Scots university fears over funding loss

Universities in Scotland have voiced fears over a reclassification of their status which could see them lose out on millions of pounds of funding. Picture: TSPL

University chiefs said they have legal advice which suggests there would be a “real risk” that accounting chiefs would see it differently – and brand them central government bodies.

This would see them lose out on millions of pounds of funding.

But Scottish Government officials told Holyrood’s finance committee yesterday that ministers will have “no control” over appointments to governing bodies under the Higher Education Governance Bill.

Stephen White, of the Scottish Government team working on the bill, played down the concerns.

“There’s been a thorough consideration of the risk with the emphasis squarely on the indicators of control,” he said.

“Nothing in this bill requires higher education institution to ask ministers for permission for anything.”

Mr White said there have been suggestions that ministers could even find themselves sitting on governing bodies.

“There’s absolutely no intention on the government’s part to do that – to have any direct involvement or control on appointments.”

Alistair Sim of Universities Scotland said there is a “very significant risk” of ONS (Office for National Statistics) re-classification under European accounting rules.

It has been claimed that universities could then lose their charitable status and up to £77 million in donations and tax breaks.

“All universities are concerned about this,” he said.

“We’ve had some discussion with the Scottish Government, but given the uncertainties, we’ve not been put in a position that gives us confidence that this issue has been properly investigated and given the risks to the sector, we really feel that university leaders need to have certainty that the bill will not lead to ONS reclassification.”

And he said that the concerns stem from legal advice which has been sought on the issue.

“The advice we’ve had from our legal advisers is that the bill, when looked at in cumulation with existing indicators of government control, creates a significantly increased risk of ONS reclassification.”

Universities fear that they could be reclassified as central government bodies by the ONS as a result of the new controls ministers will have over the way they are run under the Higher Education and Governance Bill.

Principals claim the new powers will allow ministers to decide how people should become chairs of governing bodies and how long they should serve as chairs of governing bodies, as well as determining the composition of governing bodies.