UNIVERSITIES are under increasing pressure to meet Scottish Government priorities or face financial penalties.

New guidance from Shirley-Anne Sommerville, the Higher Education Minister, calls for an "intensification" of so-called outcome agreements - which dictate what institutions must do in return for public money.

Under the guidance universities are expected to align their work more closely with the economic priorities of ministers, as well as stepping up the drive to recruit greater numbers of pupils from poorer backgrounds.

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While the claw-back of funds is currently available to the Scottish Funding Council (SFC) its use is rare and usually applies when institutions recruit too many students over an agreed quota.

Ministers also suggest greater use of financial incentives to ensure universities are delivering on their priorities.

In her letter to the SFC, Ms Sommerville emphasises the need for the SFC to "maximise" the contribution public investment makes "in achieving the Scottish Government’s priorities".

She said: "The SFC’s outcome agreement guidance should be robustly tested against those priorities and my request for a clear line of sight between your investment in ... universities and their contribution to the delivery of our national priorities.

"Outcome agreements are key to ensuring that colleges and universities have a clear understanding of government priorities and keep those to the fore as they deploy public funding to allow local, regional and national skills needs to be met.

"I would encourage you to consider other measures as a means of leveraging better outcomes for learners: for example the publication of ... performance data and the use of financial incentives and clawback arrangements where that might be appropriate."

The move to increase government direction over the work of universities is controversial because, although they currently receive more than one billion pounds from the public purse every year, it accounts for less than 40 per cent of their total funding when tuition fees, research grants and endowments are taken into consideration.

Universities also prize their independence from government because it allows them to pursue innovative research which may not meet immediate government priorities, but which might prove hugely beneficial to society in the longer term.

A spokeswoman for Universities Scotland said the sector was delivering excellent outcomes on skills, graduate employability, retention rates and innovation with business that aligned closely with government priorities.

She said: "We are proud to carry the responsibility for delivering a very high return on public investment and we expect the robust scrutiny that is already in place.

"However, we must retain scope for work that reaches beyond government objectives and delivers for Scottish society more broadly and in ways that, sometimes, could not be anticipated. That is an important part of the independence and unique role of universities.

"We don’t see how penalties would help achieve shared ambitions more quickly. Financial penalties on a successful sector can only ever be a last resort."

The tone of the guidance provoked concern from opposition parties who accused the Scottish Government of interference.

Liz Smith, education spokeswoman for the Scottish Conservatives, said: "This is further proof of the government’s determination to increasingly influence the strategic direction of our universities.

"The letter is explicit in its insistence that universities must align with their priorities despite the fact that a large proportion of university activity, including research, is not dependent upon or funded by public funds.

"The minister seems intent on pursuing the intensification of outcome agreements yet there is no acknowledgement of the wider scope of economic, cultural and social activity within the sector."

Iain Gray, education spokesman for the Scottish Labour Party, said ministers viewed universities as an "instrument of government policy".

He said: "It is astonishing that a letter of guidance should omit to mention university research at all. It is chilling to read the minister talk about the intensification of her outcome agreements for universities.

"Our universities have been autonomous institutions for centuries and that has enriched our society. The SNP government need to understand that and resist their urge to try and control them for their own ends."

A Scottish Government spokesman said: “Academic freedom is enshrined in law in Scotland and one of Scotland’s universities’ great strengths is that they are autonomous, self-governing bodies. That will never change.

“Our letter makes clear that the SFC has a critical role to play in maximising the impact of £1.7 billion of public money across further and higher education, with a focus on national priorities.

"This responds directly to a recommendation from Audit Scotland that the SFC ensures decisions on funding of activities in key areas fully aligns with achieving our policy ambitions."