Universities fear 'fatal' financial blow under Scottish Government plans for funding shake-up

Higher education leaders say any new body in Scotland must be independent of ministers

Scottish universities have warned they could be dealt a “fatal” financial blow under plans for a shake-up of the way higher and further education is funded.

They fear their charitable status could be put at “risk”, potentially leading to institutions being reclassified as public bodies, if the Scottish Government becomes more closely involved in overseeing and funding the sector.

A landmark report by James Withers recommended in June last year the Holyrood Government create a “single national funding body to have responsibility for administering and overseeing the delivery of all publicly funded post-school learning and training provision”.

Graduates from Edinburgh University celebrate after a graduation ceremony at the McEwan Hall in the centre of Edinburgh.

It would take over and potentially replace Skills Development Scotland, which oversees funding for training and apprenticeships, as well as the Scottish Funding Council, which distributes grants to colleges and universities, and possibly the Students Awards Agency for Scotland as well.

In its “purpose and principles” report, the Government subsequently said it would “investigate the options to deliver a single funding body”.

Now, in evidence to Holyrood’s education committee, Universities Scotland has raised a series of concerns about the proposal, while also welcoming the “broad aspirations” of the Withers review and several elements.

The organisation, which represents the country’s higher education institutions, said it was vital that any new funding body had non-departmental public body (NDPB) status, ensuring it works independently of ministers.

"Any closer relationship with Government would have risks including risks to universities’ charitable status; and risks that universities would be reclassified as public bodies by the Office for National Statistics, which would be fatal to universities’ financial sustainability because e.g. borrowing or reserves could not be used to invest in universities’ missions,” it said.

Universities and colleges are already counting the cost of fresh budget cuts, as well as difficulties recruiting fee-paying international students, in part due to tighter UK Government immigration rules.

In its evidence, Universities Scotland said it believed “sustainable funding is needed more than a single funding model”. "We can’t afford reform that leads to a further ‘levelling-down’ of university funding,” the document said.

It added: "Any ambitious programme of change will have upfront costs, and we are concerned in case the Scottish Government attempts to drive change without the resources necessary to make it a success.”

Universities Scotland also highlighted action that could be taken more quickly, rather than waiting several years for structural reform. The body said: “There are new learner and employer focused skills initiatives that the Scottish Government and universities can act on now to deliver on Withers’ aspirations for learners, without the need for major structural reform of the agencies, which will take years.

"We believe that there are quicker gains for learners and the economy through development of more agile support for work-based learning, life-long learning, upskilling and reskilling.”

Graeme Dey, the minister for higher and further education, is due to give evidence to the education committee on the reform programme on Wednesday. Last month, he announced the Scottish Government would take over skills planning at a national level, and that a review would be held into community learning development.