Covid-19 and a reliance on revenue from international students have raised doubts over whether Scotland’s universities are in a financially sustainable position, the higher education minister has warned.

Richard Lochhead said the pandemic had been a “wake-up call” for institutions which have in recent years used income from growing overseas recruitment to cross-subsidise other activities.

While welcoming their success in attracting students from around the world, he suggested the “multi-billion-pound” sector may have become over-dependent on the money they bring in.

He also told MPs universities would have to examine whether the existing financial model is “sustainable” going forward as governments look to tighten controls on international travel and contain the spread of new, more transmissible coronavirus variants.

It comes after The Herald told this week how higher education institutions are facing losses of £132 million in 2020/21 as Covid restrictions bite and students choose to axe accommodation contracts.

Ministers have created a £30m support package, £10m of which is aimed at helping colleges and universities make up for lost revenue linked to the pandemic.

The remaining £20m will provide further hardship support for students.

Asked during Thursday’s meeting of the Scottish Affairs Committee whether there is too much dependence on income from international students in higher education, Mr Lochhead said: “Well, there’s no doubt that Scotland’s universities, you could say, are a victim of their own success in that they have such an amazing reputation around the world, that they are an attractive destination for international students – and, of course, that generates a lot of income, and that income cross-subsidises other activities within the sector because universities are… the sector is a multi-billion-pound business. And they’re autonomous institutions.

HeraldScotland: Richard Lochhead, Minister for Further Education, Higher Education and Science, appeared before Westminster's Scottish Affairs Committee on Thursday.Richard Lochhead, Minister for Further Education, Higher Education and Science, appeared before Westminster's Scottish Affairs Committee on Thursday.

“So they have gone to a lot of effort to attract international students.

“Now that has left us in a position...that 22 per cent of the sector’s income is from fee-paying students.

“That represents about £898 million. And it’s estimated that the international students generate about £2bn for the Scottish economy. So that’s a big success.

“But, of course, in a global pandemic, when students can’t travel to the same degree, it has been a bit of a wake-up call for the institutions that we now have to look at whether we are sustainable going forward, over-dependent on international students.

“I don’t think that means being less attractive to international students or having less international students coming to Scotland but just in terms of the overall financial model, I think there is a challenge there.

“And that’s why we commissioned the Scottish Funding Council to look at the financial sustainability and the role of our universities going forward.”

Mr Lochhead told the committee that UCAS figures for acceptances by EU students in this academic year had been “quite healthy”.

But he said that a clearer picture would begin to emerge once applications data becomes available for the next session, which will be the first without free tuition for those recruited from the bloc’s member states.

“I think it’s really important we remain an attractive destination for international students and that means that we, following Brexit, have the challenge of getting that message across to the international community. Now [in] Scotland we are doing what we can, and will continue to do that, to promote Scottish brands and the fact that Scotland is an open, welcoming, internationalist country, that wants to stay at the heart of Europe,” he added.

HeraldScotland: Glasgow University is another Scottish institution which is popular with international students.Glasgow University is another Scottish institution which is popular with international students.

“And therefore we want that to be reflected in students from Europe in particular continuing to come to Scottish institutions and researchers to work in [our] institutions so we get the best brains in Europe to still be attracted to come and work, and study and live, in Scotland.”

Mr Lochhead’s acknowledgement of the sector’s challenges has been positively received by representative body Universities Scotland.

Director Alastair Sim said: “We welcome the Minister’s recognition that the current financial model for Scottish universities is unsustainable which has been our long stated position.”