27 February 2004
In the weeks since the Commons narrowly approved the government's controversial plans for top-up fees in England, university chiefs in Scotland have been anxiously awaiting the outcome of a review that could determine their status.
The results of the third phase of the Scottish Executive's investigation into higher education funding are due to be published next week. The outcome will be of major importance to Scottish universities, as the review examined the implications for Scotland of the Higher Education Bill in England.
The row over fees highlighted the significant differences in policy north and south of the border. University funding is a devolved function and the first Labour/Liberal Democrat coalition Scottish Executive wasted little time in deciding to abolish up-front tuition fees.
A year after devolution came into operation, a decision was taken to replace the existing fees system with an endowment scheme that requires graduates to pay £2,080 once they start earning £10,000 or more, which is due to be increased to £15,000 this year.
While controversy remained over whether political claims that the 'abolition' of fees could be justified, it was hoped the scheme would put in place a stable system of funding for the Scottish universities. However, those hopes were dashed when the issue of top-up fees was raised in England.
First Minister Jack McConnell has pledged not to introduce top-up fees in Scotland. But Scottish universities argue that they face being seriously disadvantaged if English universities are able to attract the best academic talent and be better equipped for research as a result of increased income from top-up fees.
Universities Scotland, the umbrella organisation representing university principals and vice-chancellors, has calculated that if Scottish universities were able to charge the equivalent of what will be raised in England in 2006/07, this would generate income of between £140m and £160m.
McConnell has given assurances that the Executive will not allow Scottish universities to be disadvantaged. However, the method of ensuring this remains in doubt. There has been speculation that the first minister will be tempted to raise extra funds by increasing the graduate endowment, but the LibDems, his coalition partners, have warned that the endowment was established to finance bursaries for poorer students and cannot be used for other purposes.
Universities Scotland has been keeping up the pressure on McConnell. In a report this week, it argued that Scottish universities are producing high-quality research much more cheaply than their counterparts in Japan, the US and leading European countries. It believes it will be unable to maintain standards unless the funding issue is resolved.
Scottish universities currently receive £700m from the Scottish budget. They want the Executive to invest a further £100m, arguing that, irrespective of the situation in England, they are already underfunded.
However, universities may be disappointed at the outcome of phase three of the review when it is published next week. Sources suggest that while the case will be made for increased capital expenditure and for investment in staff pay, the report will argue that the funding problem is less serious than suggested and that the policy for England will not have any immediate effect in Scotland.
Apart from the outcome of the higher education review, the forthcoming chancellor's Spending Review will also be of crucial importance for Scottish universities. They are already preparing to bid for £30m to cover the public expenditure implications of a pay review and the modernisation of staffing structures.
On the wider aspects of funding, the Scottish universities will be looking for signs of a firm commitment that they will not lose out when top-up fees are introduced south of the border. 'Otherwise, we will end up in a downward spiral,' a Universities Scotland spokesman warned.
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