We've received apologies for absence from Suzy Davies, and I'm very pleased to welcome Angela Burns, who is substituting for Suzy this morning. Can I also welcome Siân Gwenllian to the meeting? Siân is joining us from her constituency office via video-conference. I'm currently registered as an associate lecturer at Cardiff Metropolitan University, although I haven't done any work for them for some time. We'll move on, then, to item 2 this morning, which is our evidence session on the higher education new academic year allocations. I'm very pleased to welcome David Blaney, who is chief executive of the Higher Education Funding Council for Wales, and Bethan Owen, who is deputy chief executive of HEFCW. If you're happy, we'll go straight into questions from Members, and the first questions are from Angela Burns. I just wanted to talk about, really, the financial sustainability of the higher education sector because, as we know, there's been all sorts of things going on in the press. So, can I just start with, actually, quite a technical question and ask you what the financial indicators look like for the universities here in Wales, and are there particular indicators that are really flashing warning signals to you? dr david blaney: Well, shall I just start with a couple of contextualising comments and Bethan can come in then with some detail? It's undeniably the case there are financial challenges facing our universities. They result from three main causes: one is the impact of the demographic dip of 18-year-olds, which is deeper and longer in Wales than it is elsewhere in the UK. And, of course, we also have current uncertainty as a result of the Augar review in England, and whether that might play into Wales, and also Brexit. These challenges are not unique to Wales; the majority of the UK universities are actually taking out cost one way or another. Before the Diamond review of fees and funding in Wales, there was a pre-existing funding gap in resource between England and Wales, and even now, that's still the case. So, Welsh higher education institutions are approximately £40 million worse off than they would be in the English system. That's a challenge, and that is a result from a political decision to invest in students, and that's fine. We're not seeing a crisis; we are seeing some real challenges, and there is a distinction, I think, between—. We have to understand, though, that taking out cost to balance the books has a detrimental effect on the capacity. Obviously it impacts on the people who lose their jobs immediately, but there's a medium to longer term impact on the capacity of the system to deliver for Wales. They are taking out capacity; they're not cutting at fat now, they're cutting out core capacity. And so, the range of the curriculum, the range of research and innovation, the range of the contribution that universities can make will be diminished by that. And against that backdrop, the introduction of the Diamond reforms is hugely important—delivery of that is going to be really important—and we are really pleased to see the Minister able to meet her commitments in respect of that. This forthcoming year will be the first year we see an increase in the resource, through us, to higher education. There are some very tired staff in universities, and we've seen some stuff in the press recently about some of the impact of stress there as well. angela burns am: Can I bring you back to the financial element of that? Can I just ask a question: what are the university reserves looking like at present? dr david blaney: Here, I refer to my learned friend. There's a difference between the distributable reserves—I don't have those numbers before me, but looking at reserves, what is more important are those reserves that are available as cash or liquid cash. So, universities have reserves, but a large amount of that is tied up in their estates, so they're not immediately realisable. So, one of the key measures that we're looking at, which is even more important than surpluses and deficit, is the operating cash that our universities are generating at the moment. When we look at operating cash in 2017-18, they were generating, as a percentage of income, about 7.6 per cent, which contrasts with nearly 10 per cent for the same year for English institutions. And that represents their capacity to generate surplus cash to meet their costs, which now, increasingly, include the costs of servicing their borrowings. So, again, because capital funding has not been as available to universities as it was, they've invested in their estates and that's largely been funded by borrowings. The costs of those borrowings have to be met on an annual basis, so that's becoming an increasing proportion of the operating cash that universities have. angela burns am: I just asked that question because I know that about four years ago, the universities were sitting on substantial reserves and were less than keen to deploy them back into actually using them for the students—it was more about building up the war chest, if you like, of the universities. And I just really wanted to have an understanding of how that picture might have changed over the last four years and are they actually skinnier cats now, rather than before. bethan owen: We can get you that analysis, but even four years ago, I think the definition of exactly what's meant by reserves, it's really important to look at what are distributable reserves as opposed to the assets that universities have. bethan owen: And, there are also differences in the way that universities have secured funding for investing in their estates. So, for example, Cardiff University have had a bond rather than borrowing, which you draw down as you're spending. So, in the short term, the reserves of Cardiff will appear as though they have significant cash balances, but all of those are restricted for investment in the estate and, over the next two or three years, will be utilised for that. angela burns am: So, overall, you're painting a picture of a sector that's under a significant degree of financial stress, and this is obviously using your key financial indicators. Do you monitor each and every university, or do you wait for them to come back and tell you what their situation is? bethan owen: We monitor, we receive forecasts, five-year forecasts, and we meet frequently with all our universities now. It varies, depending on the risks of the universities, as to how frequently we meet, but we're actually meeting with every university because even the forecast that we received last July, the changes, even in the 12-month period, are significant enough for us to need a better understanding of what the latest position is. Although it had a turnover and income of £1.5 billion, which had increased, nonetheless it had a small deficit of 0.4 per cent of income in 2017-18, which was an improvement on the deficit the year before of 1.7 per cent, but notably, again, the sector in England were looking at surpluses of 3 per cent to 4 per cent in the same period. The forecasts that we had this time last year were indicating that, for 2018-19, we should have a sector that's roughly in a break-even position, but that has to be caveated with waiting for new forecasts in July, where there will have to be a reflection of the pension costs, and there have been significant changes in pension costs, both for the teachers' pension scheme and the universities' superannuation scheme as well, and those will be significant costs that universities have to build into their forecasts at a time when their income, certainly their fee income, is not increasing, and that is the challenge. angela burns am: Are