Cross-border provision of public services for Wales: further and higher education - Welsh Affairs Committee Contents

3  Higher education

Higher education policy

48. The higher education sector makes a significant and increasing contribution to the Welsh economy. According to Higher Education Wales, for every £1 million invested in higher education in 2005/06, universities contributed £5.3 million to the Welsh economy.[83]

49. Many key higher education matters have been devolved. Under the Further and Higher Education Act 1992, separate funding councils were established for England, Wales and Scotland (and separate arrangements made for Northern Ireland). The Higher Education Funding Council for Wales (HEFCW) is now responsible for the administration of funds made available by the Welsh Assembly Government in support of the provision of higher education in Wales. Most higher education student support functions were devolved from what was then the Department of Education and Skills to the Assembly in 2006 via the Higher Education Act 2004. Some functions, such as the rules determining UK residency and home fee status, remain non-devolved.

50. The Department for Innovation, Universities and Skills is now responsible for higher education in England, and for science policy and the UK research councils throughout the UK. Higher education policy in England is currently under review. In a speech in February 2008, John Denham MP, Secretary of State for Innovation, Universities and Skills, announced a series of work streams to examine various aspects of higher education in England with a view to developing a ten to fifteen year framework for the expansion and development of higher education.[84] The commissioned contributions were published in November.[85] In April 2008, the Department for Innovation, Universities and Skills published Higher Education at Work—High Skills: High Value, a consultation document which described a strategy to achieve growth in high level skills in England, and in October it published its report on the consultation. The Department for Innovation, Universities and Skills also plans to conduct a review of undergraduate variable fees (as they apply in England) in 2009.

51. Wales has its own distinct approach to higher education. The Welsh Assembly Government's strategy for higher education, Reaching Higher, published in 2002, set out a vision to achieve a competitive and inclusive higher education sector by 2010, and described the steps to be taken to achieve that vision. It included proposals for greater collaboration between higher education institutions and, where appropriate, reconfiguring the sector so as to build on strengths and establish greater critical mass of activity in key areas such as research. The Assembly Government allocated additional funding to support this reconfiguration and collaboration,[86] and some developments have flowed from this, the largest of which was the merger between Cardiff University and the University of Wales College of Medicine. The Higher Education Act 2004 enabled the Welsh Assembly Government to set its own student support and tuition fee regime in Wales, and the then Assembly Minister for Education, Jane Davidson AM, invited Professor Teresa Rees to chair an independent study to offer advice on the most appropriate student support arrangements for Wales. The review team published a progress report in March 2005, setting out a number of options and the final report ('The Rees Report'), published in May 2005, contained a number of broad recommendations to "deliver a better funded HE system and a fair and flexible student support system".[87] It recommended the introduction of variable fees (as in England) with a National Bursary Scheme to help those in need of financial assistance (instead of a competitive bursary market as in England). However the system which was implemented, and which became operational in 2007 included a policy that all Welsh-domiciled students who studied at Welsh higher education institutions were entitled to a non-means tested, non-repayable fee grant (of up to £1,845 a year for 2007/08 and £1,890 a year for 2008/09). This policy was designed "to attract more Welsh domiciled students to study and remain in Wales".[88] The Assembly Government had committed itself in its Learning Country 2: Vision into Action document to increase the percentage of students enrolled at Welsh higher education institutions who are Welsh-domiciled from 60% to 70% by 2010, in order "to encourage more graduates to work in Wales".[89]

52. In June 2008, the Welsh Assembly Minister for Education, Jane Hutt announced a two stage review of higher education in Wales, in order to refresh the Reaching Higher strategy. She explained that the first stage (which concluded in September 2008) would focus on student financing arrangements in Wales, and the second stage (due to be completed by the end of February 2009) would review the mission, purpose and role for higher education in Wales.[90] In November 2008, she announced that the first stage report had concluded that the present system of student finance for full-time undergraduates was no longer the most effective nor the most sustainable option and she therefore proposed that a significant proportion of the resources currently devoted to the Tuition Fee Grant should be redirected to an enhanced system of Assembly Learning Grants. Changes would be phased in, beginning with new students from the start of the academic year 2010/2011. She added that the Assembly Government intended to consult upon three policy areas: support for students, tackling student debt and investing in higher education.[91]

53. Most aspects of higher education policy development are now devolved, and each of the four nations has distinctive approaches and priorities for its higher education sector. Nevertheless, the benefits to all of maintaining consistently high standards in higher education institutions throughout the UK and the existence of other common interests such as shared markets for staff and student recruitment mean that in practice there continues to be a high level of interdependency between the nations. The higher education sector in England is much larger than that in Wales, and whilst Wales has the powers to develop its own policies, it remains in a number of significant respects subject to the consequences of policy changes across the border in England.

Student access to cross-border higher education

54. The recruitment of full-time higher education students is managed via the UK-wide Universities and Colleges Admissions Service (UCAS). Applications from part-time and distance learning students are managed directly by the institutions. The Department for Children, Education, Lifelong Learning and Skills of the Welsh Assembly Government provided the following information about the numbers of students crossing the border between Wales and England to attend higher education institutions (HEIs):

Overall Wales is a net importer of full-time undergraduate students. In 2006/07 17,950 Welsh domiciled full-time undergraduates were enrolled at HEIs outside of Wales and 26,835 students from the rest of the UK were enrolled at Welsh HEIs - an overall difference of around 9,000 students. For full-time postgraduates, 1,945 Welsh domiciled students were studying outside of Wales while a similar number from the rest of the UK were studying in Wales.[92]

There was a total of 66,003 full-time undergraduate students enrolled in Welsh higher education institutions in 2006/07, including 2,295 from other EU countries and 3,796 from non-EU countries.[93]

55. It is clear then, that students from outside Wales make up a significant proportion of the total. HEFCW pointed out that in 2006/07, nearly 50% of full-time undergraduates at Welsh higher education institutions came from outside Wales.[94] Over half the full-time undergraduate students at Aberystwyth University and Cardiff University were from England (62% and 52% respectively). Higher Education Wales commented that "Clearly as a sector we are very dependent on attracting students from other parts of the United Kingdom and from the rest of the world".[95]

