The promise of record investment has given Scottish universities the confidence and financial clout to compete with their fee-charging counterparts in England, higher education leaders said this week.
Spirits had been dampened when English universities were given the green light to charge top-up fees of up to £3,000 a year from 2006, with Scottish principals worried that their institutions would not be able to compete financially.
But last week's announcement of a 30 per cent rise in funding for universities and colleges up to 2008 has been hailed as a massive vote of confidence in Scotland's universities as they embark on crucial reforms to increase economic competitiveness.
The extra money will mean the higher education budget will top £1 billion for the first time in 2007-08. It includes a new £150 million capital funding stream and £620 million for further education.
Jim Wallace, the Lifelong Learning Minister, could not resist a gentle gibe at England's anticipated injection of funds. "It is in the baseline and I suspect the English universities would like to (see that) their funding settlement was quite so secure," he said. "I believe this at least maintains, and may well sharpen, our competitive advantage."
The sense of relief in Scottish higher education was palpable this week after months of growing pessimism over funding.
In January, the Scottish Enterprise and Culture Committee warned that more money was needed to stop universities and colleges falling behind England.
Just weeks after that, the Scottish Executive's higher education review said Scotland's crumbling campuses faced a multimillion-pound repair bill.
This week, David Caldwell, director of Universities Scotland, said: "The Minister has done an extremely good job, and there will be an excellent return on money well invested."
John Archer, convener of Universities Scotland, said: "It will certainly leave us in better shape to get ready to face those pressures head on. It is a big first step in ensuring future competitiveness.
'The only note of caution is that the competitive pressures will continue to grow after the period of this spending review, and this investment has to be sustained."
The money comes at a crucial time for Scotland's universities, with a Bill being introduced to merge the further and higher education funding councils. The Bill underlines universities' and colleges' central role in Scotland's economic, social and cultural development.
Universities were successful in getting the Scottish Executive to revise the original proposals, which would have seen post-1992 universities classed in the same category as colleges. Mr Caldwell said: "We are impressed by the thoroughness and seriousness of the consultation process."
Bernard King, principal of Abertay Dundee University, welcomed the Bill as promising an era of "more joined-up thinking" between further and higher education and economic development.
Scottish institutions are also embarking on a series of groundbreaking research collaborations. The idea is that departments that are too small to compete on their own on the international stage will be able to hold their own.
Collaboration plans are now advanced in physics and chemistry, with reports expected from life sciences, economics and the creative arts.