The changing face of Scottish universities

Much of the heat has gone out of the top-up fee debate in England but in north of the border in Scotland it is just beginning.

The reason, of course, is that the introduction of variable fees south of the border is making principals of Scottish universities nervous. If, and when, the income from higher tuition fees in England begins to increase substantially - and particularly when the cap on the £3,000 fee is lifted, as many suspect it will be - Scottish universities could find themselves at a disadvantage, with less money to attract good staff and upgrade their buildings.

Until now Scottish university bosses have been keeping their counsel. But last month Dr Brian Lang, principal of the University of St Andrews, broke ranks and called for an independent inquiry into the future funding of Scottish higher education. A national debate was needed about how Scotland's universities should be financed and whether or not students should be asked to make a greater contribution, as they are in England, he told The Scotsman.

"While the Scottish Executive has been very generous within difficult limits, the future of university funding in Scotland is not sustainable," he said. "We can't rely on taxpayer handouts at a time when universities south of the border have substantial new income streams, which are likely to increase."

Dr Lang is clearly impatient with Scottish politicians who, in advance of the Scottish elections in May 2007, have been coming out with ever more lavish commitments. The Liberal Democrats have promised to abolish the graduate endowment, the £2,300 sum that Scottish graduates have to pay once they have left university and are earning at least £15,000 a year.

The Scottish National Party has gone even further, promising not only an end to all fees but also to write off all existing student debt and replace loans with grants. It has also said that it plans to scrap the fees that English students have to pay while studying at Scottish universities.

These are populist pledges and whether they have been thought through is debatable. According to a secret analysis done by civil servants in the Scottish Executive - and leaked to Scotland on Sunday - scrapping loans would cost £150m a year, hugely more than the SNP's estimate of £60m a year.

Writing off existing student debt would also cost a great deal of money. Under Treasury rules, Scotland would have to make an immediate repayment of £1.64bn to the Exchequer, says the analysis.

Needless to say, these figures have been refuted by the SNP, which is still riding high in the polls - and is now being tipped to hold power with Labour after the Holyrood elections. Making generous promises to the electorate seems to be working. The SNP is setting the agenda and the other political parties are playing catch-up.

It is this kind of political climate that worries Dr Lang, hence his demand for an independent review. Moreover, St Andrews, with its small endowment, its ambitious plans for the future and its humanities-orientation, needs the money. What has happened in England with the arrival of tuition fees is very significant for Scotland, he argues, representing a sea change in attitudes towards funding for higher education. "The contributor pays," he says. "What this gives English universities is a year-on-year predictable revenue stream. It will be used for salaries and so on, but it will also enable English universities to leverage additional capital from the banks. If I had a revenue stream of this kind, I could go to a bank and say 'How big a loan can I have?'"

The implications for international competitiveness are significant, according to Lang. "If we can't afford such good facilities as English universities and if we can't afford to pay our academics as well, there will be a slide in standards."

Some experts agree with Lang, notably Andrew Cubie, the barrister and author of the report which ushered in the graduate contribution that all Scottish students pay once they have graduated. Times have changed since 2001, when he produced his report, and an independent inquiry is needed, he says. According to Cubie, the political parties must address the issue now before next year's May elections. If they don't, England will have had five years' experience of top-up fees before Scotland looks at the issue again. That could have affected the competitiveness of Scottish universities. Professor John Archer, the outgoing convenor of Universities Scotland and principal of Heriot-Watt University in Edinburgh, also said that it is just a matter of time before some form of top-up fee was introduced in Scotland.

And while he points out that there is a "no top-up fee environment" in Scotland at the moment, Professor Bernard King, principal of the University of Abertay Dundee, believes that those who benefit from higher education and thereby enhance their earning capacity should pay something back. "Personally I don't believe that everything should be free, especially in a world where most governments are against tax increases," he says.

English observers believe that the Scots will not be able to continue to regard higher education as a free - or more or less free - good, forever. "Scotland will eventually have to accept the principle of paying for higher education, which would be fair as well as efficient," says Andrew Oswald, professor of economics at the University of Warwick.

"The Scots have not thought through the inequality of making taxpayers pay for clever students to study at the expense of the young person who doesn't get a heavily subsidised higher education."

There is quite a bit of closet support for this view north of the border but few people are prepared to come out and say so openly. "I really worry about Scottish higher education if England are charging more, particularly if fees go above £3,000 a year," said one professor of economics in Scotland who declined to be named. "It will be very hard for us to compete and that matters for Scotland. I think fees, if they are packaged correctly, are the right way to go."

A number of university principals are also thought to be in favour of students paying more towards their education but are keeping their heads down because the whole issue has become so hot. Professor C Duncan Rice, who is principal of the University of Aberdeen, refused to talk, as did Sir Muir Russell, the University of Glasgow's principal and convenor of Universities Scotland. Instead Sir Muir issued a prepared statement that said that higher education was one of the jewels in Scotland's crown and must be properly funded. "This is a challenge but one we continue to face up to with vigour and optimism," he said.

One principal who was happy to talk was Michael Pittilo, vice-chancellor of Robert Gordon University in Aberdeen. Earlier this year, he explained, there had been concern that Scottish higher education institutions might lose out as a result of top-up fees being introduced in England. "There was an additional £1.3bn going into English higher education which would seem initially to put us all at a disadvantage," he said. "However, what is becoming apparent is that on further analysis we're not as badly off as we'd initially suspected."

Professor Tim O'Shea, principal of the University of Edinburgh, is also sanguine about the matter. "We have had healthy growth," he said. "Research activity is growing. So are international students. Last year we spun out 23 companies."

The generosity of the Scottish Executive is an important reason for Scottish principals to keep their heads down. Scottish universities have been generously treated by the Scottish Executive, having received an 18 per cent real-terms increase in funding over the three years of the last spending review. Why go through all the torment of arguing for an unpopular policy that requires middle-class Scots to pay more money towards higher education when you are not feeling the pinch?

As it is, Scotland's First Minister, Jack McConnell, has promised not to introduce top-up fees as long as he remains in charge - and the electoral maths of the Scottish parliament means that he can't change that position. That is why Brian Lang may argue for an independent inquiry and a bigger student contribution, but no one else is in a hurry to follow him.

Scottish politicians are operating in a very different political climate. Politics in Scotland is an altogether pinker colour than in England and the Labour party north of the border is of a collectivist, Old Labour variety. English policies are treated as anathema. So, even if the Scottish do eventually increase the graduate contribution, they will be at pains to point out that it bears no resemblance to top-up fees.

What the Scots charge students

Why don't Scottish students pay top-up fees?

Because devolution meant that the Scottish came up with their own answer to the problem of how to fund universities. The Cubie inquiry, headed by Dr Andrew Cubie, recommended a contribution be paid by all Scottish graduates. At present this is a one-off sum of about £2,300 for a four-year degree, paid once graduates are earning more than £15,000. It is much less than either the flat-rate tuition fee introduced in England and Wales in 1998 or the top-up fees of up to £3,000 introduced in autumn 2006.

How can the Scottish claim that they have free higher education if everyone has to pay the graduate contribution?

This solution was a fudge. The contribution entails every Scottish graduate paying into a bursaries fund for needy students. That way, the Scottish can claim that no one is paying tuition fees because the money is going into bursaries. But the money ends up paying for the studies of needy students, which means the principle of free education has been breached.

Are Scottish taxpayers prepared to pay higher taxes so as to subsidise higher education for those who benefit from it?

It looks like it. Certainly, the Scots have a reputation for putting a high value on education, and for being proud of their higher education system. LH