The sterile debate over the possible introduction of variable tuition fees north of the border is emblematic of the isolated world in which Scottish academic institutions operate.

It is illuminating indeed that the knee-jerk response to the perceived threat of reshaping the public and private interface, one so mind-numbingly typical of the Scottish public sector, is nothing more innovative than the traditional cap-in-hand trudge to the holder of the state purse. The undoubted need for increased salaries, upgraded facilities and better resources is again expected to be met by burgeoning public expenditure with no real attempt to cut costs or increase external income.

It is surely agreed that a primary function of any education system is actively to contribute to economic growth. In a country where 51 per cent of GDP is the direct result of public sector activity, the need for education to drive the development of a knowledge economy is even more acute. Operating in splendid ivory tower isolation with little, if any, contact with the engine house of the economy, our higher education institutions could learn a few lessons from their Ivy League cousins in America where the culture of enterprise runs through the heart of these institutions - an educational ethos foreign to Scotland.

Our higher education system is also in need of serious structural transformation in addition to the systemic change required to engage with the world in which it operates. Before one more step towards the Scottish Executive’s block grant is taken, there are a number of internal issues that require immediate attention. First, why do we have so many individual institutions (in HE and FE)? In many towns and cities, it would be possible to consolidate on a single site.

Taking Glasgow as the largest example, an “academic quarter” could be created by delineating an inner city campus boundary around the existing institutions that lie in the quarter of a square mile immediately east of Queen Street Station. This new HEFE cluster could create smoother learning paths for a wider range of students, improving access for those in the social inclusion target groups.

A public private partnership (PPP) contract for the development of the entire city centre campus could both secure rapid improvement to the physical infrastructure and help create a more entrepreneurial culture.

This would transform the learning experience and working environment for thousands of students and staff, and neatly follow in the footsteps of the city council’s visionary restructuring of the schools sector.

The merging of the various pieces of this particular education jigsaw puzzle would in itself create a massive single market that would push down prices. Everything from paper to pens, from building maintenance to personnel management, from the provision of IT services to the production of coffee shop cappuccinos would become part of a powerfully unified and dedicated market-place.

Second, in terms of reducing revenue expenditure, a close look at the four-year degree must be first base, following the introduction of the Advanced Higher. The “wipe the slate clean” mentality that underpins the need for the four-year degree has itself been swept aside by this modernisation of the upper secondary sector. In an ever-changing world that demands a commitment to lifelong learning, the defence of a four-year degree course specialising in individual subjects becomes difficult indeed.

Individual learning programmes that can be accessed in a variety of ways (full-time or part-time, day or evening, in person or online) can be offered in a much more cost-efficient manner.

The huge central infrastructure of 1970s-style campuses, with massive lecture theatres and large numbers of seminar rooms that lay dormant for months each year, is no longer required.

The third area of cost effectiveness ties in with the theme of entrepreneurship. High drop-out rates contribute significantly to the overall cost of provision and must be tackled. The introduction of variable rate fees south of the border is likely to concentrate the beautiful mind somewhat before any lazy decision to “go to university” is taken.

This emphasis on the economics of an education, with the additional requirement to generate some of one’s own income, has the potential to rebalance the individual’s right to attend and their individual responsibility not to squander the public investment involved.

Until our universities, their staff and students alike, can raise the level of debate above the normal Scottish public sector level where change is viewed with suspicion and cynicism they will be treated in much the same manner. To achieve the freedom they rightly desire our universities must give birth to a new enterpreneurialism and grow the confidence to be able to cut the umbilical cord.

Ross Martin is director of the Scottish Forum for Modern Government.