The anatomy of avoidable failure: governance lessons from Dundee

Daniel Taylor looks for lessons to be learnt from the Gillies Report into governance and financial failings at the University of Dundee

A note at the outset: the publication of the Gillies report into the governance and financial failings at the University of Dundee landed heavily across the UK higher education sector in June. The report’s findings are stark, and they resonate at a time when the sector is already under significant strain. Institutions across the country are grappling with mounting deficits, rethinking their futures, and embarking on urgent cost-cutting measures. In such a climate, failures in governance are not just cautionary tales, they are sector-wide warning signals.

As a governance consultant whose role often involves conducting independent reviews, I feel both a professional and ethical responsibility to engage closely with the Gillies report, to interpret and understand it, and learn from it. Understanding where governance falters is just as important as promoting good practice. That said, this piece is written with humility and caveat; I am acutely aware of the limitations of distance, hindsight, and commentary that comes without lived experience of the specific institutional context. This isn’t a piece of judgement but of reflection and learning.

What follows are reflections from a concerned professional looking in, from the vantage point of someone who has reviewed governance across many higher education and other institutions. In that spirit, this article offers a set of considered learnings, drawn from the Gillies report and informed by broader experience, that may support institutions seeking to strengthen their own governance.

A governance failure misread as a funding crisis

Universities across the UK are under immense pressure. In what now feels like a well-rehearsed narrative, a combination of rising costs, flatlining tuition income, policy decisions, and global competition has created a landscape in which the whole funding and business model structure for many universities feels increasingly unsustainable. In this context, deficits are unsurprising, and many institutions are tolerating them. It has also influenced universities to engage more than ever in commercial activities, productising research and creating subsidiary organisations as vehicles to market research outputs.

This position has inevitably shaped the mindset and narratives within institutions, with the leadership of many understandably framing their challenges as the inevitable consequence of a complex and in many ways limiting funding model. This isn’t untruthful but it is risky in that it inherently creates a certain belief around agency, or the lack of it.

In 2024 the scale of financial challenges at one institution, the University of Dundee, came to light and has since drawn much attention across the sector. The regulator in Scotland, the Scottish Funding Council, responded by commissioning a review, led by Professor Pamela Gillies, which reported in June.

The story from Dundee, interpreted from the Gillies report and other information in the public domain, is an interesting and important one that cannot be explained away by sector-wide stress alone. Dundee is not about the affordability of higher education, though that remains a live issue, it is about good governance and agency. It is about the importance of good governance and decision-making within the wider context of these sectoral pressures.

The backstory: timeline of how findings were diagnosed and exposed

In the summer of 2023, positive financial projections were presented to the university’s governing body, the court. In November 2024, the court was unexpectedly informed of a £25–30m projected deficit, despite previously believing the institution would break even. At that point, neither court nor oversight bodies had access to the formal 2023–24 financial statements, which weren't tabled or published according to the Gillies report.

Reacting to this, in March 2025 the Scottish Funding Council (SFC) commissioned Professor Pamela Gillies and BDO to conduct an independent investigation. The full, 64-page Gillies Report was published on 19 June 2025. The report’s publication prompted a number of resignations at the university, and other actions.

Headline lessons

The Gillies report is a story of multi-layered governance failure, which speaks to the nature of effective governance as a system of both mechanic and dynamic elements of control. The financial collapse was deemed ‘self-inflicted’, and occurred at multiple levels, executive and governance alike. It is important to understand why.

The following themes summarise some of the key findings as described in the Gillies review and other publicly available information. They are not conclusions drawn by GGi or the author from private sources. They are presented here because they are illustrative of common risks and potential pitfalls that other institutions may face and provide a real sense of where weak governance played a part in what happened.

Financial governance failures:

• Proceeds from the sale of one of its subsidiaries, expected to be ring-fenced, were spent on day-to-day operations, with only £1.5m traceably invested in strategic initiatives.
• The university breached its bank covenants, thus losing a £50m credit line, and failed to disclose the breach to auditors or SFC.
• Financial reporting was fragmented and incomplete, with court presented with optimistic narratives.

Leadership and governance attitudes:

• The leadership style was described as top-down, hierarchical, overconfident, with constructive challenge discouraged.
• Staffing increased despite financial decline, and that financial impact assessments for hires were incomplete or missing.