56. Cardiff University described the benefits to Wales brought by these students:

In addition to the 2,500 (approximately) international students from over 80 countries outside the EU, Cardiff University also recruits a significant number of students from across the border in England… These students bring financial benefits to the Welsh economy and friendships and networks can bear fruit in future years for the local economy in business partnerships and alumni suggesting or locating businesses in Wales or choosing to trade with Welsh partners.[96]

Higher Education Wales commented on the importance of cross-border activities for universities in Wales:

Many universities in Wales now recruit a third or more of their academic staff from beyond the UK. Global charities and foundations are increasingly important sources of research income. Multinational corporations are increasingly footloose when locating their global research and development centres. Universities have entered a new age in which cross-border activities are absolutely pivotal to their long term success. Universities in Wales have embraced this process and have welcomed the opportunities that cross-border working provides in helping to build a knowledge based economy in Wales.[97]

57. Recent research reports published by Universities UK have predicted how the size and shape of the higher education sector in the UK might be affected by demographic changes, and discussed how universities might respond to changing market conditions. One of its reports suggested that:

…Higher education faces significant demographic change over the next twenty years amongst the age groups from which it traditionally recruits full-time and part-time undergraduates. In particular the number of 18 to 20 year olds who make up over 70 per cent of entrants to full-time undergraduate programmes is projected to fall sharply from 2009 to 2019 before rising again up to 2027.[98]

Higher Education Wales noted that Wales's success in attracting students from across the rest of the UK and beyond will become increasingly important as the effects of this demographic change takes place and suggested that:

It is important to bear in mind the potentially negative consequences of policy measures to engineer a more insular Welsh undergraduate student market as this could lead to considerable difficulties in maintaining overall student numbers at universities in Wales.[99]

58. Higher Education Wales told us that there were some indications that the proportion of Welsh-domiciled full-time undergraduates at Welsh institutions had increased over the last three years, and that the proportion of English-domiciled students at Welsh institutions had decreased. It explained that some changes were to be expected following the introduction of variable top up fees in England in 2006/07 and in Wales in 2007/08, but that it was too early to be fully confident about trends.[100] HEFCW pointed out that the distinctiveness of Welsh higher education policy could be another factor behind any cross-border student application patterns.[101]

59. Harper Adams University College, a specialist higher education institution focusing on agriculture, land and food related studies, also expressed concern about the potential for differing fees policies to affect cross-border student applications. The College is located in England but close to the border with Wales. In 2006 and 2007, 10% of its students were Welsh-domiciled, but it stated that:

…we note that there are differences in the costs to students of studying in Wales relative to pursuing similar studies in England … Whilst we have not yet seen a reduction in our Welsh intake, we would be concerned were there to be any greater divergence in relative costs of study to students which could undermine recruitment in a strategic subject area within a major provider.[102]

60. Student flows from England to Wales are very significant for Welsh higher education institutions and for the Welsh economy. Although it appears that increasing numbers of Welsh-domiciled students are choosing to study in Wales, within the UK Wales has the highest proportion of full-time higher education students coming from outside the country. Policy decisions made in England which alter the pattern of student flows, whether as an intended or unintended consequence, could have a major impact on Wales. Similarly, decisions of the Welsh Assembly Government need to take account of the reality of choices made by would-be students and the health of Welsh higher education institutions.

Higher education funding

61. UK higher education and research funding is provided via the dual-support system. The first element is the Government's investment in teaching and research. The devolved administrations receive this funding from the Department for Innovation, Universities and Skills as a result of Barnett formula consequentials, related to the level of higher education spending in England. They are then free to decide how much of this investment to allocate to higher education, via their respective funding councils (HEFCW for Wales). The second element of the dual-support funding is provided on a UK-wide basis by the Department for Innovation, Universities and Skills via the research councils and bodies such as the Technology Strategy Board. Research councils set priorities and budgets under a framework set by the UK Government, and funding is provided through a competitive grant application process based on research excellence.

62. Witnesses told us that since devolution the different spending priorities of the Welsh Assembly Government and the Department for Innovation, Universities and Skills had led to the development of a significant difference between levels of funding for higher education in Wales and England. Higher Education Wales pointed out that whilst Scotland and England were pursuing a policy of investing in higher education, the Assembly Government had "chosen to freeze the HE unit of resource in real terms since 2001/02".[103] It went on to describe the extent of the issue:

The divergence in HE funding has led to the emergence of a growing investment gap between universities in Wales and those in Scotland and England. The size of the gap has grown to such an extent that it now represents 19% of total HE grant in Wales. An even larger investment gap exists between Wales and Scotland. A position of equal funding between the HE sectors in Wales and England in 2001/02 has rapidly deteriorated and developed into a substantial HE investment gap which totalled £61m in 2005/06 (the latest available figures) according to HEFCW statistics.[104]

63. Professor Teresa Rees described the dual funding system as "well respected". However she pointed out that many key decisions about higher education spend (such as pay and pensions) were made at a UK level, while universities' income and therefore capacity to meet the bills depended upon devolved funding decisions. She commented on the possible consequences of the funding gap:

We are already seeing the consequences of this gap in deteriorating spend per student in Welsh institutions … Infrastructure repair and new investment are first casualties. Difficulties in recruiting and retaining good staff are likely to follow. Universities in Wales are unlikely to be able to compete effectively.[105]

64. Other witnesses expressed similar concerns: Higher Education Wales stated that:

Such persistent underinvestment from the Assembly Government will significantly frustrate the ability of universities to create a knowledge economy at a time when Wales's economic performance is lagging well behind the rest of the UK.[106]

Cardiff University explained that:

HEIs in Wales are committed to helping Wales succeed in meeting the challenges of globalisation but, without a level playing field with England and Scotland, Welsh HEIs will lag behind their counterparts in the rest of the UK in contributing to the opportunities presented by globalisation.