we going to lose any universities in the next couple of years? dr david blaney: I don't think so. As I said earlier on, we're not seeing a crisis, we're seeing really challenging circumstances for institutions to manage. At the moment, our sense is they are managing them, so one of the things we try to do is to make sure that, insofar as we can see it, we are making sure that the institutions are alert to the challenges they're facing, and are actually engaging those challenges properly, and we are seeing that at the moment. So I think what we will see if the pressure continues unabated is more costs being taken out, so more jobs being lost, more capacity being lost, but that's not the same as falling over. There is always the possibility of structural change within the sector, and that might be one of the solutions that institutions think about, but it's not a policy position, and it's not always a good short-term response to crisis anyway, actually. But I think, as I say, we're in a managed situation, but the challenges are quite acute. angela burns am: When you talk about structural change, are you referring to the fact that certain offshoots or divisions might close? I bring this up because I'm the Assembly Member for Carmarthen West and South Pembrokeshire, and I have had multiple representations from students, and their parents, who are about to go to Lampeter and who've been told that courses are being restructured, there's a massive staff loss, and they have concerns about whether the three-year commitment they're about to make to a course is going to be able to be sustained. So I am trying to drill down a little bit, because I think it's only fair for the students to know what they're up against, and also it's a bit like in the great depression—you can start a run on something, can't you? Because if enough people believe it, then suddenly enough people will stop going to what is an excellent little university, really top-quality in medieval literature, in archaeology. And I'm just talking about one, but I know there are problems in other universities around Wales, so I just wondered if you could comment on that and also what processes you as HEFCW might have in place to protect any student who does find themselves in a situation where their course appears to be disappearing before their eyes. So, if we look at the debate that happened in the Senedd last week, from my reading of the transcript, it was actually quite a balanced debate where pretty much every contributor made reference to the contribution that higher education is making. There was reference to the national student survey scores, and in many ways Wales is the best place in the UK to come and be a student, because you are looked after properly in Wales. But there was also a perfectly legitimate exploration of whether or not there's a crisis, and if you look at the way in which that was represented in the media, the crisis bit stuck and the rest of it didn't. At the point where the sector is trying very hard to recruit students, it's really quite unhelpful that you get that sort of representation. So we do need to make sure, I think, all of us, that we try to avoid a situation where there can be media amplification of a problem that's not actually as acute as the media are portraying it, and that is very harsh. I'm not being critical of the political process here, but it has ripples and we do need to be careful that we don't start a run on this. In terms of the specifics at Lampeter, we understand that there are no plans to close any of the departments, and there certainly will not be plans to pull the rug out from under continuing students. So there's an absolute obligation on them to meet their commitments, and that's a contractual obligation anyway, so it's a legal obligation. But we also have a quality machinery that we operate where we would expect institutions to be able to demonstrate that they've put in place appropriate arrangements to ensure that students can finish their programmes of study. So they're not going to be recruiting students to programmes that they're not planning to continue—they just are not going to do that. And if you think about it in a market context, it would be suicidal for a university to treat their students like that. angela burns am: But I have to ask these questions because the auditor was very clear that there was a material uncertainty in Trinity Saint David's financial plans. dr david blaney: Yes, I understand that, so let’s come back to the material uncertainty. What I'm hoping to try and express is that we have absolute confidence that the institutions will not do the dirty on their students. They will look after their students and if they're recruiting to programmes, they are recruiting to programmes that they are planning to run, and run through to completion. And the expectations that we place on them in terms of our quality assurance machinery is precisely that—when they are engaged in portfolio change, they have to look after the interest of the students that they currently have. In terms of our oversight and monitoring, our primary consideration, again, is the interest of the students. They are the people who have, in many ways, least influence over what happens in terms of the way an institution is managed. Although, they do have a voice and, actually, the arrangements for the student voice in Wales are, again, better than elsewhere in the UK. But, nonetheless, we do not wish to see students becoming innocent victims of difficulties of management and financing. Our institutional risk review process is fundamentally designed to make sure that institutions are grappling with their problems before they become a crisis. So, we have machinery, which has 70/80 different factors and hundreds of questions that we ask twice a year, to interrogate the performance of the institutions and to make sure that we are seeing them managing the issues that they're facing. So, it's not the challenges you face, it's the way you face your challenges—it's a cliché—and, at the moment, they are managing them, but if we were in any way concerned that they weren't, the people who are most at risk in that context are the students and we will be intervening to make sure that they were cited, and we do intervene when we have to. angela burns am: Well, following on from what you said, I've just got two really specific technical questions, then, to ask, because you said that you look across the whole scope to make sure that they are meeting all of their correct liquidity ratios and so on. So, considering how much is invested in their estates, are you happy that each university's estates strategy and its financing is prudent and has appropriate governing-body oversight in place? dr david blaney: Yes, so the estates strategies that institutions operate are overseen by either the full governing body or relevant sub-committees in respect of every institution, so there is proper governance oversight. And in all of those instances, there is staff and student engagement as well in the strategic approach on estates. So, the machinery is in place— angela burns am: Because it's the big thing that drives most of university borrowing, isn't it? dr david blaney: Indeed, it is. angela burns am: So, if our universities are on a sticky wicket, we just need to know that the borrowing that they're undertaking is absolutely prudently assessed and is appropriate. So, as long as you're content, if I can hear you say that—[Laughter.] dr david blaney: Okay. We're content on two fronts: one is that the governance machinery within the institutions is structured appropriately to look at that, but also that if the institutions