SCOTTISH universities have called for urgent talks over the future financial sustainability of the sector.

The demand came after the Scottish Government cut the revenue budget for higher education by 1.3 per cent in cash terms.

Under the Budget proposals institutions will receive £1,013.9 million in 2017/18 compared to a 2016/17 baseline of £1,027.2m.

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Professor Andrea Nolan, convener of Universities Scotland, said institutions recognised ministers had tried to protect higher education. But she added: “This settlement does not enable recovery towards sustainable funding of universities’ core teaching and research activities.

“We urgently need to discuss with government how we might chart a three-year path towards a sustainable funding settlement.

“Our priority was to get a settlement that started a climb back towards sustainability. That has not happened.”

Ms Nolan also criticised the announcement of £45.5m for building projects, which she said did not contain any new money.

She said: “The announcement is almost entirely made up of pre-existing commitments. That, regrettably, means there will be almost no new resources from government to meet the backlog of maintenance in university teaching and research facilities. A top priority will be to establish whether this settlement actually provides enough to allow universities to draw-down funds that are available from the UK Government on a match-funded basis.”

Earlier this year the Auditor General warned that universities were not sustainably funded.

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The report found they received only 94 per cent of the cost of teaching students in 2014/15, while research is under-funded at 86 per cent of what it costs to deliver.

Overall, Audit Scotland said there had been a six per cent real terms cut to funding between 2010/11 and 2014/15 and warned of “underlying risks” to university finances.

Universities Scotland said that, since then, funding for higher education has been cut by another six per cent, and five out of 18 institutions reported a deficit in 2014/15.

In the wake of the report, universities suggested potential options for saving money included course cuts and even compulsory redundancies.

Lecturers’ leaders also criticised the settlement, warning it threatened the world-class reputation of the sector.

Mary Senior, Scotland official for the University and College Union, said: “It’s disappointing to see another cut to higher education revenues in this Scottish Budget.

“We’re already seeing job losses in universities across Scotland and there is a limit to the sector being able to call itself world-leading whilst continually cutting the staff who make it so.

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“This cut, on top of the uncertainly the sector faces following the Brexit vote, will make this a difficult and worrying time for staff in the sector.”

Meanwhile, Vonnie Sandlan, president of National Union of Students Scotland, called for a fairer funding package for college students.

She said: “Students there are still left with the uncertainty of whether they’ll receive any financial support. Without the necessary financial support, we could see more students dropping out of education, or never making it there in the first place.”

However, Hugh Hall, chairman of Colleges Scotland, welcomed a rise in funding for the further education sector, which rose from £721.4m to £741.3m.

He said: “The increased investment is very welcome particularly in these tough financial times.

“This is a well-deserved vote of confidence in the college sector and a recognition of the valuable work delivered by colleges.”

The Government said the settlement marked a significant investment in Scottish further and higher education.

The Budget states: “Scottish Government funding combines with other sources of complementary investment secured by colleges and universities to deliver teaching, research and innovation activities that can accelerate Scotland’s productivity and economic growth.

“In 2017/18 we will increase our investment in our college sector to ensure it continues to add real value to our economy.

“ We will increase overall investment in our university sector to support our universities to continue to make a significant contribution to Scottish society, culture and the economy.”

Ministers also said its policy of free tuition for Scottish university students would continue to be funded.