The Assembly sets out ambitious goals and targets for the HE sector and it is questionable whether these can be met within current resources. In order to secure the sustainable growth and development essential to support Wales' needs, appropriate and sufficient resources must be made available to secure a vibrant and competitive HE sector able to compete with the very best in the UK and beyond.[107]

North East Wales Institute of Higher Education (now Glyndwr University) agreed, stating that:

Given that all HEIs are in competition, the comparatively lower level of funding given to Welsh HEIs disadvantages them in the market place. Welsh institutions are able to provide fewer resources per student, possibly resulting in equipment and buildings being of a lower standard.[108]

CBI Wales described the possible consequences for Welsh businesses and the Welsh economy:

A clear consequence of devolution is the possibility of divergent decisions on funding for higher education. However, we believe the current £61m investment gap between the Higher Education sector in Wales and England must be addressed. Higher Education is vital in supplying the economy with graduate and postgraduate skills and engaging in research and development partnerships with business. While HE is as yet performing well, Wales cannot hope to fully achieve a 'knowledge driven economy' with an underfunded HE sector. It is almost inevitable that underfunding will lead to Wales falling behind EU nations and greatly undermining this major driver to a knowledge economy. It will be extremely difficult to rectify this at a later stage. Action must be taken immediately.[109]

65. Differences in spending priorities between the governments in Wales and in England have led to a funding gap, estimated on 2005/06 figures to be £61 million, between the amount which the higher education sector in Wales receives compared to what it would receive if it were funded on the same basis as the higher education sector in England. Witnesses told us that if this funding disparity were to continue, the higher education sector in Wales would become unable to compete effectively with institutions in the UK and other European Union nations and that this would limit its ability to contribute to a growing economy in Wales.

Research funding

66. Universities in Wales have two sources of research funding under the dual support system; the Welsh Assembly Government (via HEFCW) and the Department for Innovation, Universities and Skills (primarily via the UK research councils). The HEFCW research funding, known as quality-related funding, is provided to support overheads, build capacity and to match-fund certain contracts rather than to support specific research projects. It is allocated to higher education institutions on a formula basis, weighted by research excellence. The Department for Innovation, Universities and Skills describes this quality-related funding as "core funding to support research infrastructure and build capacity for HEIs' own determined and blue skies research".[110] It stated that HEFCW quality-related funding for Welsh higher education institutions was £67.3 million in 2008/09.[111]


67. The other sources of research funding under the dual support system are the UK research councils. The Department for Innovation, Universities and Skills provides funding to the research councils through the science budget. Welsh universities can apply to the councils and compete with universities from across the UK for a share of the funding. Decisions about funding awards are made by the research councils, and the role of the Department is "to oversee the Research Councils in undertaking the funding of high quality research against the priorities agreed in each Council's Delivery Plan".[112] According to Research Councils UK, "the seven UK Research Councils are the largest public funders of research in the UK, investing over £3 billion per annum in research, training and knowledge transfer across a broad spectrum of research areas".[113]

68. In addition to funding research at higher education institutions, two research councils support their own research institutes in Wales.[114] The Biotechnology and Biological Sciences Research Council supports the Institute of Biological, Environmental and Rural Sciences which is part of Aberystwyth University, and the Natural Environment Research Council supports the British Geological Survey at Cardiff and the Centre for Ecology and Hydrology at Bangor. The budget for these institutes in 2006/07, as a proportion of the research councils' total UK spend on institutes for that year, was 5.8% and 2% respectively.[115] Research councils also fund postgraduates in universities, either through a block grant to the universities who allocate the individual grant or through competition for grants by individual students.[116]


69. Universities in Wales and the rest of the UK also secure research funding from other sources such as businesses, charities and international bodies. The Department for Innovation, Universities and Skills stated that universities in both England and Wales were actively involved in European Research initiatives and that they secured funding for European Union collaborative research with a range of partners in the UK and Europe.[117] Welsh higher education institutions won research grants of £121.3m in 2007/08 (of which £35m was awarded by the research councils). [118]

Research Capital Investment Fund

70. The Department for Innovation, Universities and Skills has UK-wide responsibility for the new Research Capital Investment Fund and the Technology Strategy Board. The Research Capital Investment Fund replaced the Science Research Investment Fund which was a temporary fund designed to reduce a backlog of underinvestment in research capital. The Department for Innovation, Universities and Skills described the Research Capital Investment Fund as "a permanent funding stream to provide ongoing funding for research capital."[119] It is allocated by formula, and is made up of a combination of funding from the Department's Science Budget across the UK, and funding from the separate higher education budgets (from the Welsh Assembly Government in the case of Welsh higher education institutions). According to the Department for Innovation, Universities and Skills, for the spending review period 2008-2011, the total budget from this fund for Welsh higher education institutions is £56.3m.[120]

Technology Strategy Board

71. The Technology Strategy Board was established in July 2007 and funds research and development in emerging areas of technology. It has a UK-wide remit and its budget for 2008/09 to 2010/11 is over £1 billion.[121] The Department for Innovation, Universities and Skills explained that the Board had established arrangements for liaison with the devolved administrations:

The Devolved Administrations are working with the Technology Strategy Board on a number of activities, including Knowledge Transfer Partnerships and jointly funded Collaborative R&D projects where the Devolved Administrations have, since 2004, provided over £6.7 million (Welsh Assembly Government £4.5m, Northern Ireland £1.8m, Scottish Government £0.4m) of funding. Work is underway to further strengthen the national-regional interface.

David Grant, Vice Chancellor of Cardiff University, is a member of the Technology Strategy Board's Governing Body and has a role of representing the Devolved Administrations.[122]

Professor Ian Diamond, Chair of the Executive Group of Research Councils UK commented that Welsh institutions were keen to engage with the Technology Strategy Board and its work,[123] and that the Technology Strategy Board was doing everything it could to engage with industry and with policy makers throughout the UK.[124]

Matched fundraising scheme

72. The Department for Innovation, Universities and Skills has responsibility for some research funding initiatives which only relate to England. In 2006 the UK Government announced that universities in England would benefit from a matched fundraising scheme under which donations to universities would be partly matched with funds from the Department for Innovation, Universities and Skills. Higher Education Wales pointed out that there was as yet no equivalent scheme in Wales, which could discourage potential donors from supporting Welsh higher education institutions:

The Assembly Government has yet to announce a similar matched fundraising scheme in Wales. … There are fears that charitable foundations or donors who may have considered giving to universities in Wales may not consider donating because their contribution would not be matched by government funds, whereas a donation in England would attract that support.[125]

73. The introduction of a matched fundraising scheme for universities in England, and the absence of any equivalent scheme in Wales, will inevitably increase the funding disparity between England and Wales and the advantages of such a strategy should be explored by the Welsh Assembly Government.