are wanting to engage in anything other than relatively trivial borrowing, they have to get our consent as well. And what we don't do is second-guess everything, but what we do do is make sure that the governing body, or its relevant committees, have been asking the right questions. bethan owen: Can I just add to that, then? angela burns am: Yes, of course. bethan owen: In asking for the forecasts, we have reinforced this year the importance of universities looking at different scenarios. So, to be looking at the demographic and maybe in the past, where there's potentially been growth in the system and universities have built that into their forecast, we have explicitly asked this year that we are provided—not just the governing body—with the scenario where there is no growth in the income. That's not the core forecast, but a scenario, so that it's quite clear how reliant the forecasts are on that growth, and if that growth doesn't come through, what the contingency plans are for ensuring that all the cost commitments can be met. And we should probably just differentiate between—we have a role before borrowings are entered into, but all the best forecasts in the world can never quite predict, certainly what's happened in the last two years, probably, in universities. So, there are significant borrowings that are now committed to and the key measures we are looking at are universities' capacity to meet their covenants and their repayments under those borrowings, because that's essential for maintaining their liquidity. angela burns am: Which actually, neatly, thank you, brings me to my last question, which is: have any universities broken those loan covenants or been close to breaking them, unable to pay their borrowings as and when they fall due? bethan owen: There was a significant change in accounting standards in 2015, financial reporting standard 102, so most universities had to renegotiate their covenants, but it was because the accounts were looking very different. The accounting standards brought about changes in how income was recognised and how some service concession arrangements, largely student accommodation arrangements, and pension costs, significantly, were recognised in the accounts. So, most universities have had to renegotiate covenants, but we're not aware of any who've had to renegotiate due to covenant breaches, other than one which the University of Wales Trinity Saint David disclosed in their financial statements—that they did need to renegotiate their financing arrangements, which they have done earlier this year, and they have now negotiated new covenants. It's a core part of financial management in universities now that you manage your relationship with your lender as well as with us. Breaching covenants in themselves is different to doing that with your lender being unaware and the factors being within your control. So, again, from that perspective, we have the covenants built into our forecasts, we require the forecasts to show how the university are planning to be within their covenants. The nature of those covenants vary, but most of them require a measure of cash flow, a ratio between the cash generated and the cost of debt, so there is close monitoring that is required because of the borrowing in the system, as well as our ongoing monitoring as well. Just before we move on to Hefin David, can I just ask you what your view, then, is on the statement included by auditors in the accounts of Trinity Saint David that there is material uncertainty? bethan owen: Yes, I'll pick up on that. The material uncertainty largely relates—there is a note in the accounts that explains the factors that are being taken into account, but it largely relates to some significant cash receipts that have been subject to timing delays and the fact that the timing of these is essentially outside the control of the institution. The main delay relates to the receipt of funding for the Egin project, which was due to be received from the Swansea city deal. That funding has been delayed, but the sums due to the university are still due to the university—it's the issue of the timing of those receipts that is causing a cash pressure. Just in terms of cash flows, all universities have to ensure that they are maintaining enough cash in their system to meet their payments as they fall due. Most of their costs are incurred on a monthly basis, staff costs in particular, but the income flows into universities are now less regular. In days gone by, that funding would largely flow from us and that would also come on a monthly basis. A quarter of that money comes in in October, a quarter in February, and the majority of it, half of it, doesn't come into the university in cash until May. So, that's quite a different cash management scenario for universities to manage; it requires holding cash balances to do it. Just before I bring Hefin in, we're going to need to have a bit of agility, as Dai Lloyd would call it, in our questioning and our answers if we're going to cover the ground that we need to cover. hefin david am: How can we be assured that governance arrangements across the eight institutions are sufficiently rigorous but also consistent? dr david blaney: So, the first point to make, of course, is that universities are autonomous, as you know— hefin david am: I've just written 'independent and autonomous'. The university governing body obviously is an important part of the machinery, particularly in terms of generating constructive challenge for the executive within universities. The governing bodies all are expected to behave in a way that is consistent with the guidance produced by the Committee of University Chairs, the CUC guide, which identifies good practice. Just in terms of governing bodies, it's also important that governing bodies engage in a process of continual refreshing, because that gives you a greater variety of perspectives, which is important. But it’s also important they have people who understand the higher education business as well as from other contexts. But I think our view would be that when you get an increase in the contextual pressures that we’ve been discussing already this morning, the role of the governing body actually becomes even more significant. So, we have encouraged the sector, both the chairmen of the university councils, but also the vice-chancellors, to engage in a process of an independent review of governance in Wales. And it hasn’t been hard for us to encourage that—they have been keen to take this opportunity to take stock. The Welsh higher education system is part of a UK system—they don’t want to be a million miles away from the rest of the UK in terms of expectations, but there is scope in Wales, given the scale of the sector, to actually construct something that is more challenging, I think, in terms of expectations, than might be the common denominator across the UK, and maybe some more exemplification. It’s going to be quite hard to do this, but I’m very keen that we engage—and the sector are up for this—in governance culture, because, actually, you can do process checks and you’ll have the right structure of committees and have the right sort of papers going, but, in the end, it’s the dynamic within that room and who’s asking which questions and how well informed they are, and whether it's an open culture or is it a defensive culture—these are really what influences the quality of decision making. hefin david am: And how different are those cultures across institutions? dr david blaney: I think it’s very hard to say. Typically, that’s at a point where there are sufficient difficulties going on that we feel that we need to— hefin david am: Do