Governance oversights:

• The effectiveness of financial oversight was starting to falter in June 2024 when court members seemed to accept a lack of critical financial data without much follow up.
• On more than one occasion the university court received scant information on the financial recovery plan, with limited visibility into what they were being asked to decide.
• Whistleblowing and constructive challenge were absent; staff feared raising issues. Few spoke truth to power.

Governance on paper, not in practice

According to the Gillies report, the University of Dundee’s governing body – the university court – met regularly, had a functioning committee structure, and received finance papers. The problem was not procedural absence but structural passivity. The review found that the court approved a series of significant decisions that should have raised deep concern, including pursuing a financially aggressive growth strategy, approving major estates developments and strategic commitments without full financial contingency planning.

These are not modest decisions made on the margins, they are defining strategic choices with long-tail risk. The report depicts a picture that such decisions were presented to court in the language of optimism and entrepreneurial confidence. What was absent was independent scrutiny, governors were not offered full visibility of the risks or trade-offs, and when they sought detail, it was often withheld or obfuscated. Finance reporting was described by the review team as ‘fragmented and incomplete’, with breaches of bank covenants going unreported to court, audit committee, or internal auditors.

This is the first and most profound lesson from Dundee: governance can exist structurally and yet fail systemically. Without culture, transparency, and genuinely empowered challenge, even the most comprehensive terms of reference will not surface emerging risk.

The executive influence and the erosion of dissent

Throughout the Gillies review, a consistent pattern emerges: the centralisation of decision-making and the marginalisation of challenge. One vice-principal who did raise concerns found themself excluded from key meetings and ultimately offered a severance package. It is dangerous in any organisation when there are elements of of information control which limited dissent and scrutiny.

More broadly, the executive leadership under the then principal was seen to have operated a governance-adjacent strategy, consulting committees only when necessary, controlling information flows, and discouraging questioning. The Gillies review makes clear that court was often not made aware of, or was provided with limited or filtered information about, decisions or actions that had already been taken.

The governance failure here was one of culture before it was one of structure. Chairs, vice-chancellors and governance directors must remember that risk cannot be seen through rose-tinted dashboards. Institutional leadership that becomes too invested in its own infallibility will often create the conditions for governance failure – one where assurance becomes performative, information flows are manipulated, and the power of challenge is neutered.

Misusing windfalls and masking operational risk

Among the most serious findings in the Gillies review is how Dundee used the £40m Exscientia share sale. Rather than treating the income as a ring-fenced capital resource for transformation or endowment, the university folded the funds into the operational budget to sustain day-to-day costs. This created a dangerous illusion of stability. The cash papered over structural deficits and allowed the university to delay critical decisions about cost reduction, strategic reprioritisation, and financial modelling.

This could have been governed better. Governors were not clearly told how the Exscientia money was being used. There was no proper paper on the strategic use of these funds. There was no scrutiny of opportunity costs. The finance and planning cycle became less about strategic allocation and more about cashflow survival.

The university also experienced banking covenant breaches - triggered by liquidity shortfalls - but these too were not formally disclosed to the governing body. Alongside some of the other issues surfaced in the Gillies report, this reflects an issue with how information was managed and shared with decision-makers.

Stress-testing is not optional: boards under pressure must perform better, not worse

Perhaps the most sobering insight from the Gillies report on the University of Dundee is this: governance failed to safeguard the organisation precisely when it most needed to. As the financial situation deteriorated, the institution’s leadership entered crisis management mode but not by triggering a governance-led resilience plan. Instead, it relied on a small informal executive cohort, bypassing normal governance routes. No emergency court subcommittee was formed. No special assurance sessions were scheduled. In effect, governance struggled to function effectively as a system and was, at times, sidelined.

This pattern – seen in other sectors from Carillion to Kids Company – is not unusual, but it is wholly avoidable. Good governance is not about calm periods of equilibrium; its real value lies in how it enables the institution to sustain accountability when under acute pressure. A lesson from Dundee, which would be true in many organisations, is about the value and importance of governance stress-testing, and mechanisms to escalate or amplify risk visibility. The existence of such things is evidence of attention to governance as a living system.

