He wrote: “I realise that this will be a difficult and unsettling message. However, it is important that we are honest about the scale of the challenges that we need to address, the reasons behind the course of action that we are taking, and the impact that this will have on our operations and on everyone in the university.”
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In her budget, Chancellor Rachel Reeves announced an increase to employers’ national insurance contributions while also lowering the threshold at which they start paying contributions.
The rate will rise by 1.2 percentage points to 15% from April next year and will now be paid on staff earnings from £5,000, rather than the current £9,100 level.
Earlier this month, Universities Scotland told The Herald they believe the change could add £45million to the wage bill for Scotland’s universities.
Prof Mathieson — who is the UK’s best-paid principal, with a yearly package in excess of £400,000 — told his colleagues costs make up 60% of annual outgoings, higher than in “comparable universities”.
He said Edinburgh’s running costs now stand at £120 million per month.
As well as the hike to National Insurance, he told staff the institution had failed to meet targets for student recruitment in 2023-24.
With tuition fees making up 37% of the university’s income, that had left a significant shortfall.
He told staff the university’s outgoings were “consistently growing faster than our income and that we require to change our operating model to ensure we remain financially sustainable.”
In a statement to the press, Prof Mathieson said: “The university costs £120m each month to run.
“In the context of the recent sector challenges around international student recruitment, increasing staff costs since the pandemic, and the unsustainable levels of funding for Scottish and other UK students, our outgoings are consistently higher than our income.
“In response to this situation and recent developments with regards to National Insurance, we have concluded that we need to take a series of actions, which will include selective voluntary and, if unavoidable, compulsory redundancies.”
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He added: “We will be offering staff the opportunity to find out more through a variety of online and in-person meetings, and we will continue to work with our unions and managers to help colleagues through these changes.
“I don’t underestimate how unsettling this news will be, however, it is important that I am honest about the scale of the challenge we have and transparent about the actions we need to take to address it.”
The UK Government has been approached for comment.