you have the option to observe at any point? dr david blaney: We can't insist, I don't think. But in the main, actually, our presence would change the dynamic of that anyway, so I'm not sure that's necessarily helpful. But we are keen to see what we can achieve with the sector in addressing these issues of what constitutes constructive challenge. Is your aim to see consistency in the same approaches, then? dr david blaney: I think we’d like to see a consistent minimum set of expectations. In the end, it’s about personalities, it’s about people’s background and it’s about their knowledge. And we have a role to play in this as well, so we have a toolkit that we produce for governors, which, essentially, is a set of information that locates their university in the context of the UK, across a number of factors. So, if they had been told something that is not perhaps as true as it might be by the executive, they can see that in the data. Whether that toolkit needs a refresh—I’m sure it probably does, it’s been there for a while now—. So, part of that is what information we can provide to help governing bodies be properly informed as well. This is quite distant from Government—unlike other institutions, where you can prescribe some of these approaches. dr david blaney: Yes, and in the end I don't think there's any pushback from the sector in terms of wanting to operate in accordance with best practice. hefin david am: So, what about risk appetite? Do you feel that any governing bodies are exhibiting what might be considered to be an imprudent risk appetite? dr david blaney: I don't think so, and this manifests itself in two ways. So, we would see this coming through in forecasts, and we would see it coming through in requests for borrowings, predominantly. Our links into institutions are many and various, and we have our formal stuff, but we all have links into institutions that are informal and we—. One of the beauties of the scale of the sector in Wales is we can see the institutions in a way that they can't hope to in England. But we have, in some instances, I think it's fair to say, helped institutions to think again about some of their aspirations. So, where we've seen things and we think, 'That just looks ridiculously optimistic,' we've just asked the questions. We don't say, 'No, you can't do that,' because they are autonomous, they make the decisions, but we try to make sure that they're asking the right questions. hefin david am: So, would you see that governing bodies are falling short in doing that themselves, in that, where they become strategic decisions that require due diligence, are the governing bodies themselves presenting that challenge? Or the fact you've just said that, does that suggest to us that, actually, they are falling short? dr david blaney: I think there's a mixture of things going on. We have a slightly different perspective and we have a perspective that is very intimately informed in terms of how the institution is performing. So, you have a governing body with a range of perspectives, and you will also have people who are very committed and very enthusiastic about the institution, and just occasionally it's helpful to get a slightly external perspective on these things. So, I don't think it's a shortfall as such, but I just think— hefin david am: The kind of honest broker role, kind of. dr david blaney: The machinery depends on having a body like HEFCW doing some of that role, and the people who lend money to institutions are absolutely clear about that. So, we have relationships with the banks; they come and see us every now and again—typically not to talk about individual clients but just to talk about what we do and how we do it. Interestingly, for example, when Michael Barber got up before Christmas and said there will be no bail-outs of universities, we had banks on the phone to us within a couple of days, wanting just to talk about how it is in Wales and is it still how it used to be. So, it's not really a governance failure; it's just that the machinery includes us. And one of the things, from a distance—, I've been involved in different ways in an institution, and looking at the institutions from a distance. Do you find that the relationships between executive teams and governors is effective, and are they sufficiently robust and challenging as well? Those executive permanent staff and the governors—is there challenge there? dr david blaney: I would say, in the main, yes. Occasionally, we help the governors to ask the right questions, so occasionally that external perspective we've just discussed is helpful in that regard. Actually, there are times when there are tensions between the executive and governing bodies, inevitably—that's not something that's remarkable—and we can feel that as well. hefin david am: And that can become apparent from a public point of view as well—you know, media reports and—. dr david blaney: Yes, sometimes these things can spill, and the governing bodies also include student representation, staff representation, who are typically union reps, and so, you know, there are all sorts of—. I'm not in any way saying that people are indiscreet, but there are all sorts of interests that are sitting around that table that have to be managed within a governance context. And these tensions are not all-out war, but there are sometimes differences of view and they have to be worked through, and that's governance working properly, I think. hefin david am: Okay, which is—some of the work you've suggested will help towards that. hefin david am: And a last question: you've identified one university as high risk, five as medium, and two as low in the short to medium term. You're obviously not going to tell us which, but what I'm interested in is the direction of travel, and whether those that are 'medium'—are they at any point at risk of becoming 'high' in the near future? dr david blaney: I think it's fair to say that the direction of travel is that we're seeing an increased risk profile in the sector in Wales, and it's about the financial pressures that we've already discussed this morning. And that is why the efforts that the Minister has gone to to secure the Diamond settlement, and, indeed, other bits of money now and again, are so important. So, she's doing what she can, and that's really good, but we always knew that, between the point of the Diamond recommendations being made and the full implementation, there was going to be a valley to cross. So, the amount of funding was always going to be under pressure; there's a demographic dip, and there are the other contextual factors we've discussed. And the institutions have been working very hard to try not to take cost out now that they really don't have to take out, because they don't want to reduce capacity, which they'll struggle to recover again when the financial position improves. So, they are seeing deficits, which are managed deficits, where they're spending more than their income in order just to keep the capacity in. hefin david am: And, if you're back in a year or two's time, the next few years, are we confident that there won't be more in the high-risk category? You said you don't see collapse, but are we confident there won't be more in the high-risk category? dr david blaney: Well, I think what I would always say about this process is that it doesn't guarantee 100 per cent accuracy. HEFCW is innately cautious as an organisation, so I'm not going to say we're confident, but that doesn't mean to say we're worried either. So, to answer my question: are we likely to see more in the high-risk category or not? dr david blaney: We might. bethan owen: And, just to add, I think the