Scotland's universities are of the people and for the people.

It's a truism that post-industrial nations like ours live by their wits – but that doesn't make it any less true. Whatever Scotland's constitutional destiny, the practical reality is that the education of its people will largely determine their quality of their lives. There really is no alternative to the hard graft of learning, now that heavy industry is long gone, and the false gods of Scottish banking, like Fred Goodwin, have been torn down and trampled into the dust.

Fortunately, Scotland has a unique advantage for a small nation of five million in having at least five world class universities – more in the 'QS top 200 even than much larger countries France – and one of the best educated workforces in the world. Yes, most of them take their qualifications south because of the lack of job opportunities here - but that's another question. Scottish higher education is an industry in its own right, drawing ever greater numbers of international students to study and benefit from our comparative advantage in the learning business.

But there is much more to this than just crude economics. Scotland's universities have never been regarded as mere education factories – they have a distinct egalitarian, or equalitarian tradition, summed up in that much-misunderstood phrase, the “democratic intellect”. There has been much debate about what George Elder Davies, who coined that phrase in the sixties, really meant. But Professor Ferdinand von Prondzynski, Principal of Robert Gordon University, in his report published yesterday, has finally discerned its settled meaning. Scotland's universities should seen as engines of social and cultural improvement - not just for the benefit of the individual, but for society as a whole. In this, the Scottish universities are markedly different to those elite universities, in America and south of the border, that increasingly regard learning as a commodity to be bought and sold, and students as consumers of a product sold at a price determined by the market.

I should declare an interest here. As Rector of Edinburgh University  I was on Professor von Prondzynski's review panel, though the views expressed here are my own. And it's well worth reading his report, which is short and very much to the point. The former president of Dublin City University has managed to achieve a clarity of focus and a seriousness of intent that has eluded most of the reports, reviews, working parties and task forces that have looked at Scottish higher education in the past. His recommendations are radical but practical, have been well received, and will almost certainly see the light of legislative day in a new bill on Scottish Universities in the next year.

What does the democratic intellect mean? Well in means no tuition fees for a start. The near 10% decline in university applications south of the border, only 1.5% here, tells us a lot about where English higher education is going, now that students are faced with £9,000 a year fees.  Scotland simply cannot afford to allow higher education to become a finishing school for the children of the well off. Nor should universities be allowed to become quasi-private businesses, run on market principles, and led by chief executive officers who are motivated by the size of their pay packets and by the weight of their bonuses.   We don't want a generation of Fred Goodwins to be attracted into Scottish higher education.

One of the reasons why the Scottish government set up the Prondzynski review in the first place was public concern over the ever-inflating pay of university vice-chancellors, some of whose official remuneration packages are heading rapidly toward the £300,000 mark. The report does not specify what university principals should be paid, but it makes clear that the recent spiral of disproportionate pay rises needs to be halted while a rational review is undertaken.  Also, von Prondzynski wants staff and students to be represented on those occult university remuneration committees that set Principals' pay. My own strictly personal view is that no one serving in public bodies should earn more than the First Minister of Scotland.

But are universities public bodies? They are, according to von Prondzynski. “Scotland’s higher education tradition is a distinctive one”, he says, 'rooted, before the twentieth century, in its commitment to social mobility and social responsibility; and, since World War II, in the nation’s particularly strong commitment to the principles of the welfare state'. Scottish universities were created and are sustained by public money, and they are answerable ultimately to the people of Scotland. But if universities truly are democratic communities, then it is necessary to make them more overtly democratic. This was the most difficult question of all. For the simple answer would be to make them answerable directly to the democratically elected government of Scotland. But to allow ministers to hire and fire principals would compromise academic freedom.

Von Prondzynski has attempted to make governing bodies of universities more democratic by opening them up to election by staff and students and the wider community, and by proposing a buffer institution, a higher education forum, that can mediate between the minister and university. The report also calls for trades unions to have representation on university governing bodies and for a minimum of 40% female representation on university courts.

Von Prondzynski's most controversial proposal is for the chairs of university governing bodies to be elected. It is fiercely resisted by the university establishment, but it is not entirely clear why. The ancient universities,  have had elected Rectors since 19^th Century, who have the right to chair court, though not all of them do.    All that is being proposed is that they are given the necessary means to do the job of democratic oversight. Hardly a red revolution. I know from my own experience of chairing the governing body of Edinburgh University, that this really isn't something that can't be done on a casual, part time basis.

The vice chancellors are thought to be opposed even to this meagre ration of democracy. Well, they may have to get used to it, just as they are going to have to get used to the absence of the tuition fees they lobbied so hard for. This report marks a parting of the ways in higher education between Scotland and England, and not just in terms of finance. Scotland's universities are of the people and for the people, and that's how it is going to stay.