FEARS that Heriot-Watt University could close its world famous School of Textiles and Design in Galashiels have been branded "ridiculous".
Professor Steve Chapman, the university's principal, spoke out after union leaders claimed up to 10 full-time jobs - a quarter of the workforce - were under threat.
He pointed out the university was investing �12million in building new student accommodation at its site in Nether Road, Galashiels, which, he claimed, would be the best in Britain, in addition to the �2million it spent on the new Scottish Borders Campus which includes the recently refurbished High Mill.
Prof Chapman told the Border Telegraph: "Any idea that there is any possibility of closing is ridiculous.
"We have never spent more in the Borders than we are spending at the moment. Over the last few years, the university has invested probably around a third of its capital expenditure in the region.
"And when you think of the size of the school here, with 44 staff, compared to Edinburgh, with 1800 staff, that's a hell of a lot of money.
"We've put �12million into the new halls of residence which will give our students the best accommodation in the UK. And we won't make our money back on those for 30 years - so we're here for that long at least. There is absolutely no threat to the School of Textiles in terms of its long term position here in the Borders, it is here to stay."
The principal confirmed the School of Textiles in Galashiels - the second-oldest textile institution in the world - has been running at a loss for at least the last eight years and had recorded a deficit of almost �500,000 in the past 12 months alone.
He explained that Heriot-Watt had previously written off the debt using money from its other, more profitable, schools.
However, he revealed they could no longer afford to bail it out without putting the university at risk.
Prof Chapman said: "It's getting to the stage that it could seriously jeopardise the health of the university rather than just the school (of Textiles and Design) and we've got to get it under control."
But he added: "We have a plan and the plan is designed to make the Borders campus, in terms of our School of Textiles, sustainable for the future and actually I think it has got a very bright future."
The principal has promised all avenues will be explored to avoid redundancies. But he admitted job cuts could not be ruled out following a meeting with staff and students, as part of the consultation process on the five-year strategic plan for the School of Textiles and Design, on Thursday.
He said it was too early to say how many jobs, if any, might have to go but claimed every option would be considered, including more flexible working, job shares and offering some staff early retirement.
Prof Chapman, said extra cash could also be raised by attracting more fee paying students and marketing its new halls of residence as suitable for conferences during the summer months to offset any potential job losses.
"The staff totally get the financial problem," he said.
"They know that if they don't fix it, it will get worse and they could be in deeper trouble. They also know, because I have given them a commitment, that if we fix that deficit and then extra income comes, that income is for them to reinvest in their school in future."
But he added: "We do need to make cost savings, if we can't meet that requirement by increased income. That does not necessarily mean that we have to make compulsory redundancies. But in the end it has to be fixed. There is no solution where you take no action."
He pledged any restructuring at the Borders campus won't affect the amount of contact time students have with staff after they raised concerns through an online campaign.
Prof Chapman said: "I'm very proud of our students and I think the School of Textiles and Design makes the University a little bit more special, so I'm totally committed to it.
"There aren't many places in the country now that do the course because it's costly to run and other places have similar problems to us - they're not getting enough overseas students and fee-paying students to come and therefore they can't make money on it so they have just simply stopped doing it."