key bit of that is maintaining the attractiveness of Welsh universities to students, because a large proportion are coming not from just Wales, but from England and internationally—so, that's a key part—and also that our research portfolio is invested in, and that also brings economic benefits. So, I think those are the two that we are [correction: need to be] able to maintain: the institutions as attractive options for students, and that our research capacity is invested in. sian gwenllian am: Just in the interest of transparency, are you able to tell us which universities are in which categories of risk? dr david blaney: We don't publish that; we publish numbers. hefin david am: They didn't even try to—[Inaudible.] [Laughter.] lynne neagle am: Okay. Can you explain your overall approach to the 2019-20 allocations and what your priority for allocations has been? bethan owen: We publish our funding allocations, and we published the 2019-20 allocations on 4 June. For 2019-20, we're allocating £149 million, and, as David said, this is the first year that we've been able to start putting funding, additional funding, in from the Diamond recommendations for investment in the sector. So, that means we've been able to increase our recurrent teaching funding by £7 million—not a significant amount, but it's a start. And we have maintained QR, which is our funding for research, quality research, and postgraduate research, at least at the same levels of £76 million, as it's been that in previous years. We've increased part-time funding by £1 million to £26 million, and we've started to increase support for expensive subjects—that's medicine, dentistry and conservatoire provision—and higher cost subjects—those are the sciences and the STEM. So, we made a start on that and increased that support by about £6 million to £20 million in total. And, in addition to that, we have strategic funding that we're maintaining for Reaching Wider projects and the Sêr Cymru project. And then, in addition to our recurrent funding, we have had strategic funding in our remit letters for the last two years. So, we're developing programmes for civic mission, community engagement, collaborations between higher education and further education, and, more recently, we had funding at the end of March to start to implement the recommendations of Graeme Reid's report for research investment, and also for developing mental health and well-being. That strategic funding is very welcome, but to be able to build those activities into our core funding, which we hope Diamond will bring, would be more sustainable for institutions. How do your allocations to the 2019-20 academic year support and incentivise collaboration between HE and FE? dr david blaney: So, there are probably two dimensions to this. First of all, we have provided £3.5 million of separate funding specifically targeted to improve and increase collaboration between HE and FE. So, we put out a circular inviting proposals for that, and it was competitive, so we funded what was the best of the proposals, and we constrained it to be available only to pump-prime new activity or to add value to existing activity, but not just to keep things ticking over. We had seven bids submitted from across the three Welsh regions on a whole range of activities, which we probably haven't got time to go into now. I've got a long list here, but, for example, in south-east Wales, the University of South Wales is leading on a bid partnering with Cardiff University, Cardiff Met, with the Open University and all the FE players in the region. We tried to get it within regions, because that's how you get the biggest impact for learners in the area and also for smaller enterprises in terms of innovation work. And then we direct fund a couple of FE institutions for delivery of higher education for historical reasons, and we also have our funding going through to support franchise activity between HE and FE. There are about 5,000 students who are studying HE programmes under franchise in FE colleges in Wales, and our funding method has, historically for some time now, protected that money. So, we try to prevent universities from taking the money out of franchise and onto campus, because we think it's important to try to encourage local provision within particular localities. And, certainly in areas where public transport infrastructure is perhaps not what it might be, for people to move to universities can be quite a disincentive, so—. Then, finally from me, the council's remit letter for the 2019-20 academic year from the Minister does ask you to consider how you'd increase openness and transparency around the use of fee income. So, what are the issues here, and how will you take this forward? bethan owen: The reporting of the income and expenditure is largely provided, probably more so in narrative form in the accounts and the financial statements and annual reports of institutions. A number of institutions also provide graphs and more easily accessible information to understand the income and expenditure of universities. There are examples of good practice across the sector in presenting as simply as possible what the income sources are for universities and how they spend their money. And we're going to be working with the Welsh universities and sector bodies to improve the accessibility of that information for Welsh institutions. More transparent reporting of income and expenditure, and not just fee income, is actually very important for understanding how income cross-flows work in universities. Some reasonably simplistic analyses can assume that all the student fee just covers the direct costs of academic provision, but there's much more to the student experience than that, so there are costs: there are the infrastructure costs, the student support costs, even the community engagement and all the research activities bring benefits to the teaching and fee provision. So, more transparency of all the universities' income sources and expenditure and a better understanding of the income cross-flows and why you can't look at universities in isolation of student provision and research, you have to look at the whole—so, we'll be working with them to improve that information. We're going to go to Hefin David now for some questions on part-time student funding. hefin david am: Part-time student numbers are bucking the trend in Wales, as I understand it, and we are seeing a bigger increase in Wales of part-time numbers than elsewhere in the UK. How is that going to be sustainable within current arrangements? bethan owen: We've allocated £26.5 million in 2019-20 to support part-time provision, and we have been able in 2019-20 to fund some growth. So, there is growth in that funding to allow those institutions and incentivise those institutions who have recruited more students than last year to continue to do so. That came at an overall additional cost of £1.9 million, and, based on what we're hearing from student support, we're expecting to see that requirement increase. So, it's one of the areas where we'll need to look at how we prioritise Diamond funding. And at the moment, our intention—but subject to knowing the quantum of it—is to continue to support and fund growth in part-time provision. hefin david am: So, is it possible—? With the Welsh Government's policy of developing lifelong learning, is it possible that will be ever spread more thinly? dr david blaney: That is the challenge, and there's a piece of work that we have in our sights to look again at part-time and what it is and what the various drivers are. There's a temptation, I think, at times, to see it solely in terms of skills for an economy, and