Health research funding

74. There are some sources of research funding specific to Wales. The Department for Children, Education, Lifelong Learning and Skills at the Welsh Assembly Government stated that the Health Department had its own research funding of £36.5m in 2007/08.[126] Witnesses suggested however, that this research funding was not readily accessible by higher education institutions. Professor Teresa Rees told us that there were "enormous difficulties in the research allocation which is in the NHS" and stated that "in Wales it is incredibly difficult to extract that budget from the NHS in Wales, frankly because the NHS in Wales is under-funded and it is needed to subsidise clinical practice".[127] In England, the NHS research budget is now the responsibility of the newly formed UK Office for the Strategic Coordination of Health Research, which has also assumed responsibility for the UK-wide former Medical Research Council. Higher Education Wales commented on this dual role:

Cross-border coordination of health research … is also vital for universities in Wales. …it is also important that the new UK Office for the Strategic Coordination of Health Research … takes the views and priorities of health researchers in Wales fully on board before recommending its strategic approach to clinical research across the UK.[128]

Professor Dylan Jones, Head of the School of Psychology, Cardiff University, described the combining of the Medical Research Council with the England-only National Institute for Health Research (NIHR) as "a cause for concern".[129] He stated that:

At present, funds that are derived from NIHR are not available to HEIs in Wales, and at present there is no equivalent or matching funding stream in the Welsh system. Not only does this mean Welsh HEIs cannot collaborate on NIHR-funded projects, but there is also a significant funding gap in the medical research arena in Wales.[130]

The Department for Children, Education, Lifelong Learning and Skills stated that the Assembly Government was planning to establish a National Institute of Health Research for Wales "to maximise impact of its research funding and help create synergies with other UK research funding bodies", but did not provide any further details as to whether or how this might be coordinated with equivalent bodies in England, or whether the funding would be available for research in higher education institutions, outside the NHS.[131]

75. Witnesses expressed concerns about the decision to merge the responsibilities of the Medical Research Council, which has a UK-wide remit, with the National Institute for Health Research, whose remit covers England only. We recommend that the newly formed UK Office for the Strategic Coordination of Health Research implements procedures to ensure that the views and priorities of health researchers in Wales are fully taken into account when considering its strategic approach to clinical research across the UK.

Funding to support collaboration

76. There is funding available in both Wales and England to support greater collaboration between higher education institutions, both within nations and across the border. The Department for Children, Education, Lifelong Learning and Skills told us about the support it provides for research collaboration between Welsh university departments and between Welsh and English universities:

In some areas, research collaboration between Welsh university departments has been strengthened through transitional support from a ring-fenced budget, Reaching Higher, which is provided to drive up performance in the Welsh HE sector. There are good signs that this reconfiguration agenda is successful, increasing capacity to win further funds. … Collaboration is also developing across-borders, such as between Cardiff and Bristol Universities. In some research areas, and especially in EU regional funding, it has also been possible to leverage additional business investment, therefore driving up the scale and likely economic impact of research.[132]

The Department for Innovation, Universities and Skills described a similar approach in England:

In February 2005 HEFCE announced specific funding to support innovative strategic research collaboration between HEIs where this was likely to improve strength, quality and responsiveness of the national research base; and where partners had a commitment to sustained strategically-driven collaboration. The funding aims to support innovative, leading-edge work that will carry forward work in the discipline(s) on the national or international scene. It supports collaboration by HEIs in England with other HEIs within the dual support system across the UK.[133]

This source of support for collaboration and for cross-border projects was welcomed by witnesses. Professor Teresa Rees commented that:

There is through HEFCW the research and collaboration fund and that has enabled quite a lot of joint research projects across the institutions in Wales, bringing strengths together. That has been excellent. One of our difficulties though has been … that our natural partner on some areas may be in fact be an institution in England … and I am very pleased that the two funding councils have now enabled us to apply jointly, together, for something that cuts across the border.[134]

77. Some witnesses suggested that it was difficult in practice to secure funding for cross-border projects. Cardiff University stated that there were "challenges in securing funding for such initiatives from the respective funding councils"[135] and the University of Wales Institute, Cardiff stated that Welsh higher education institutions were unable to participate in Centres of Knowledge Exchange projects which were supported by the English funding council.[136] The North East Wales Institute of Higher Education (now Glyndwr University) stated that the Research Councils and the Technology Strategy Board both invited UK-wide collaborative proposals and that it had participated in several bids and benefited from the cross-border expertise gained through conducting such research.[137] However, it also commented that HEFCW's funding to support collaboration and reconfiguration amongst Welsh institutions was less valuable to institutions close to the border, where collaboration would be more appropriate with English institutions, because of geographical proximity.[138]

78. HEFCW gave an assurance that the necessary arrangements for cross-border collaborations were now in place:

The two councils [HEFCW and HEFCE] are clear that, where a good case exists … there should be no impediment to joint funding. … There is well established custom and practice in these matters, so that usually the main focus of discussion is about the nature of activity and the deliverables sought, rather than about the partition of funding or the governance arrangements.[139]

79. We have been assured that the necessary arrangements are in place to enable the funding councils of Wales and England to support cross-border collaborative projects. We are supportive of such projects and believe that they could help foster better cross-border cooperation and as a consequence, potentially improved research funding in Wales. We recommend that the Department for Innovation, Universities and Skills and the Welsh Assembly Government monitor this issue so as to ensure that joint funding is provided to appropriate projects.


80. Research commissioned by Universities UK showed that the territorial allocation of research funding from all of the main sources (research councils, charities, industry and commerce and the EU) was not representative of the relative populations of the four nations. The research report stated that:

Scotland enjoys significantly more than its population share of research funding from all sources other than the EU, although on a proportional basis its share is now declining and England's is gaining. Moreover, as England continues to have a little under its population share of income from most sources, it appears that Scotland's strong position is largely at the expense of Wales and Northern Ireland, which receive significantly less than their population shares of research funding.[140]

81. HEFCW told us that there was "a well-established pattern" of Wales winning a lower share of research council income than might be expected from its relative size and stated that it was working with the research councils to address this issue by encouraging them to address meetings of senior university research leaders and managers and by seeking to foster better research performance within the sector.[141] Research Councils UK explained that for the financial year 2006/07:

…around 3% of funding to HEIs by the Research Councils was directed to Welsh HEIs, although there is considerable variation between Councils, with a range of 2-8%. For comparison, the proportion of UK academic staff employed by Welsh HEIs was around 5% in 2004/05 …[142]

