Scottish universities fear that they could lose their status as charities and become part of the public sector if the Edinburgh government pushes ahead with a new higher education governance bill.

The controversial bill, published in June, would shake up the composition of Scottish university governing bodies, and would require them to include at least two members directly elected by staff, and another two by trade unions, students¡¯ unions and alumni associations.

It also raises the possibility of elected governing body chairs, although exactly how they are chosen would be decided by ministers at a later date.

Because ministers would gain these powers, Universities Scotland has warned that this could prompt the Office for National Statistics to reclassify universities as part of central government.

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This change would restrict university borrowing, stop them from reinvesting surpluses, and imperil income from donations, the body said in a to the Scottish Parliament Finance Committee.

¡°Without the financial tools and the autonomy to invest strategically in this way, universities would inevitably have to reduce their levels of activity and investment, with significant implications for their ability to deliver on Scottish Government priorities, such as skills provision, innovation, and social mobility,¡± the submission said.

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A loss of charitable status would ¡°severely prejudice institutions¡¯ capacity to access philanthropic funding, currently worth around ?53 million a year. Donors are highly unlikely to wish to support institutions who are no longer charities.¡±

Angela Constance, the Scottish education secretary, has argued that the bill would create more accountability for universities and give a stronger voice to students and staff.?

david.matthews@tesglobal.com