it is important for reskilling and upskilling, but actually, it's important for other things as well. If we see higher education solely in terms of skilling an economy, we've missed an important part of the contribution that higher education makes. But part-time is really quite difficult, because there's part-time that is about upskilling, part time that's about reskilling, there's part-time for social purposes, there's employer-supported part-time, there's student—. dr david blaney: Well, there is a sense that they are more price sensitive, yes, and so the support regime that the Government is putting in place is important, and that probably has made a difference to the numbers of part-timers entering the system this last year. But I think we need to stake stock of what is important about part-time, what the market will deliver, what the market won't deliver, what we should fund and so on. And there's a complexity around all that, as I've indicated, which we need to do a bit of work on with the sector, with the student body as well, just to take some stock of this over the next year or so. hefin david am: Could we end up seeing significant fee increases for part-time students? dr david blaney: My sense is we won't. The Government wishes us to monitor, so we monitor, and that in itself is not straightforward, actually. There's a limit to how much a fee increase would be acceptable to the part-time market. I don't think we'll see massive fee increases; we might see a bit, but we won't see masses, I don't think. We've got some questions now on funding for research and innovation, and also we'd like to talk a bit about a replacement for European Union funds. If I could turn specifically to research, we know, of course, that both the Diamond and Reid reviews called for QR funding to be maintained in real terms, but the allocation is exactly the same for 2019-20 as it has been for the past nine years. Have you carried out any kind of assessment of the impact of this level of research funding on universities and, indeed, on the Welsh economy? dr david blaney: I'm sorry; I missed the beginning of that because I couldn't hear this headset. I was talking about the Diamond and Reid reviews at the beginning of my question and the fact that they had recommended that QR funding should be maintained in real terms. The reason the sum hasn't increased is because we haven't had enough money to be able to increase it and still meet the obligations we have to other bits of the HE system. Both Ian Diamond and Graeme Reid were very clear about the importance of being able to invest in our QR research funding, for a number of reasons. The capacity of the sector to be able to respond to funding opportunities elsewhere in the UK and across the rest of the world is itself determined by the size and the strength of the research base, which is sustained by QR funding. If they go for UK-based competitive research funding, that is typically constructed on the absolute assumption that QR will be part of that mix. So, they tend to fund to 80 per cent of the actual cost of the research, with the expectation that QR will plug the gap. And we know that, although the Welsh research base is extraordinarily productive, and really is punching above its weight in many ways—and I mentioned earlier the impact of the research base in the last research excellence framework—we know that, actually, it could do so much more, if it just had more scale. So, we fully endorse the reports from both Ian Diamond and Graeme Reid that QR is important, and it's important also to be able to allow institutions to invest in research areas that emerge over time. It's almost impossible for a body like us, far less the Government, to know where these emerging strengths are going to come from, and QR provides the flexibility for institutions, which is absolutely fundamental to keeping the research base dynamic. sian gwenllian am: Therefore, you do have concerns that this isn't increasing—you have that concern of a lack of increase in the level of investment. But has any particular assessment been made of the impact of not increasing that funding? dr david blaney: So, there is—. Graeme Reid's report produced an assessment of the correlation between QR funding and capacity to generate funding from other sources, and there's a very close correlation— sian gwenllian am: Has HEFCW done any assessment to look at the effect of underfunding research, to all intents and purposes? dr david blaney: Not directly. sian gwenllian am: Your remit requires you to encourage universities to continue to develop one particular element of research, which is educational research. How does your allocation for 2019-20 contribute to that in terms of pedagogy and educational research specifically? dr david blaney: Bethan, did you want to say something on this? bethan owen: I was just going to add that, when we look at the funding that comes into our sector in Wales, compared with the rest of the UK, it's easy to see from the figures that our percentage of income that comes from research is smaller than in England, so the figures show that we receive less of the money that's available, which is a factor that results from us having less QR as a percentage, so we're in a situation where we get less of that UK funding that's available as well. sian gwenllian am: So, there's a knock-on to that; that's what you're trying to say. But from the point of view of my question on educational research—? dr david blaney: So, we have provided funding in 2017-18 and 2018-19 to WISERD Education, which is a research collaboration between a number of the Welsh universities, specifically looking at educational issues, and we're providing additional funding to that to add value to the Welsh Government's existing evaluation of the progress of pioneer schools in developing the three-to-15 curriculum in Wales. I won't go into the full detail of it now, but it's a five-partner project feeding into this with researchers from Cardiff, Cardiff Met, Trinity Saint David, Aber, Bangor and the University of South Wales. So, it's a collaborative effort, and we have, in the past, also funded WISERD Education, so it's an important research facility and increasingly being used, I'm delighted to say, by Welsh Government in underpinning its own policy thinking. sian gwenllian am: And likewise, in 2019-20, there will be allocations specifically for this. Well, could you provide the remit letter from—[Inaudible.]—do that? You have to do everything in the remit letters. dr david blaney: We do what we can to pay due regard to the remit letters, as the wording goes. sian gwenllian am: And then turning to the impact of the loss of funds were we to leave the European Union. Of course, this is going to have a far-reaching impact on future research, and the Reid review has made recommendations to mitigate this impact. So, what assessment have you made of how allocations will be able to help universities to transition away from EU funding? dr david blaney: So, again, the Reid review has done a lot of the heavy lifting in terms of an impact assessment for us. There has been an additional £6.6 million allocated for research very recently by the Government, which we have put out specifically in line with some of the recommendations from Reid. So, that's a start, but that's not sustainable funding, and it's not enough, really, but it is a good and welcome start. Reid was also not just talking about the money, but also talking about the way in which the Welsh research base both represents itself and also engages with UK-wide developments. And in response to that, we have recently issued our own vision for research and