82. The North East Wales Institute of Higher Education (now Glyndwr University) suggested that since there were no Welsh-based representatives on the councils of several of the Research Councils, there might be "a lack of a Welsh voice steering the work of these organisations which fund a large proportion of the fundamental research undertaken in the UK".[143] Professor David Worsely, Swansea University, noted that there had been no Welsh representatives on the research council panel which turned down his bid for an industrial doctorate centre in the Engineering School at Swansea University.[144] However, the Department for Children, Education, Lifelong Learning and Skills told us that there was "active participation by researchers from Welsh HEIs within each of the Research Councils" and that "appropriately qualified individuals from Welsh HEIs are encouraged to engage with the Research Councils, including involvement in peer review panels".[145] Both the Welsh Assembly Government and Research Councils UK confirmed that there were formal Memoranda of Understanding and clear channels of communication between the research councils and relevant bodies in Wales.[146] [147]

83. However, witnesses also suggested that Welsh higher education institutions would continue to encounter difficulties in securing research funding because of the lower levels of infrastructure investment in Wales. Professor Gummett, Chief Executive of HEFCW stated that:

…it would be better, given that we are running from behind and therefore as always when trying to catch up having to run faster, if we could inject a bit more pace into that process by investing in more staff in key research areas…. That requires additional funding.[148]

Professor Teresa Rees expressed support for the way in which research councils operated,[149] and agreed that it was the funding gap which made it difficult for Welsh higher education institutions to prepare sufficiently competitive research bids:

I have served on research councils myself and I am very confident that they are fair and they follow excellence, but the difference with the funding gap … of £61 million is that academics in Welsh institutions are going to have less time to develop research skills, put bids together, go to conferences and all of that, that is the issue.[150]

CBI Wales agreed with this view, stating that "because awards by funding councils are done on a competitive basis and if you are less able to invest in your research capability because of the core under-funding then you are probably going to be in a poorer position to compete for further funding council bids".[151]

84. Witnesses suggested that collaboration between higher education institutions was a key route to making stronger research bids and to securing more research investment. Professor Ian Diamond, Chair of the Executive Group of Research Councils UK told us that:

… there is an enormous need … for collaboration across institutions so that the very best researchers do not need to have the very best equipment, for example, in their own institution, but they can work together across institutions to establish that. That does not say that you need one research institution; it does say that you need collaboration and partnership, which goes across institutions, and may indeed cross institutions outside Wales into the rest of the United Kingdom, or indeed internationally so that the very best scholars feel that they can pursue their research in entirely the best way within Wales.[152]

Higher Education Wales advised us that higher education institutions in Wales were collaborating with each other in order to produce stronger bids:

That is the key to it because many of our science departments are a bit on the small side, even within each institution, but if you put them together with other institutions they become very significant.[153]

85. Universities UK suggested that the research councils' criterion of excellence created a trend for funds to move increasingly toward already-successful institutions:

A policy that has research excellence as the sole criterion for their allocation will have the effect, over time, of rewarding the already-successful and diverting funds away from those who have potential but who may not have demonstrated success in the past.[154]

Universities UK also pointed out that whilst the use of the criterion of excellence was "understandable" and "laudable" in order to maintain standards of high-quality research, it took no account of the significant economic impact on the regions and localities where that public money was spent.[155] An illustration of this was provided by Professor Worsley, Swansea University. He pointed out that the rejection by the Engineering and Physical Sciences Research Council of his Department's research bid to continue with its engineering doctorate in steel technology programme would have significant economic implications for Wales:

The disinvestment in Wales is significant. The EngD and MRes schemes represent an annual Research Council income to Welsh HEIs of around £1.4 million which is matched by industry and is critically the catalyst for far more value added research activity in the various clusters at the partner HEIs. In addition, for the longer term, the fall off in talented high calibre researchers entering Welsh Industry will have a negative economic impact. With an upcoming period of recession, increasing global output of materials and the noted skills shortages in the UK this could make the industry sectors very vulnerable since innovation and product differentiation will be the success measures for a sustainable manufacturing sector in Wales.[156]

Universities UK suggested that funds should be made available to provide opportunities for institutions with new potential which might not be able to demonstrate past success and to stimulate economic growth where it was most needed:

Given the economic impact of research spending, and the significantly lower Gross Value Added of Wales and Northern Ireland than the UK average, the question of whether additional funds should be made available from UK sources to support the development of research capacity in the devolved territories needs to be considered. Such funds could take the form of an allocation from the UK to support research capacity generally, or specific funds within the budget of each of the research councils.[157]

86. It is clear that the higher education sector in Wales receives a smaller share of UK research funding than would be expected from its relative size. Witnesses have suggested various explanations for this, including the possibility that the lower level of higher education infrastructure investment in Wales is compromising the quality of research bids; the fact that there is a greater proportion of smaller institutions in Wales; the possibility that Welsh interests are inadequately represented when selecting successful research bids; and the possibility that current systems for awarding funding favour established institutions with a proven track record rather than ones with future potential.

87. Research investment brings significant economic benefits to the surrounding localities. Higher education institutions in Wales will be disadvantaged if the funding gap continues to grow, which will make it increasingly difficult for them to compete on an equal basis with English institutions for research funding, with the prospect of a downward spiral developing. This would have a significant and negative impact on the economy of Wales. We believe that the UK-wide distribution of research funding by the Department for Innovation, Universities and Skills should take account of the relative needs of different parts of the UK for such economic investment. However, it must be acknowledged that it will be harder to attract research funding if the funding gap referred to in paragraph 65 continues. We recommend that the Department prepares and publishes a report on the varying levels of research investment across the different nations and regions of the UK, together with an explanation of the variation and steps which could be taken to achieve a more equitable distribution, giving consideration to each of the factors listed in paragraph 86 above.

88. We believe that research councils should not just follow excellence, but must also foster it. Higher education funding should not be based on a winner takes all model. We support the suggestion of Universities UK that, given the economic impact of research spending, funds should be made available at a UK level to support the development of research capacity in economically deprived areas of the four nations. We recommend that the Department for Innovation, Universities and Skills makes available a specific allocation of research funds to develop the research capacity of higher education institutions outside the established elite to enable them to gain a track record of success and so be able to compete more effectively for research funds from other sources.

