THE ability of Scottish universities to establish long-lasting and substantial spin-off companies has been questioned by ministers.

Keith Brown, the Economy Secretary, said businesses were concerned that such companies were not delivering on their potential.

His comments came at a meeting of the Scottish Parliament’s education committee where he was giving evidence on the merger of the boards of the Scottish Funding Council and a number of enterprise and skills agencies.

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Daniel Johnson, a Scottish Labour MSP, asked Mr Brown: “What is broken about our university system that needs this level of reform?

“Our universities produce more spin-out companies and receive more competitively-awarded research funding than any other part of the UK.”

However, Mr Brown said: “We are not seeking to reform universities, but you have raised the issue of spin-out companies.

“Many universities have had huge success, but there are people in the private sector that sometimes feel universities will often take too high an equity stake in those companies which negates their further growth.

“There are questions about whether the spin-outs result in scale-ups where those companies become more substantial.”

Alastair Sim, director of Universities Scotland, said: “Universities are determined to get research and expertise into the world where it can have a positive impact.

“University leaders have spent the last two years delivering an action plan and closer engagement with business has been a key part.”

Mr Brown went on to defend the government’s plans for a new single board to co-ordinate the work of Scottish Enterprise, Highlands and Islands Enterprise (HIE), Skills Development Scotland and the SFC.

John Swinney, the Education Secretary, has already confirmed the government’s intention is for the new board to replace those of the individual agencies.

The change has been described as a ‘’death knell’’ for HIE, with opponents arguing against the centralisation of its governance.

Concerns have also been raised the abolition of SFC - which is responsible for funding Scotland’s further and higher education institutions - could compromise the autonomy of universities, particularly if the new board is chaired by a minister.

Conservative MSP Ross Thomson quoted Mr Sim who last week told MSPs “a limited number of people sitting round a table will not have the competence to deal with the huge remit that the board could be given”.

Mr Thomson said: “Is there a danger that a new single board could be set up to be too big to function, and we would be setting up to fail?”

Mr Brown responded: “I don’t think it is going to be set up to fail, whether it’s set up as too big to function - I think that issue is something that has to be, and is being, considered as part of the governance review.”

He insisted the autonomy of universities would be maintained and told the committee a decision on whether a minister should chair the new board was still under review.

The Economy Secretary was also pressed on what evidence the government had that the new structure would be an improvement and which organisations had supported the move to an overarching board.

Mr Brown said the government’s view was that joint working between the different agencies on internationalisation and skills had not happened to the extent that it should have.

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He said: “The evidence we cite for that is that we’ve not achieved our ambition to move from the third quartile in terms of the OECD rankings to the first quartile.”

Liberal Democrat MSP Tavish Scott said: “The cat is out of the bag. The Cabinet Secretary refused to name anyone who wants to abolish the boards.

“It is now clear that this centralisation is driven by SNP ministers and no one else.”

Ross Greer, education spokesman for the Scottish Greens, added: “Our universities’ funding, particularly from charitable foundations, is at risk due to Scottish ministers’ bizarre decision to press ahead with scrapping the board of the SFC.

“Ministers must reverse their decision to abolish the existing boards in favour of this monster of a multi-agency board.”