The Scottish Government has pledged not to let university funding levels fall below those in England, as part of a new "something for something" financial deal.

The Scottish Cabinet has backed proposals from its higher education taskforce for universities to be recognised as a key economic sector in their own right.

Education secretary Fiona Hyslop said: "In return for that, we expect them to ensure the activity we fund is aligned with our purpose of increasing sustainable economic growth - an issue more critical than ever given the current economic climate."

The final report of the taskforce, published this week, says Scotland must immediately boost investment in higher education if it is to meet its 2028 goal to join the top quartile of countries in the Organisation for Economic Co-operation and Development in terms of investment in research and development.

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There have been widespread concerns that Scotland's universities will fall behind their English counterparts because students in England pay tuition fees. The Government is to take advice on the level of funding needed to ensure "broad overall comparability" with the rest of the UK.

Ms Hyslop will chair a new "tripartite advisory group" on funding, made up of four university members, four from the Scottish Funding Council (SFC) and four from the Government.

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The taskforce report heralds a new "lighter touch" from the SFC, which will streamline resources into a General Fund (GFU) for mainstream teaching and research, and a Horizon Fund (HFU) for initiatives tied in with Government strategies.

The SFC says it is important to "think big", suggesting that the HFU could underpin schemes bringing together research and knowledge transfer, such as the Translational Medicine Research Initiative, a joint venture between the universities, a US pharmaceutical giant and the National Health Service. It could also help create Scotland-wide postgraduate training and education for priority industries.

The SFC says that, on its current budget, it envisages ?965 million going to the GFU and ?122 million to the HFU. It believes the bulk of the funds should be in the GFU to give institutions stability.

Controversially, it proposes simplifying its teaching funding formulae by reducing the 25 different price groups for undergraduates and postgraduates, suggesting that there might only be four. This suggests only two price groups at each level, laboratory-based and non- laboratory-based, but the SFC concedes that this will need more work and discussion with the universities.

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It says it will free up resources by confining itself in "a very disciplined way" to only collecting data and giving information when this is directly relevant. It aims to ask for only one major statistical return each year instead of two, and to axe around half of its other 40 annual information returns. It also plans to cut down the number of circular letters to universities by 40 per cent.

Current conditions of grant, annual reporting and routine returns will be replaced by an "outcome agreement" with individual institutions, which will cover not only national issues but also institutions' specialisms.

olga.wojtas@tsleducation.com

OUT OF KILTER? SCOTS GRADUATES WOULD DO IT ALL AGAIN

The vast majority of Scottish graduates would relive their higher education experience, with 88 per cent happy to go back to the same institution, and 79 per cent content to repeat their original course.

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These are the latest findings from "On Track: Class of 2004", a long-term study of students who qualified in 2004. The study, carried out by Ipsos Mori and Critical Thinking, and published by the Scottish Funding Council, reports that 70 per cent of respondents are in their chosen career, or believe they are on the way to it; 79 per cent are working, with 70 per cent of those in permanent jobs or on open-ended contracts.

More than half - 56 per cent - believed that their earning potential had risen because of their studies, and 72 per cent agreed that the money spent on their education was a good investment.

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