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Muddied red water

Colin Riordan argues that England shouldn’t look to Wales for higher education funding solutions

Way back in December 2002, Wales’s then first minister, Rhodri Morgan, delivered a seminal speech on public services. In it he coined the soundbite Clear Red Water, setting Wales on a distinctive policy path.

In higher education terms, successive Welsh governments have steered a different path and have not been shy to trumpet Wales as the most generous student support system anywhere in the UK—so much so that Labour policymakers at the other end of the M4 are looking to Wales for possible solutions.

In recent weeks, Wales has once again displayed its progressive credentials by sticking to the 30-year repayment window for tuition fees and raising the maintenance grant in line with inflation, in stark contrast to the position in England.

But this doesn’t tell the whole story. While progressive for students, it’s proved less helpful for Welsh university budgets, which arguably bear the real cost of this policy direction.

Whether you’re in Bath or Bangor, Cardiff or Cambridge, Aberystwyth or Aston, tuition fees are failing to deliver the income needed to keep pace with ever-increasing demands.

Unsustainable model

It has been clear for some time that the higher education funding model at both the UK and Welsh sector level is unsustainable. Using international student fees to support home student fees and subsidise research is the reality of how Welsh universities are now forced to operate.

Our own estimates show that without further funding it is likely that Cardiff University will be forced to reduce the size, scope and quality of its operations over the next few financial years if significant deficits are to be avoided. Wales can ill afford for its only Russell Group university to be forced into such a parlous position.

A similar picture is likely to be the case across the Welsh sector. If anything, Cardiff may be in a better position than the other Welsh universities given our scale and proportion of international fee payers.

Rocketing energy prices and inflation, increased salary ambitions and pension contributions, growing student expectations and, most importantly, the reduced value of the home fees cap are also beginning to bite, and bite hard on universities’ finances.

Figures calculated by colleagues from Cardiff University’s Wales Fiscal Analysis (WFA) programme suggest that, had Welsh fees increased with inflation, the £9,000 home tuition fee (compared to £9,250 in England) for the academic year 2022-23 would have increased to almost £11,000.

In real terms, tuition fees in Wales have decreased by 17.4 per cent—and these calculations do not reflect more recent levels of inflation.

In the period October 2012 (when the tuition fee cap was raised to £9,000) to October 2022, the Consumer Prices Index rose by some 30 per cent. If we had increased tuition fees by the same amount, then the home tuition fee in Wales would now be £11,709.

If you add into the mix that Welsh universities were more heavily dependent on EU structural funds than other universities elsewhere in the UK, the picture is even worse. Jobs are already being lost as structural funds disappear.

The lessons from Wales for England’s new path are certainly not clear.

Unpalatable increase

However, one thing we do know is that any move to increase tuition fees is politically unpalatable.

Only last week Wales’s education minister, Jeremy Miles made it clear that he has no ‘intention of making students pay more’ with little evidence he’s looking seriously at addressing the financial challenges Welsh universities are facing.

Sir Keir Starmer’s Liberal Democrat-esque U-turn on abolishing tuition fees shows just how hot a political potato tuition fee policy remains with a UK general election just around the corner.

Cast your memories back to Theresa May’s time in office and the Augar review, intended to provide solutions to the tuition fee conundrum.

While full of policy changes and suggestions, it shied away from the central problem by freezing fees at £9,250. Politically palatable to middle England it may have been, but once again universities were left with little clarity about their financial future.

In the absence of any increase in domestic fees in Wales or increased funding from the Welsh government to meet the real shortfalls, we will continue to see a deterioration in the sustainability of institutions. Relying so heavily on international student fees is a risky strategy, and arguably difficult to defend in moral terms.

Radical options

So the answer to the question, what lessons can Wales teach England, is a tricky one, with no clear red water on offer.

What we do know is that policymakers—whether they’re in Cardiff Bay or Westminster—have to grasp the nettle and come up with a more sustainable approach to funding higher education that is fair and affordable for students and the taxpayer and protects the pipeline of skills to support innovation and economic growth.

Otherwise, more radical options may need to be considered. Capping home students but funding them properly, increasing international students at the expense of home students, cutting staff or areas of research activity could be among some of the more painful ways of balancing the books.

Sadly, the clear red water that Rhodri Morgan set out in his speech more than two decades ago is not much in evidence as far as higher education policy is concerned.

Until political parties—regardless of country and standpoint—provide a sustainable solution for university funding, it’s students and staff who will bear the consequences of inertia on both sides of Offa’s Dyke.

Colin Riordan is president and vice-chancellor of Cardiff University