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The Scottish Government yesterday guaranteed the Scottish Higher Education sector will receive a new funding settlement as it published the report of the joint working group on funding.

The report, prepared in partnership with Universities Scotland, presents a range of options for increasing income for universities as well as setting out various scenarios on the possible future funding gap between Scotland and England based on increased tuition fees south of the Border.

The UK Government has announced it expects average fees to be around £7,500 per year in England. An analysis of the report shows that the net funding gap based on this scenario is £93 million in 2014/15. This is based on the extra income from Scotland charging students from the rest of the UK higher tuition fees being up to £62 million by 2014/15.

These figures are before efficiency savings are factored in. The report's authors note that universities will aim to at least meet the Government's efficiency targets, which equate to £26 million in 2011/12.

Speaking ahead of tomorrow's cross-party summit on Higher Education, where the findings of the report will be presented, Education Secretary Michael Russell said:

"The size of any funding difference between England and Scotland will clearly depend upon the fees charged by English universities. The UK Government has made clear that there is no need for average fees south of the border to be more than £7,500. Indeed, the Universities Minister David Willetts has made clear that he would consider clawing back any additional income universities receive if the average goes above £7,500.

"Working on this assumption, our analysis of today's report reveals the net funding gap in Scotland would be £93 million.

"That is a significant amount of money but, critically, it is an amount that allows a political choice to be made. It is nothing like some of the ridiculous scare story figures bandied about by the proponents of one solution or another.

"I am making a clear commitment today: we will deliver a new funding settlement for our universities that will ensure the sector remains internationally competitive. This Government will lay out the choice it will make in how it plans to fill that gap very soon.

"The joint Universities Scotland and Scottish Government technical working group, which was proposed by the sector, has provided clear and robust figures based on a range of options and assumptions.

"I would like to thank all those involved in the group for their contributions. I look forward to discussing these findings further at the cross-party summit on higher education tomorrow (Tuesday March, 1) which will formally end discussions on the Green Paper.

"The Scottish Government will then announce its final proposals on how we plan to fund universities in the coming weeks."

The Green Paper on Higher Education "Building a Smarter Future" established a short-life, joint Scottish Government and Universities Scotland technical working group to consider the size and nature of any gap in funding between north and south of the border which may be opening up, and comment on the possible effect of some of the funding solutions in this paper in terms of helping to close that gap.

The joint Scottish Government / Universities Scotland Technical Group consisted of Scottish Government and Universities Scotland officials and a small number of sector experts. The Group was supported by a panel of independent academic economists.

The Technical Group included: Dr Andrew Scott (Chair), Scottish Government; Stephen Kerr, Scottish Government; John Ireland, Scottish Government; Alastair Sim, Universities Scotland; Phil McNaull, Heriot-Watt University; Dr Alexis Cornish, University of Edinburgh. The Group was supported by a panel of economists consisting of: Dr Andrew Goudie, Chief Economic Advisor, Scottish Government; Professor David Bell, Stirling Management School; Professor Neil Kay, University of Strathclyde; Professor Anton Muscatelli, Principal, University of Glasgow.

The Group was formally established in early January 2011. Initial exploratory work began in December following the publication of the Green Paper Building a Smarter Future.

The group met formally on February 11 when the initial outcomes from the work were discussed. This was followed by a meeting with the independent Economist panel on February 15 to test the results. The Group has also endeavoured to meet the Cabinet Secretary's commitment to an open and transparent way of working, including publication of its detailed methodology and taking evidence from NUS Scotland and UCU.

Ministers received its final report on February 23, 2011 and opposition parties and stakeholders received a copy of the report on February 28, 2011.

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