Policy consultation and coordination


89. Responsibility for higher education policy is now largely devolved, and each of the four nations has developed its own distinct approach. However, the Department for Innovation, Universities and Skills retains UK-wide responsibility for some aspects, and there is a need for it in those instances to consider the interests and policies of each of the four nations. This is not always a straightforward matter. In a recent report, Universities UK commented that "Devolution has created a range of anomalies, discrepancies and complexities in almost every sector".[158]

90. Witnesses expressed concerns about the extent and effectiveness of consultation and coordination between the Department for Innovation, Universities and Skills and the Welsh Assembly Government, and about the potential for confusion to arise because some of the Department's higher education responsibilities were UK-wide and others related only to England. Professor Gummett, Chief Executive of HEFCW told us that he was concerned about the number of Government documents which appeared to show "insufficient awareness of differences across the UK". [159] HEFCW noted that there was a risk that "the desire for greater strategic coherence might take insufficient account of the diversity of agendas across the UK, and so result in too England-oriented a focus for the UK-facing aspects of the work of DIUS".[160] Higher Education Wales agreed, stating that:

…there appears to have been a culture in some Whitehall departments that aspects of HE policy which are legally devolved but have an essential UK dimension do not require consultation with the devolved administrations. For example, there has been a recent tendency by the UK Government to take unilateral decisions in relation to research assessment policy, which though devolved, can only be organised on a UK basis to be effective.[161]

Aberystwyth University commented that it was often necessary to remind UK-wide agencies "that research funding is indeed UK-wide and that Wales should be given the opportunity to compete for a share of the available funding".[162]

91. Universities UK noted in its report on higher education and devolution that the devolved departments and funding bodies were members of the Funders Forum, which was now under the remit of the Department for Innovation, Universities and Skills, but that although its meetings provided an opportunity for networking and discussions, it was not a decision making forum. It concluded that the remit of the Forum was limited, and that "The devolved departments or funding bodies find it hard to point to tangible outcomes in which they have been able to exercise influence through the forum to the benefit of their country or region".[163]

92. We were told that there were a number of communication mechanisms in place between the Department for Innovation, Universities and Skills and the devolved administrations. Bill Rammell MP, Minister of State, Department for Innovation, Universities and Skills, explained that his Department's officials held a series of quadrilateral meetings with the devolved administrations which took place three times a year.[164] We were also told that the UK Funders Forum met quarterly "to share and agree strategies for ensuring the sustainability of the research base" and that it included representatives from the devolved administrations.[165] HEFCW told us that the funding councils sought to inform one another about locally distinctive aspects of higher education policy, "doing so via cross-observer status on each other's boards, twice-yearly meetings between their chairs and chief executives and regular dialogue between officers".[166] HEFCW explained that informal dialogue also took place between the English and Welsh funding councils from time to time, for example concerning potential cross-border collaborative activity between institutions.[167] The Welsh Assembly Government's Department of Children, Education, Lifelong Learning and Skills stated that it had been "mindful to the cross-border implications" of its further and higher education policies and had "engaged in coordination and communication activities across its policies".[168] It added that higher education student finance was coordinated via policy quadrilateral meetings which took place at least three times a year and, within Wales, via a student finance Wales consultative group which met on an ad hoc basis.[169]

93. Whilst there are undoubtedly a number of communications mechanisms in place between the Department for Innovation, Universities and Skills and the Welsh Assembly Government, it is clear that these have not been sufficiently effective. We fear that the liaison between the two departments is of a formal nature only and steps need to be taken to create a relationship which develops into a true partnership. We heard evidence of instances where UK policy had been developed with little attention given to Welsh issues, and of policy developed for England without consideration of the impact it would have on Wales and vice versa. We look to the Wales Office to improve communications and ensure that they are fit for purpose. There should also be better liaison between the Wales Office, the Welsh Assembly Government and HEFCW.


94. Other matters described by witnesses related to particular policy areas where more effective UK-wide coordination would benefit both Wales and England. For example witnesses raised the potential for confusion over responsibility for science policy. Whilst science policy is a UK Government responsibility, the Welsh Assembly Government funds research conducted in science departments in Welsh universities through HEFCW's quality related grants. The Welsh Assembly Government published in 2006 its own strategic document, A Science Policy for Wales, which set out key priority areas for science research in Wales, although it has not provided specific additional funding to support the implementation of the strategy.[170] The Welsh Assembly Government's First Minister, Rhodri Morgan, AM told us that:

…science policy is, in principle, not devolved, but that does not mean, because of its importance for climate change or for higher education or for economic development, that we do not have a pretty strong input into making our own science policy and devising how to make sure that is properly done.[171]

Higher Education Wales suggested that there was scope for greater collaboration and investment with regard to science policy:

… the Welsh Assembly Government should be working closely with DIUS to explore the potential for a joint WAG/DIUS science investment fund and/or the location of a DIUS 'strategic science site' in Wales (as has been developed in the North West and in Oxfordshire). HEW does not believe that sufficient policy collaboration in this area of cross-border policy responsibility is occurring between WAG and DIUS, despite the recent appointment of an (interim and part time) Assembly Chief Scientific Officer.[172]

95. Bill Rammell MP, Minister of State, Department for Innovation, Universities and Skills, remained convinced that since science policy was clearly a reserved matter, there was no need for further clarification. He told us that:

I believe it is because of the importance of a joined up approach to science funding that science is a reserved matter. I am clear that when the Government sets out science policy it does so in view of the UK as a whole. A key foundation of the policy is the Science and Innovation Investment Framework 2004-2014. The allocation of the Science Budget for the CSR2007 period clearly and repeatedly emphasises the UK-wide nature of science spending. Against that background, I see no need for a national debate at this time.[173]

The Secretary of State for Innovation, Universities and Skills told us that he "would not want to raise expectations of a DIUS "strategic science" fund or site in Wales" and that his Department's policy for science and research funding was "to fund the best science wherever it occurs in the UK, not to aim for a particular national spread of research investment."[174]

96. The Department for Innovation, Universities and Skills is responsible for science policy throughout the UK and must ensure that all of the four nations benefit from its science investments. The Welsh Assembly Government has defined its own science priorities for Wales but has provided no specific additional funding to pursue these aims. There is a clear risk that neither body will give sufficient priority to science investment in Wales, despite the obvious benefits to the economy there. We recommend that the Department for Innovation, Universities and Skills explores with the Welsh Assembly Government the potential for a joint science investment fund or a joint strategic science site in Wales.


