Over £1billion has been allocated to Scottish Universities as part of the annual Scottish Funding Council (SFC) budget announced earlier this month.

The allocation, which was based on the 2008 Research Assesment Excercise (RAE), includes £666.5m for teaching and £242m funding for research, and has been welcomed by Edinburgh's four universities.

John McClelland, SFC Chair said: "Scotland's universities are an essential part of the intellectual, social and cultural fabric of Scotland but they are also playing a critical role in the economy by providing well qualified and employable graduates, and through their research, development, and support for innovation in business.

"Today's announcement is a significant investment in Scotland's future prosperity and signals a major change in the way that the Scottish Funding Council funds universities, aimed at strengthening even further their contribution to Scotland's economic, social, cultural and civic prosperity."

Edinburgh's four universities all welcomed their respective allocations, which is based in part on the number of students enrolled and the quality of previous research they have conducted.

A spokesperson for Edinburgh Napier University, who were allocated £51m, said: “Overall Edinburgh Napier University will receive a 2.1 per cent increase in main grant next year which, together with the associated assumed tuition fees is expected to result in a 2.5 per cent increase in overall income from these sources.

“In particular, we were pleased that our strong performance in the 2008 RAE has been rewarded with an increase of almost £400k in the grants for research. This increase reflects the hard work and innovation of many staff across the University."

Following widespread results of excellence in last December's RAE, there were fears amongst research intensive institutions that research funding would fall in real terms for those institutions who recieved large grants in last years funding.

Responding to the announcement on funding for the coming academic year, the principal of the University of Edinburgh, who received £153m, said that, as far as Edinburgh was concerned, its allocation was “further objective evidence of improvement in the university’s research performance.”

Professor Sir Timothy O'Shea said: “Since 2002 our objective has been to improve the quality of our research at a faster rate than the upper quartile of the Russell Group of universities – and we have achieved that. Thanks to the hard work of staff across the University of Edinburgh, we have improved the quality of our research and the support we can offer to young researchers.”

The overall funding allocation includes £77m of captial funding and £25.3m ring-fenced grants.

A spokeswoman for Heriot-Watt welcomed the substantial rise they received, which amounted to a total of £35m for 2009-10.

She said: “Heriot-Watt has received a 3.6 per cent increase in its grant this year, above the sector average of 2.9 per cent. This allows us to continue to work towards being a world leading university and to compete in a world populated by many larger and better funded institutions.”

In addition to the research and teachings grants, an additional fund has been established this year. The "Horizon fund" is worth £126m and is an incentive based grant which will be distributed based on the performance of universities in the following areas: improving employability of students, widening access for learning, cultivating knowledge exchange and increasing the student learning experience.

Professor Anthony Cohen, principal of Queen Margaret University, said that they had "broadly anticipated" their allocation of £13.5m.

A spokesperson for Universities Scotland said that the funding was acceptable in what has been “a volatile year”.