Universities must get more funds

Apr 23 2008 by David Rosser, Western Mail

A REPORT released yesterday by the Higher Education Funding Council for Wales, an Assembly body, shows that universities in Wales receive £61m less in public funding than they would receive under the system which operates in England, equal to 20% of their grant.

And it also reported that this gap is growing, up from £40m the previous year. The settlement for Welsh HE funding in the recent comprehensive spending review is lower than that for England and Scotland, so this trend is likely to continue without a change of policy.

The Welsh decision to invest less into its university sector, compared to England, is an interesting contrast to Scotland, which over-invests by an estimated £150m.

The universities are understandably concerned by this differential and join the list of sectors in Wales which look enviously across the border. The question is – does this matter in the long term?

So far, Welsh universities seem to have coped well with the financial situation. The student experience has not obviously suffered and recruitment has held up, though a recent fall in the numbers of English students applying to study in Wales must not be allowed to develop into a trend.

And Wales’ universities have performed well in encouraging spin-out companies and increased their research income. But a study tour of campuses in Wales and the rest of the UK will rapidly demonstrate the differing level of investment in infrastructure that is taking place.

There is the sense that other regions are poised to motor ahead of us. Scotland already wins a higher share of research income than its weight in higher education suggests it should.

It is winning grants from EU research bodies, US foundations as well as the UK research councils, and seems to be repaying the investment that the Scottish executive has made in the sector.

Scotland has 34% of its population with higher level skills, foundation degree or above, compared to 26% in Wales.

All studies show that higher skill level jobs are being created more rapidly than those requiring lower skills, and the forecasts are that this rate of change will accelerate. Widening access, reaching out to and supporting students from poorer backgrounds to study, is notoriously expensive and the investment in Scotland has allowed them to make some progress in this objective.

And most economic commentators and public policymakers agree that economic development needs to be based on a more knowledge-driven economy than in past years. The examples of successful businesses given by Michael Moritz, the Cardiff-born Silicon Valley venture capitalist, in his talk in Cardiff last year all started with technology-based universities.

The notion of Wales as an aspirant “small, clever country” is one which is repeated frequently. Yet currently Wales languishes at the bottom of the UK regional R&D tables.

Without adequate funding it is difficult to see how Welsh universities can continue to invest in infrastructure to support world-class teaching and research, especially into the physical sciences. They need to compete for the best research teams, who demand the best facilities.

But those researchers will attract income into Wales, from the international public and private sectors, and create an environment where businesses can cluster and new companies can be created.

And better facilities, and greater capacity, will allow institutions to continue their mission of supporting our existing company base.

Welsh universities have proved they are perfectly capable of competing with the best – IBM investing in Swansea and Cardiff University winning a Nobel Prize are evidence. But currently they are fighting with one hand tied behind their back. Here we have some excellence in which we could invest.

The Assembly Government has diverted some of the cash it might otherwise have spent on our universities by putting it into the pockets of students, through the grant used to offset the top-up fees that were introduced recently. This is a good example of one of the consistent themes of the Assembly Government in recent years, which it refers to as universalism.

Widening the opportunities for all, by reducing the cost of accessing a service, in this case higher education, while reducing the support for the provision of the service itself – funding universities. Other examples might be spending some of the transport budget on free bus passes, rather than running more buses, or more recently, taking some of the health budget and spending it on free car parking rather than the actual provision of healthcare.

For many people this will be a key to enhancing social justice, others see it as economically wasteful – subsidising services that most people would have bought at the higher price. Rhodri Morgan last week robustly defended this policy but there is a danger that in a climate of constrained finances, it produces mediocrity rather than excellence.

By most measures Wales has traditionally enjoyed excellence in its university sector. At a time when most countries see their economic future as being more closely tied to higher education than in the past, now is not the time to be throwing this away.

David Rosser is director of the CBI in Wales