Governance as impact, not optics

The Dundee case study is an object lesson in why governance matters, and how its value must be understood in terms of institutional risk, resilience, and outcomes. Taking the Gillies report as its word, a few key areas of governance improvement would have really helped court to govern more effectively in this situation, and could have prevented the some of the issues such as the use of capital, improved the level of challenge around the sustainability of the operating model, demanded alternative financial planning scenarios, and surfaced breaches at an early stage.

Good governance, then, is not about procedural neatness or performative best practice, it is about enabling the institution to survive and thrive. It is about surfacing risk, stewarding strategic clarity, and insisting on transparency in decision-making. Where it is absent, the cost is not just to reputation, it is to the fundamental viability of the institution.

Governance takeaways

So, what are the lessons? There are many, and they can be grouped around a number of key domains:

Early detection & transparency

• Present full, timely financial statements at governance meetings; executive should withhold no known under-performance or breaches.
• Ensure that windfall or ring fenced funds are tracked separately and cannot be repurposed without explicit governance approval.

Culture of challenge, not compliance

• Leadership should welcome dissent, especially from independent or elected governor voices. Whistle blowing pathways must be credible and audited.
• Governance consultants should probe actual decision culture: is challenge valued, or is there deference cloaked in decorum?

Governance structure & clarity of roles

• Financial control shouldn’t be concentrated in small executive groups with overlapping roles. Decision makers (e.g. deputy principals, CFO) must clearly understand financial accountability.
• Oversight bodies (court/board) need adequate briefings, ability to seek detail, and capacity to push back effectively.

Vigilance around executive conduct & incentives

• The board need to monitor executive leadership styles and treatment of dissent, particularly whether concerns are sidelined or suppressed.
• The boards of organisations under financial strain should place more emphasis on the scrutiny of hiring, compensation, and expansion decisions and how they are governed.

Warning for the sector

Dundee is not a unique case. It reflects sector-wide vulnerabilities in university governance, especially in:

A. The illusion of ‘good news governance’

It isn’t uncommon for organisations to reward assurance over challenge. Executives who present ‘good news’ may be perceived as effective, even when the underlying reality is deteriorating.

Lesson: Boards must interrogate forecasts, require sensitivity analysis, and seek disconfirming evidence.

B. Board financial acumen is non-negotiable

Governors (especially lay members) must have the ability to:

• understand balance sheets and cash flows
• ask probing questions
• interpret risk signals and funding trends.

Lesson: Training and recruitment must ensure financially literate and courageous boards.

C. Challenging leadership culture is crucial

The Gillies Report confirms what other sector reviews (e.g., Camm Review) have found: leadership cultures resistant to scrutiny create institutional risk.

Lesson: Regular cultural audits and 360-degree feedback on senior leaders should be a part of governance oversight.

D. Proper role of audit and risk committees

• Internal audit must be independent and have direct access to the board or audit committee chair.
• Risk registers should be tied to financial plans, scenario planning, and decision-making triggers.

Lesson: Audit committees must not be compliance-led but strategically integrated into decision assurance.

Where do we go from here?

For chairs, vice-chancellors, and governance leads, Dundee must be a turning point. Not because it is exceptional, but because it is uncomfortably recognisable. Many universities are grappling with financial risk, but not all are attending to the quality of governance that shapes their response.

This is the moment to revisit how governance operates, not on paper, but in real time, in moments of pressure, through culture and information flow, not just structure and cadence.

Key questions to consider now:

• How independent is challenge in our governing body? Is scrutiny welcomed or neutralised?
• Do we fully understand how windfalls and capital income are allocated? Who decides, and how transparently?
• Are we actively monitoring how our governance structures perform under pressure?
• What early warning systems are in place for detecting when financial or risk data is incomplete or filtered?
• How do we ensure executive narrative does not crowd out alternative strategic perspectives?

A GGI rapid governance health check

GGI offers a bespoke, confidential rapid governance health check, tailored for higher education institutions. It helps to:

• test your governance resilience under pressure
• map risk intelligence flows across your system
• diagnose cultural dynamics that suppress challenge
• review finance oversight and strategic assurance structures.

At a time of systemic pressure, the risk is that leadership retreats into defensiveness and narrative control. A governance health check gives you clarity, confidence and corrective insight before others are forced to.

This article represents the personal reflections of the author, drawing solely on publicly available information. It does not constitute advice or formal opinion for any specific institution.