innovation, which was developed over a number of months, following the Reid report closely, working with stakeholders, including the Welsh Government, in order to try and set a vision for how we respond to the challenges facing research in the future, including the reduction, potentially, of access to EU funds. A lot of that requires investment in the Welsh research base in order to be able to go for competitive funding at a UK level. Since it seems possible at least, and possibly even likely, that any money retrieved from not having to invest in the EU will sit in London rather than necessarily being devolved to the devolved administrations—we understand fully the Welsh Government's position on that, and we don't disagree with it. But either way, we need a research base that's able to compete, and that's why the investment recommendations of Reid are so important. I think Reid was saying that there may be pots of money out there that aren't being accessed at the moment by Welsh universities. Are you able to help then within that process? bethan owen: One aspect that we do intend to fund—and this is from Diamond, as well as Reid—is to place funding back into the system for innovation. We're consulting currently, with the intention, if the funding is available to us, clearly, in the year 2020-21, to provide £15 million back into the sector in innovation funding. sian gwenllian am: Is that part of the UKRI funding? There is some £7 billion in the hands of that organisation, as I understand it, and there may be some possibilities there too. bethan owen: That £15 million will be money that comes from us, but the intention is that the money will go in in order to improve universities' ability to access that funding from UKRI. So, Innovate UK would be the part of UKRI—and that we improve our ability to get funding from outside Wales. And, then, Graeme Reid says the same thing in terms of research—that we need more funding to do the same thing there. dr david blaney: And, then, there's also the recommendation from Reid that Wales needs to be better embedded in the conversations that are going on on a UK-wide basis, so the Welsh Government has established a presence in London in respect of research, and we have a colleague in HEFCW who is fractionally embedded in the United Kingdom Research and Innovation specifically to respond to that recommendation. And that is actually paying dividends; we are strengthening our relationship with the UK machinery, which is essential if we're to understand where they're heading and what their funding bids are all about, and even to be able to influence those. lynne neagle am: Okay, Siân? sian gwenllian am: So, as far as research is concerned, it's not all doom and gloom. There is money coming in and if the Government, as it is able to, can find money and can invest in this area, then that will help. Just a couple of questions from me, then, before you close: what is your recent work on the 'basket of goods' show regarding student accommodation costs? And have any institutions used their 2019-20 fee and access plans to make commitments to more affordable accommodation for under-represented groups? dr david blaney: First of all, on the basket of goods, the work we're doing now—we're currently in train in terms of analysing the data in respect of the basket of goods, so this is slightly premature, but our early look at the data indicates that there are no increases in costs, accommodation or other, that would cause us concern. So, it doesn't look like institutions are succumbing to the temptation to up their income streams from other costs. In terms of the fee and access plans, the sector has committed over £28 million of investment in student support-related activities from the fee and access plans, and that includes, in many instances, bursaries that are designed to help students cope with the costs of accommodation and the cost of living more generally. The support is provided for a range of purposes, but a couple of examples, just very quickly: Trinity Saint David, since we've talked about them a lot today, they offer £1,000 bursary to care leavers, which is in addition to local authority support for care leavers. Bangor also offer targeted support for care leavers, and these are often also extended, so they apply not just in term time, but throughout the holiday time as well, because people still need to live during the holidays. And just one final question from me then, going back to Trinity Saint David: are you concerned that the governing body of Trinity Saint David has taken decisions that have led to that material uncertainty, and is that unprecedented in Wales? dr david blaney: My view is that the decisions that the governing body made were, in our view, perfectly rational decisions to have made, given the information they had at the time. So, what's happened is that a number of unforeseen events have arisen, which, actually, I don't think it's reasonable to expect them to have foreseen, and it's just a combination of these that has caused the cash pressure. So, I don't see this as a governance failure, and they are engaging with those challenges. We've come to the end of our time, so can I thank you both for attending and for answering all our questions this morning? You did say that you would give the committee a note on reserves for the last four years, so we'd be grateful if we could receive that. Paper to note 1 is a letter from me to the Deputy Minister requesting further information for our scrutiny of the Children (Abolition of Defence of Reasonable Punishment) (Wales) Bill. Paper to note 2 is a letter from me to the Children's Commissioner for Wales also asking for further information to pursue our scrutiny of the Bill. And paper to note 3 is a letter to the Minister for Education asking for an update on the framework for young people educated other than at school. Item 4, then, is a motion under Standing Order 17.42 to propose that we resolve to meet in private for the remainder of this meeting and for the whole meeting on 10 July<doc-sep>gareth rogers: Good morning, and welcome to today's meeting of the Children, Young People and Education Committee. Unfortunately, the Chair is unable to attend today, so in accordance with Standing Order 17.22 I call for nominations for a temporary Chair for the duration of today's meeting. gareth rogers: As there's only one nomination, I declare that John Griffiths has been appointed as temporary Chair. Thank you all very much, and item 1 on our agenda today is introductions, apologies, substitutions and declarations of interest. We will move on then to item 2, and our inquiry into the impact of Brexit on higher and further education, and our first evidence session. I'm very pleased to welcome the Higher Education Funding Council for Wales here today, and Dr David Blaney as chief executive, and Bethan Owen, director of institutional engagement. I wondered if we could start off with you telling us what evidence you can see that the Brexit process has had any impact on Welsh higher education so far. dr david blaney: Can I preface the response by just reminding you that we are, by contract and by role, apolitical, and a lot of the judgments about the impact of Brexit essentially reflect where people sit politically in terms of whether they think it's a good thing or a bad thing? We're not going to go there, obviously, today, so we'll stick to the facts as we can see them, and hopefully we'll be able to help you, but there are areas where we are unable to help. But even in terms of your assessment of whether this is going to be a good thing or a bad thing, a good impact or a bad impact, some of that inevitably in