SCOTTISH students are finding it increasingly difficult to secure a place at university north of the Border, a major report has warned.

Scotland’s spending watchdog said the squeeze was taking place because applications from Scottish students are increasing at a higher rate than available places.

At the same time, Audit Scotland said, universities are placing increasing reliance on generating income from fee-paying students from the rest of the UK and overseas.

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As a result, 66 per cent of higher education students were Scottish in 2014/15 compared to three-quarters in 2005/06.

During that period, the overall number of Scottish students declined by eight per cent from 166,925 to 153,915 - although the number of Scottish school-leavers going to university is increasing.

Overall, the report found Scottish universities are facing “significant” future challenges because of growing pressures on funding including increasing costs and potential reductions in funding from the public purse and international student fees.

Audit Scotland also highlighted concerns about the Scottish Government’s drive to widen access to poorer students concluding that achieving targets without increased funding will reduce the number of middle class students.

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The report concluded that financial uncertainties and the way the Scottish Funding Council allocates money threatens the delivery of key Scottish Government objectives such as world-class research, innovation and widening access.

Caroline Gardner, the Auditor General for Scotland, said: "Given the growing pressures on public finances, the Scottish Government must be clear about its priorities for higher education and how it will target public funding to support those aims.”

Professor Pete Downes, convener of Universities Scotland, said the report made clear higher education was facing “very real funding pressures”.

He said: “This assessment was reached before the Brexit vote which is causing instability and serious levels of risk in almost every aspect of universities’ business.

“We have a higher education sector that Scotland can and does take pride in. It is one of the best in the world, but our current success is seriously threatened by the funding pressures."

Mary Senior, Scotland Official for the UCU union, which represents lecturers, said the report made it clear public funding was central to success.

“The Scottish Government needs to take a hard look at the level of funding it gives to higher education and how it raises that money," she added.

However, Shirley-Anne Somerville, Minister for Higher Education, said for the fifth year in succession the government was investing over £1 billion to allow universities to grow.

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She said: “Supporting all students, particularly those from less advantaged backgrounds is a top priority for this government which is why we have committed to implementing all of the recommendations made by the Commission on Widening Access and reviewing student support."

She added: "Since 2007, the number of Scottish domiciled full-time first degree entrants to Scottish universities has risen by 11 per cent and a record number of students successfully completed full-time higher education courses at colleges in 2014/15."