A government-led funding initiative for higher education in Scotland has challenged universities to demonstrate how their use of public funds supports the economy.

The Joint Future Thinking Taskforce, which had its final meeting last week, will re-direct funding to align university activity with the government aim of higher levels of sustainable economic growth.

It charges universities with attracting young people to Scotland, developing higher skill levels essential to a knowledge-based economy and creating an engaging environment between universities and Scottish business.

A spokesperson for the Scottish government said: “By demonstrating that they are delivering outcomes relevant to our aims of higher levels of sustainable economic growth for all, universities will strengthen their future case for increasing levels of public investment.”

The spokesperson added that Holyrood is investing a higher proportion of its spending in Scotland’s universities than the previous administration—a 2.9 percent real-term increase—and investment in the sector is now more than £1 billion.

In the last decade the pattern of change in the Scottish labour market has been characterised by an increase in high-level skills. The proportion of jobs requiring a tertiary education qualification has roughly doubled to more than one third.

Critics of the Taskforce have accused the report of concealing the real need for additional funding. The rectors of Scottish universities, speaking jointly for the first time in 600 years of Scottish higher education, said that the Scottish government needed to invest more in universities in order to compete with the increasing revenue procured by fee-charging institutions in England and Wales.

Evidence given to Parliament’s education committee last week by Professor Anton Muscatelli, convener of Universities Scotland and principal of Heriot-Watt, showed that there has been a real-term drop of 0.2 per cent in the last year in university funding.

He warned that competing with rival countries would be increasingly difficult.

Adam Ramsay, president of Edinburgh University Student Association, described the university sector as the engine of the Scottish economy. He said: “Our society and economy depend on well taught graduates. It's crucial that funding for teaching is increased.

“Scotland used to lead the world in education. Today, our investment in universities is substantially less than the average for a developed country."

Students won't get the teaching we deserve because universities aren't getting the money they need.”

Currently only 1 per cent of Scottish GDP goes towards universities compared with the Organisation for Economic Co-operation and Development average of 1.2 per cent.

Last year university principals said an extra £168 million was needed to remain competitive with fee-charging universities south of the border. However they were given just £30 million for the following year.

The director of Universities Scotland, David Caldwell told The Journal they would continue to push for additional investment: “Funding is a tremendously important issue for universities and we are certain that additional investment will provide a positive return for Scottish society, culture and for economic growth.”