Universities in Wales have responded to a withering attack by Leighton Andrews, the education minister, who described the sector as "a halfway house".
Speaking at Cardiff University, Mr Andrews said that being "blunt and candid", he saw "too much institutional behaviour and not enough leadership" in universities.
His remarks last week came as the Welsh Assembly government published a report on efficiency in education. It revealed that more than half of university funding (52 per cent) was spent on support and back-office services.
The study, which was carried out by PricewaterhouseCoopers, also found that fewer than half of university staff in Wales are involved in teaching or research.
Mr Andrews said: "In the first six months I have been in the post, I have begun to wonder whether the higher education sector in Wales actually wants the Assembly government to have a higher education strategy, or whether it even believes that there is such a thing as a Welsh higher education sector.
"I am not clear ... that the higher education sector in Wales welcomes devolution or democratic accountability at all."
The minister said that the bureaucracy surrounding higher education "gives us a halfway house", adding that he had heard of university governors being appointed on the basis of a single phone call.
"It appears that higher education governance in post-devolution Wales has become the last resting place of the crachach (the Welsh elite)," he warned.
Mr Andrews said the sector had become "cautious and conservative", adding that such traits would not be helpful in a time of financial constraints.
However, his blunt appraisal was met with defiance from within the sector.
Teresa Rees, pro vice-chancellor for research at Cardiff, said: "There are some elements of his choice of language that we would regret and we would feel weren't justified.
"I think there is a lot of picking up on rumour and anecdote. I'm not sure how well rooted these criticisms are in fact."
She said figures in the report had been used out of context, counting expenditure on equipment that forms an integral part of teaching and research as back-office costs.
"There are all sorts of methodological issues with it and we're not impressed with that," Professor Rees added.
Others, however, supported the minister's stand.
Andrew Parry, executive adviser to the vice-chancellor of Glyndwr University, said there was "some justification" in Mr Andrews' criticism that the sector had failed to respond to the agenda set out by the Welsh Assembly government.
The PwC report, Review of the Cost of Administering the Education System in Wales, concluded that a more efficient sector was "essential" to protecting the quality of teaching, research and knowledge transfer in Welsh universities.
It claimed the sector could save as much as 20 per cent by simplifying governance and up to 10 per cent by introducing shared services in higher education.