The Implications of Scottish Independence on Business: Higher Education and Research: and Postal Services - Business, Innovation and Skills Committee Contents

4  The impact on Higher Education

44. Higher Education is an area of Government Responsibility which is highly devolved. However, there are specific areas—student fees and UK research collaboration—in which independence would have a significant impact on both an independent Scotland and the rest of the United Kingdom.

Access to Scottish higher education

45. In its White Paper, the Scottish Government stated that:

    Access to higher education will be based on ability, not wealth; this Government will protect free tuition fees for Scottish students and continue to provide appropriate support for living costs. [47]

However, the Scottish Government also stated under an independent Scotland, student from other parts of the United Kingdom would have to pay tuition fees:

    To ensure Scottish students remain able to study at Scottish higher education institutions, this Government had little option but to allow Scottish institutions to set their own tuition fees for students from the rest of the UK at a rate no higher than the maximum annual tuition fee rate charged to such students by universities elsewhere in the UK.[48]

46. The Scottish Government believed that this would be acceptable to the European Union because the policy was based on the "unique and exceptional position of Scotland in relation to other parts of the UK".[49]

47. Alastair Sim, Director of Universities Scotland, told us that his organisation had received legal advice on this policy proposal. That advice indicated that it might be possible to construct a case to allow students who are normally resident in Scotland to benefit from a particular fees or no-fees regime and for EU citizens resident elsewhere to be treated differently if an objective justification for that could be proved.[50] However, he went on to acknowledge that the last two Governments to try to make such an exemption—Austria and Belgium—were both unsuccessful.[51]

48. Clarity on the legality of this policy proposal is of significant importance because, according to Universities Scotland, fees charged to students from the rest of the UK, net of any bursary payments, yielded around £25m in additional income in the academic year 2012-13 rising to £62m in 2014-15.[52] Alastair Sim concluded by stating that this was "an extremely important issue", and one where there needed to be "absolute clarity" before a choice on independence could be made.[53]

49. According to press reports, Jan Figel, a former European Education Commissioner, said that if Scotland left the UK and became a member of the EU, students from England and Wales should receive "the same treatment" as Scottish students—who do not have to pay to study at universities north of the border. When asked if an independent Scotland could charge fees from students from England and Wales he said:

    This would be illegal, this would be a breach of the treaty. If Scotland is an EU member state, from that day on it must apply the non-discriminatory rule which is linked to the free movement of persons.[54]

50. This reading of the situation was reiterated by David Willetts, the then Higher Education Minister:

    The view seems pretty clear that if Scotland were to be a separate state within the EU it would not be legal, because there is a very clear legal framework within the EU that you cannot discriminate against members of other member states. I quote the spokesman for the European Commissioner for Education, who said that, "Unequal treatment based on nationality […] is regarded as discrimination, which is prohibited by Article 18 of the Treaty on the Functioning of the EU".[55]

51. When questioned on the Scottish Government's view that it could prove an objective justification for such a policy, the Minister said that he "cannot see any reason why it would succeed".[56]

52. The current policy of charging tuition fees for non-domiciled UK students provides a significant source of income to Scottish universities. Despite the special circumstances highlighted by the Scottish Government it is highly doubtful that this policy will be compatible with EU Membership. The Scottish Government must therefore set out how it will replace the financial shortfall of not being able to levy tuition fees only on students from the rest of the United Kingdom.

Research funding

53. The second area of interest was the capacity of Scottish universities to continue to attract a sufficient level of funding for Universities. In its White Paper, the Scottish Government stated that it would:

    Provide levels of public investment in university research that will enable our researchers and universities to remain internationally competitive.[57]

54. At present, public funding for university research in Scotland and across the UK is delivered by a dual support system comprising:

    A block grant given by the funding council of each country (funded from devolved budgets) and

    Competitively awarded grants from the UK-wide Research Councils (funded through the tax base).[58]

55. These two sources make up the majority of university research income. In 2011-12 Scottish universities received a third of their research income from the Scottish Funding Council and won a further quarter in competitive funding from the Research Councils and National Academies. The Scottish Government proposes to retain these funding streams:

    After independence this Government will seek to continue the current arrangements for a common research area and funding through established UK Research Councils, as we believe this would benefit both Scotland and the rest of the UK in supporting collaboration.[59]

It went on to state that as a post-independence country, the Scottish Government would:

    … negotiate with the Westminster Government a fair funding formula for Scotland's contribution based on population share but taking reasonable account of the fact that the amount of research funding received by Scottish institutions from the Research Councils may reflect higher or lower levels of funding.

    Providing a direct contribution from the Scottish Government budget in this way would create more transparency and clearer accountability around our investment, enabling Scottish interests to be better and more consistently reflected in the identification of Research Council priorities.[60]

56. The Institute of Physics highlighted to us the fact that Scotland, through UK research council funding, had an excellent level of access to international science facilities including the accelerators at CERN, the telescopes of the European Southern Observatory (ESO) and the space missions of the European Space Agency (ESA). It was concerned that access to these facilities would have to be renegotiated in the event of independence, which would include independent funding.[61]

57. The Royal Astronomical Society also highlighted the need for clarity over:

    … how the currently UK-wide research councils would agree to divide assets and grant funding between an independent Scotland and the other nations of the UK; and

    The kind of cross-national agreements that would need to be put in place to maintain the health of research activity.[62]

58. Universities Scotland in its evidence also noted that in the event of a yes vote, the Scottish Government would need to ensure the continued funding to retain the existing levels of:

    The quality, scale and impact of university research and knowledge exchange; and

    The maintenance and enhancement of universities' scope for collaborative teaching and research at Scottish, UK EU and international levels.[63]

59. The Higher Education Minister highlighted the "excellent research institutions in Scotland" and the fact that it attracted 13% of UK Research Council Funding against a population of only 8%. He went on to question whether these institutions could continue to attract that level of investment as a separate country where collaboration would need to be underpinned by a more cost-based assessment of financial input:

    If Scotland were to separate, of course one would hope for continuing research collaboration, but it would be between two separate countries. The basis on which we do research collaboration with France or Germany or the US, in general, is we pick up the costs incurred in our country, and the French or the Germans pick up the costs incurred in their countries. You have to come to some kind of overarching project, but that is how you allocate costs. That would be how it would have to work in this case. The rest of the UK would not be using the rest of the UK's research budget to pay for institutions in Scotland.[64]

60. It is unclear whether the common research area is either practical or desirable in a post-independence United Kingdom. Even if it is, such an arrangement will need detailed negotiation to ensure that public funds from the UK are not being disproportionately diverted to a separate country. In any case, a complicated formula for the distribution of funds is very likely to undermine the economies of scale currently enjoyed by universities bidding within a single country.

47   The Scottish Government: Scotland's Future: Education, Skills and Development  Back

48   The Scottish Government: Scotland's Future: Education, Skills and Development Back

49   The Scottish Government: Scotland's Future: Education, Skills and Development Back

50   Q34 Back

51   Q35 Back

52 Back

53   Q34 Back

54  Back

55   Q182 Back

56   Q183 Back

57   The Scottish Government: Scotland's Future: Skills and Development  Back

58   The Scottish Government: Scotland's Future: A Research Funding Policy and Landscape Right for Scotland  Back

59   The Scottish Government: Scotland's Future: Skills and Development  Back

60   The Scottish Government: Scotland's Future: Skills and Development  Back

61   Ev61 Back

62   Ev65 Back

63   Ev71 Back

64   Q184 Back

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Prepared 8 August 2014