97. A key issue raised by witnesses was the apparent lack of coordination between the Department for Innovation, Universities and Skills and the Welsh Assembly Government with regard to the development of higher education policy, given that each has separately initiated reviews of higher education policy this year. In November, the Department for Innovation, Universities and Skills published nine contributions which it had received to date regarding different aspects of its higher education review, most of which appeared to relate to the UK rather than solely to England.[175] Witnesses pointed out in particular the impact which the English review might have on the Welsh higher education sector, and questioned whether appropriate consultation mechanisms had been put in place to consider possible impacts on Wales before making policy decisions. Higher Education Wales stated that:

The result of a wholesale review of Higher Education in England announced by the DIUS Secretary of State, John Denham, in February 2008 will doubtless have a huge cross-border impact on Welsh universities. With ten major strands of work covering all aspects of HE, the DIUS review is both in-depth and wide ranging. Without proper input from the devolved administrations there is a danger that the DIUS review of HE in England may stray into areas of UK competence.[176]

98. Professor Merfyn Jones, the then Chair of Higher Education Wales, told us that his organisation would "certainly be inputting into the discussion directly through Universities UK" but that there would also need to be "an engagement between the Welsh Assembly Government and DIUS".[177] Ms Wilkinson, Director, Higher Education Wales told us in June that her organisation was not aware of any specific engagement between the Welsh Assembly Government and the Department for Innovation, Universities and Skills and that it was not clear how the English work might inform the Assembly Government's own review.[178] The First Minister told us that he had asked for "a very early sight of and a very early discussion on what you are thinking of doing in England" because it could have a very significant effect on "the viability of the Universities' cross-border flows of students".[179]

99. The Minister of State at the Department for Innovation, Universities and Skills, stated that part of the work of his Department's review would be to look at the effect of the first three years of variable tuition fees within England and that as part of that the review team would want to look at the effect so far on the devolved administrations. He commented that "What we need to ensure is that each of us is aware of the decisions that the other is taking and the impact of those".[180] With regard to the Welsh Assembly Government's review of higher education he stated that:

What the Welsh Assembly Government does with its system is a matter for it. I am more than happy however, either at ministerial level or at official level, to talk about our system and the way that, frankly, since the introduction for example of variable fees the system is working well …[181]

100. However, Professor Teresa Rees suggested that merely seeking better communication between the reviews in Wales and England was insufficient,[182] and that what was really required was "more strategic thinking"[183] and a coordinated UK approach:

I think it is a strange place to start to look at the expansion of higher education in just one of the countries …[184]

…there are responsibilities at UK level for higher education and if you are making a decision about expanding the sector then it is very strange to do that in just one country… why not discuss the issue with the other ministers for higher education and say should we do this at a UK level?[185]

101. The higher education sector in Wales is less than a tenth the size of England's. According to Universities UK, in August 2008 there were 12 higher education institutions and 66,055 full-time undergraduate students in Wales compared to 133 higher education institutions and 985,810 full-time undergraduates in England.[186] Professor Rees explained that given the relative sizes of the higher education sectors in Wales and England, decisions in England inevitably had a significant impact on the Welsh sector:

The cross-border flows are terribly sensitive and if you have a policy on one side of the border —and it would be England because it is so much bigger—that can have an incredible effect in Wales … any tinkering with policies can either bankrupt three Welsh institutions or make it very difficult for access students in Wales to compete with very highly qualified students coming across the border from England. I think, therefore, that it is the responsibility of the ministers for education in the four countries to think about these issues from a UK perspective. It does not mean that higher education should not be devolved, but you cannot have one country making a decision, particularly England, and saying "You can do what you like in the other countries" because that decision affects the other countries and in particular Wales.[187]

Higher Education Wales agreed, stating that:

Because we are part of a UK system of higher education, and that is the way … we are perceived globally, if there are major changes … either in policy or in funding in England, then that will have a profound impact on our competitive position in Wales.[188]

102. Professor Charlie Jeffrey, University of Edinburgh, when describing some of the findings of his research programme on devolution and constitutional change, observed that the UK had a structure of devolution which was "unusually open to far-reaching policy variation and lacks the mechanisms employed elsewhere to balance divergent territorial preferences with overarching state-wide concerns".[189] With regard to mechanisms for cross-border coordination, he concluded that:

The UK's system of post-devolution intergovernmental relations is extraordinarily underdeveloped. It would be difficult to assess it as fit for purpose. The UK does have codified arrangements—but these in most cases are not used. Intergovernmental relations instead work typically through ad hoc, case-by-case interactions among different and changing groups of officials.[190]

Universities UK came to a similar view:

The UK government's policymaking process often considers devolved concerns late, or not at all and liaison remains undeveloped. Greater clarity in the UK Government about devolved and non-devolved matters is needed, with more systematic liaison and recognition of the impact of the financial systems and the anomalies they can create.[191]

103. Higher Education Wales noted that although the three higher education funding councils met regularly and frequently, it was unaware of formal regular and frequent meetings of senior higher education officials in the Department for Innovation, Universities and Skills, the Welsh Assembly Government and the Scottish Government at which emerging policy developments in the three home nations could be systematically discussed.[192] Higher Education Wales suggested that "Direct discussion between the four Higher Education Ministers is … a key priority to ensure a basic level of policy coordination" and suggested that the coordination of higher education policy across the UK should be a top priority for the Joint Ministerial Committee over the next 18 months.[193]

104. The Minister of State at the Department for Innovation, Universities and Skills, told us that there was already "a good deal of communication" between officials in his Department and those in the devolved administrations.[194] However, he agreed that there might be scope for more formalised Ministerial discussions and stated that he was considering the possibility of establishing formal bi-annual meetings with counterparts in Wales, Scotland and Northern Ireland to discuss aspects of further education, higher education and research policy.[195] He conceded that:

… in addition to official level contacts, I agree that there may be scope for more formalised Ministerial discussions. I suggested in my oral evidence that I should add formal bi-annual meetings with the Welsh Assembly Government to existing contacts. I can see a benefit in also exploring this idea with counterparts in Scotland and Northern Ireland, and will put a proposal to them after the recess. I believe a targeted ministerial meeting covering aspects of FE, HE and Research Policy would be a more appropriate mechanism than using the Joint Ministerial Committee, which I do not believe is the appropriate forum for seeing consensus or making agreements on policies.[196]

The Minister also accepted that greater transparency about meetings being held between the devolved administrations and UK ministers, and the subject matter of those meetings, could be beneficial, provided that it did not inhibit more ad hoc liaison.[197] In order to encourage better joint working, we suggest a greater use of secondments between the two government departments as well as between funding bodies on both sides of the border.

