Proposed design of Nucleus Phase 1
Proposed design of Nucleus Phase 1

he wishes of the individual donors. These include scholarships across our colleges for students, funding for researchers or to develop our facilities, and much more.

Capital investment

At the start of the pandemic we made the prudent decision to pause discretionary capital investment in order to preserve cash, build financial resilience and provide the University with a better range of financial choices in the short to medium term. Even so, our actual capital spend in the past year has remained significant with £131 million being spent on contractually committed projects, compliance, maintenance, minor works projects and equipment.

During the past year our committed construction projects on-site have been able to progress with physical distancing measures and other protective measures in place. Significant multi-year projects that continued throughout 2020/21 included the £140 million Edinburgh Futures Institute, the £49 million Nucleus project at Kings Buildings and the £95 million Institute for Regeneration and Repair. We forecast that all of these major projects will be completed within the next 18 months. In addition, the £20 million Advanced Computer Facility extension at Easter Bush was completed this year with a new high voltage connection to the facility progressing on site to provide future resilience and expansion capability.

We have also used the time wisely to re-prioritise our capital plan that will see us invest an additional £300 million over the next five-year budgetary horizon on new major projects including new student facilities as well as a significant investment into student accommodation. The University still retains a large cash balance from debt raised in recent years that we will use towards funding our capital plan.


The University of Edinburgh will continue to address tomorrow’s greatest challenges through our world-leading research and teaching. Some adjustments are inevitable in the face of a pandemic, but our financial and strategic decision-making will always be guided by our purpose and values as we step up to current and future challenges."