Responses to a revised version of the plans, outlined in a consultation that ended last week, were met with caution despite the SFC¡¯s efforts to meet the sector halfway.

In its response to the funding council, the University and College Union Scotland warns that blues-skies research may be stymied by the proposals, which outlined plans to distribute ?21 million in funding for knowledge transfer through its Horizon Fund in 2010-11.

Of this, ?6 million would be allocated on a project-by-project basis, with applications judged by a committee, and the remaining ?15 million by a traditional funding formula.

This marked a change from original proposals, which would have introduced a bidding process with universities competing against each other.

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The final consultation also reveals that the SFC intends to increase the proportion of funding allocated to ¡°strategic projects¡±, claiming that formulaic allocation methods ¡°have not resulted in a strong, strategic focus on Scotland¡¯s biggest challenge or opportunities¡±.

The UCU response says of the plans: ¡°Universities are extremely wasteful of highly qualified labour. This is due to an inappropriate management methodology, which directly links specific amounts of cash to the contracts of research staff.

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¡°UCU believes project-based funding is not a sustainable method of funding knowledge transfer while these employment practices and management mindsets remain.¡±

The union also warns against creating a culture of dependency on the private sector, with more research taking place in industry.

Universities Scotland¡¯s response to the SFC says it ¡°acknowledges and welcomes [the] significant revision¡± to the proposals.

But it also warns that universities are split on whether a higher or lower proportion of the Horizon Fund should be distributed on a project-by-project basis.

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A spokesman for the SFC said its aim was to ¡°find the best way to support universities in an area of their work which has taken on an even greater significance in the current economic climate¡±.

hannah.fearn@tsleducation.com