105. Some of the responsibilities of the Department for Innovation, Universities and Skills are UK-wide and others relate only to England. Our evidence suggests that this situation has given rise to confusion, both within and outside the Department. Welsh interests are not being adequately taken into account when formulating UK policy, and UK policies are overly based on English interests. We recommend that the Department for Innovation, Universities and Skills establishes processes to ensure that the territorial extent of any policy is clearly identified and communicated by officials before any developments to it are proposed and that this should be done in consultation with the Wales Office and the Welsh Assembly Government.

106. With regard to the development of higher education policy, we were told that there are a number of opportunities for officials of all administrations to meet and share information, but there appears to be no framework to ensure that future strategy is developed with due regard to the interdependencies of the higher education sectors of the four nations. We saw no evidence of any clear process for considering the implications for the devolved administrations before decisions about policies for England were made. Because of its relative size, changes to the higher education sector in England will inevitably have an impact throughout the rest of the UK. Policy decisions must be taken in the knowledge of the likely consequences on both sides of the border. We recommend that the Department ensures that the devolved administrations are fully consulted before any further decisions are made with regard to future higher education policy in England, and that any future reviews routinely include this type of consultation as a matter of course. We look to the Wales Office to ensure that this happens.

107. Occasional and ad hoc meetings serve a useful purpose in exchanging information about current issues, but there is also a need to establish better protocols and relationships to ensure that the Government's policymaking process routinely considers devolved interests at an early stage. We recommend that until any alternative structure is put in place, the coordination of higher education policy should be a top priority for the Joint Ministerial Committee, and that information about its discussions is made publicly available.

83   Ev 150 Back

84  Back

85  Back

86   Ev 192 Back

87   Fair and Flexible Funding: A Welsh Model to Promote Quality and Access in Higher Education, Final Report of an Independent Study into the Devolution of the Student Support System and Tuition Fee Regime in Wales (The Rees Review), May 2005, p.18 Back

88   Ev 189 Back

89   Learning Country 2: Vision into Action, Welsh Assembly Government, Department for Education, Lifelong Learning and Skills, April 2006, p 53 Back

90   Welsh Assembly Government, 25 June 2008 Back

91   Statement by the Welsh Assembly Government, 25 November 2008, Higher Education, Jane Hutt, Minister for Children, Education, Lifelong Learning and Skills. Back

92   Ev 187 Back

93   HESA Student Record 2006/07 Back

94   Ev 146 Back

95   Q 762 Back

96   Ev 114 Back

97   Ev 150 Back

98   The future size and shape of the higher education sector in the UK: threats and opportunities, Universities UK, July 2008, p.6 Back

99   Ev 153 Back

100   Ev 146 Back

101   Ev 147 Back

102   Ev 165 Back

103   Ev 153 Back

104   Ev 154 Back

105   Ev 171 Back

106   Ev 154 Back

107   Ev 113 Back

108   Ev 182 Back

109   Ev 117 Back

110   Ev 127 Back

111   Ev 127 Back

112   Ev 127 Back

113   Ev 173 Back

114   Ev 178 Back

115   Ev 179 Back

116   Ev 128 Back

117   Ev 128 Back

118   Ev 190 Back

119   Ev 128 Back

120   Ev 128 Back

121   Ev 191 Back

122   Ev 129 Back

123   Q 885 Back

124   Q 886 Back

125   Ev 154 Back

126   Ev 191 Back

127   Q 967 Back

128   Ev 152 Back

129   Ev 164 Back

130   Ev 164 Back

131   Ev 191 Back

132   Ev 191 Back

133   Ev 128 Back

134   Q 952 Back

135   Ev 115 Back

136   Ev 185 Back

137   Ev 181 Back

138   Ev 182 Back

139   Ev 148 Back

140   Devolution and higher education, Universities UK, December 2008, p.28 Back

141   Ev 149 Back

142   Ev 173 Back

143   Ev 182 Back

144   Ev 183 Back

145   Ev 191 Back

146   Ev 191 Back

147   Ev 179 Back

148   Qq 777, 778 Back

149   Q 967 Back

150   Q 973 Back

151   Q1020 Back

152   Q 881 Back

153   Q 758 Back

154   Devolution and higher education, Universities UK, December 2008, p 32 Back

155   Ibid Back

156   Ev 184 Back

157   Devolution and higher education, Universities UK, December 2008,p32 Back

158   Devolution and higher education, Universities UK, December 2008, p5 Back

159   Q 797 Back

160   Ev 149 Back

161   Ev 151 Back

162   Ev 75 Back

163   Devolution and higher education, Universities UK, December 2008, p.31 Back

164   Q 908 Back

165   Ev 128 Back

166   Ev 148 Back

167   Ev 148 Back

168   Ev 196 Back

169   Ev 189 Back

170   Ev 151 Back

171   Uncorrected transcript of oral evidence taken before the Welsh Affairs Committee on 12 June 2008 (Hc 401-vii, Session2007-08) Q605. Corrected version to be printed with the Committee's Report on the provision of cross-border health services for Wales. Back

172   Ev 152 Back

173   Ev 135 Back

174   Ev 197 Back

175 Back

176   Ev 154 Back

177   Q 742 Back

178   Q 746 Back

179   Q 602 Back

180   Q 929 Back

181   Q 930 Back

182   Q 948 Back

183   Q 948 Back

184   Q 978 Back

185   Q 979 Back

186   Higher Education in Facts and Figures, Universities UK, Summer 2008 Back

187   Q 968 Back

188   Q 743 Back

189   Ev 198 Back

190   Ev 198 Back

191   Devolution and higher education, Universities UK, December 2008, p8 Back

192   Ev 154 Back

193   Ev 155 Back

194   Ev 135 Back

195   Ev 135 Back

196   Ev 135 Back

197   Q 910 Back

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