The warning was issued by the Scottish Parliament’s enterprise and culture committee in its Scottish Solutions report on the impact of any move by Westminster to allow universities south of the border to charge variable tuition fees of up to pound;3,000 a year.

There is still some doubt, however, whether the policy will survive a Labour backbench rebellion when the proposals are debated in the Commons at the end of the month.

The enterprise committee took the unanimous view that the current proposals “will have an adverse impact on Scottish higher education, particularly in its research sector”. It urges the Executive to “significantly increase” public investment in higher education, noting evidence from Professor Arthur Midwinter, the public finance expert from Strathclyde University, that HE’s share of the Executive budget had fallen from 3.32 per cent in 2000-01 to 3.16 per cent in 2003-04.

But the committee was forcibly reminded by evidence from the FE sector that not all higher education takes place in the universities. Professor Midwinter’s figures, for example, relate to cash channelled through the Scottish Higher Education Funding Council.

The higher education that takes place in FE colleges, in the form of higher national certificates and diplomas, is excluded, and the committee does not appear to have tied down precise figures as to how this affects relative spending north and south of the border.

The committee noted that 35 per cent of higher education is provided in FE colleges and it warns: “In making available any additional resources for higher education in Scotland, there should not be a presumption that these will be allocated solely to the university sector and that the strategic importance of the further education sector should also be addressed.”

This was welcomed by the Association of Scottish Colleges as was the recommendation of more support for part-time students, who represent four out of five FE enrolments. Colleges believe there will be little impact from increased fees beyond a small potential rise in applications from England for specialist courses.

Tom Kelly, the association’s chief executive, commented: “This is not a bidding war against England. Our efforts should be concentrated on developing Scotland’s own talent and ideas.”

Lewis Macdonald, Deputy Minister for Lifelong Learning, told MSPs that the planned merger of the FE and HE funding councils was a recognition that “the strength of our higher education sector and the strength and potential of our further education sector cannot be separated”.

The all-party committee, whose report was unanimous, did not spell out what sums ought to constitute a “significant increase”. It merely noted the evidence from Universities Scotland that the sector ought to receive another pound;59 million by 2005-06.

This would restore funding to 2002-03 levels, with another 5 per cent increase in real terms over five years at a cost of pound;43 million a year, allowing Scotland to match key competitor countries.