Scottish higher education institutions are preparing to battle against funding cuts, armed with a report which shows higher education as a key player in the Scottish economy, writes Olga Wojtas.

Iain McNicoll, professor of economics at Strathclyde University, has produced a report for the Committee of Scottish Higher Education Principals on the economic impact of the higher education sector, the most comprehensive analysis undertaken so far.

It shows that the sector has created more than 68,000 jobs and generated Pounds 1.3 billion for Scottish households. In 1993/94, the 22 colleges and universities had an income of more than Pounds 1.1 billion, of which Pounds 793 million came from the public sector. But Professor McNicoll estimates that about Pounds 672 million returned to the Treasury, primarily through taxes and National Insurance contributions.

International revenue, "invisible export earnings", reached almost Pounds 140 million, with off-campus spending by overseas students topping Pounds 60 million, and another Pounds 10 million spent by overseas visitors.

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John Arbuthnott, COSHEP's convener, said: "Quite simply, higher education is one of Scotland's most valuable assets and it is time that it was recognised as such."

In the debate on educational funding, higher education was frequently portrayed as an expensive luxury, competing for taxpayers' money with more so-called "essential" causes, Professor Arbuthnott said.

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But higher education offered excellent value for public money, and this had been increasing year after year, with an average annual 4.8 per cent growth in staff student ratios for the past eight years, while the funding per student had dropped, and staff salaries had barely kept pace with inflation.

The study suggested that higher education accounted directly for 2 per cent of Scotland's total economic activity, rising to 4 per cent when knock-on effects were taken into consideration, Professor Arbuthnott said.