Universities in Scotland stand to lose hundreds of millions of pounds in funding if reforms to the way they are run are pushed through, principals have warned.
Proposed laws increasing ministerial power over university courts will cost institutions their charitable status and force them to be reclassified as public bodies, the sector claims.
Universities Scotland, the umbrella body for higher education, says the changes will cost them at least £80 million in lost tax breaks and charitable donations.
On top of that, they say they will lose money that they make through deals with the private sector. More than £2 billion of funding for universities now comes from sources other than government grants, and they say the proposed legislation would jeopardise that because it would limit their ability to invest in companies they spin off.
The warning comes in a submission by Universities Scotland to the Scottish parliament’s finance committee, which is scrutinising the financial impact of the government’s Higher Education Governance Bill.
Advertisement
In it, the organisation claims the law’s “far-reaching financial implications” will damage the contribution that universities make to the Scottish economy.
Ministers want the power to determine the make-up of university courts, guaranteeing places for trade union representatives and making the powerful role of chairman an elected position.
Universities say the conditions will reduce the autonomy that their status as non-profit charities depends on.
Reclassification by the Office for National Statistics (ONS) would restrict universities’ ability to borrow, and would curtail lucrative commercial deals with the private sector. Universities Scotland claims the loss of funding would force institutions to cut back on teaching, research, innovation and efforts to encourage pupils from deprived backgrounds to take a degree.
The submission adds: “This would no longer be simply a question of ‘meeting costs’ but a critical change to operational capabilities.”
Advertisement
Colleges were reclassified as public bodies in 2010, forcing them to place about £100 million of surpluses under the control of an arm’s-length body. Colleges must also now seek approval from government for certain spending.
Liz Smith, the Conservative spokeswoman for young people, accused the Scottish government of a “politically motivated” power grab that would damage university finances.
“If you look at universities around the world, those that are succeeding most are those where the government has been at arm’s length if not removed from university governance, and yet Scotland seems determined to go in the other direction,” she said.
“Very few people understand why the Scottish government is so concerned with meddling in university governance when there is no evidence whatsoever that any problems exist within the current system. This is a very political move by the SNP, and one that the university sector is rightly up in arms about.”
A Scottish government spokesman denied claims that the bill would affect either the ONS classification or charitable status of universities: “We are clear that universities are autonomous bodies. This bill simply aims to enable our higher education institutions to make governance more inclusive and transparent, ensuring that every voice on campus is heard.
Advertisement
“In a response to the original consultation on the bill, the Scottish Charity Regulator raised no concerns about the plans set out.”