SCOTTISH universities have warned of the “catastrophic risk” of being reclassified as public bodies under plans for a shake-up of the way they are run.

The Scottish Government has brought forward plans to bring the Scottish Funding Council under the control of a single overarching board with a number of other enterprise bodies.

One possibility which has not yet been ruled out is that the new board, which will also oversee Scottish Enterprise and Skills Development Scotland, could be chaired by a government minister.

Universities Scotland, which represents the sector, said any move to increase the influence of government ministers could result in them being reclassified as public bodies by the Office of National Statistics (ONS).

ONS reclassification is crucial because it would prevent universities from generating income from outside sources and stop them from holding reserves at a time when public funding is under enormous pressure.

Alastair Sim, director of Universities Scotland, was asked about the issue at a meeting of the Scottish Parliament’s public audit committee.

He said: “There is a real risk there. If you look at ONS classification the more you come into the sphere of influence and direction from government the heightened risk you have of reclassification which means you can’t earn entrepreneurial income, you can’t hold reserves and so what we are saying very clearly is let’s proceed with care.

“Whatever the design is it needs to retain that firewall that means that universities are at arms length from government and that we are not heightening that risk of reclassification nor are we diminishing universities’ capacity to be a voice in a society that in many ways is aligned with government, but we are not government.”

Paul Johnston, the Scottish Government’s director general of learning, agreed that the issue of how the board would be chaired in future “had to be looked at in detail”.

He said: “I am aware the issues around ONS classification are matters that need to be looked at carefully and certainly we would want to be sure that the new arrangements that we put in place would not lead to any reclassification.

“We absolutely recognise the risks that would create and the current status of universities supports the attraction of a wide range of additional funding and we would want to look at that issue carefully and ensure there is no reclassification of universities.”

The review, which was announced in May by First Minister Nicola Sturgeon, was intended to look at the roles, responsibilities and relationships of the enterprise, development and skills agencies operating in Scotland, including the SFC.

Chaired by Keith Brown, Cabinet Secretary for the Economy, it concluded that a national board should be created to oversee the different agencies and ensure their work was “aligned”.

The SFC was set up in 2005 to replace separate boards for higher and further education.

It oversees allocations of government grants for universities and colleges.