the end becomes a matter of your politics on it, so we will be as careful as we can be on that. In terms of the impact of Brexit on higher education, clearly, the significance here is about the contribution that higher education can make to Wales. So, we fund provision; we don't fund providers, technically, although obviously there's not much provision without providers. So, we are interested in the sustainability of higher education providers, but fundamentally the issue is: what does the HE system in Wales do for Wales, and what impact might Brexit have on the capacity of the system to continue to deliver for Wales? So, we know that universities make annually about £5 billion of impact; 50,000 jobs. Of course, in Wales, all of that economic impact is really very significant, and uncertainty about the relationships and the arrangements with Europe is one of the most significant issues confronting university management at the moment. We can identify at the moment the extent to which the HE sector in Wales is exposed to sources of income that are located from the EU, so EU students, structural funds, and EU research funding, and so on, from the EU. We can identify some of that, but, actually, what happens in the future is much harder to be clear about. We are beginning to see some impact in terms of applications from EU students and I'll ask Bethan to share some details on that in a moment. We're also beginning to pick up, only anecdotally, some signs that there are increasing difficulties in the UK sector, and the Welsh sector as part of that, in playing in some of the EU collaborative research activities. And that, I think, just reflects the extent to which EU partners consider that British partners might be a stable partner as we go through this transition period. We don't have data on that—that's anecdotal—but there are signs that some of those relationships are beginning to become a little bit more difficult. In terms of the financial impact of that, clearly, if it is accepted that the UK is a net contributor to the EU then, presumably, some of the money—we're almost immediately straight into politics if you're not careful—but some of the money will be available back to the UK, and the extent to which Wales benefits or not from that returned money is a function of the political relationship between the Welsh Government and Her Majesty's Government. It's not necessarily the case that Wales will always lose out in that relationship, but that will become a matter of politics. There's a broader dimension, which is about the economic impact of Brexit on the UK economy and how much tax revenue there is and all of that. I think it's very hard for us to be definitive about how that's going to play out. But we can certainly anticipate some turbulence and exactly how that plays for institutions remains to be seen. We can touch later on on the extent to which they are sighted on this and preparing for it. bethan owen: This is based on the UCAS applications and the report that was published at the end of June, 30 June. The European Union-domiciled applicants to Wales have decreased by 8 per cent, which contrasts with a 2 per cent increase for English institutions, and non-EU—so international students, not from Europe—have also decreased by 9 per cent to Welsh institutions, again contrasting with a 7 per cent increase in England. Could I then just ask you what you see as the main pressures on the Welsh higher education sector at the moment? bethan owen: The funding position would be the main pressure. The recommendations made by Sir Ian Diamond in his review of higher education funding and student finance are in the process of being implemented, and the changes to the student finance arrangements will take effect from this September. However, the recommendations for re-establishing funding at Welsh institutions are expected to take quite a bit longer. That funding, when it returns to institutions, is intended to re-establish funding for higher cost provision, both full time and part time; reinstate funding for innovation; and maintain, at the very least, the research funding in real terms. Universities, in the meantime, are trying to minimise the cost reductions that they're making in order to maintain the infrastructure, so that when the funding comes they can get the best value out of it. For the research and teaching grant, though, we are still funding at a lower level—£12.5 million less—then the starting point for the Diamond report, the 2015-16 starting report. But we expect to be able to start introducing funding from 2019-20 to make a start on implementing Diamond. And it's probably important to note that the Diamond recommendations predated Brexit, therefore the challenges introduced by Brexit are in addition to those that the Diamond report was addressing. There is also the start of a reduction, both in Welsh-domiciled and English-domiciled applications to Wales. And the other pressures include pay and pension costs, not least the issues around the universities superannuation scheme pension fund, where there's potentially a significant increase in cost. Increased student expectations for modern facilities and infrastructure bring a requirement for capital expenditure and borrowing, which bring their own pressures. And finally, the uncertainty about potential consequences that could arise from the review in England of fees and funding—the Augar review. john griffiths am: In terms of European Union students and enrolment, is Wales forecast to do less well than England and, if so, why might that be? bethan owen: They are not forecasting it. It's very difficult until the enrolments are made, and it's also very hard to see—the data that we see is the UCAS data. So, now, they have to find the full fee, whereas previously they were getting the grant in the same way as Welsh students. So, I'm speculating that that might be having an impact as well on EU students' appetite to come. llyr gruffydd am: Well, that's straight into what I was going to ask, really, about what you think the factors are that led to this 8 per cent or 9 per cent drop in EU students applying to study in Wales, where we see a 2 per cent increase in England. Is that it, or are there other things that you've taken into account? What's your assessment of the reasons behind this? dr david blaney: It's very difficult to be definitive about the reasons, but I think there are probably two. The one that Bethan has already indicated, which is the change in student support arrangements for EU students, will have an effect of perturbation. That's probably relatively temporary—let's hope it is—as that settles down because, actually, the deal for EU students coming into Wales is no worse than that coming into England. Ours would be better because the fee level is slightly lower, but we do struggle in Wales in terms of the Anglocentric nature of the media and so on. The other dimension is that when you're in a highly competitive recruitment market, you have to do what you can to look attractive. Part of that is about being able to invest in facilities, and particularly buildings and kit, and the relative levels of investment between Wales and England over quite a long period of time now probably have an impact on that. Certainly, anecdotally I know, from my own family, that a lot of the choices have been made in terms of the state of repair of campuses and so on. There's something rational about that, isn't there? If you've got a system that is relatively better invested, then you're likely to have a better student experience because the resources are likely to be better. We saw a sort of similar but opposite effect when the £9,000 fee maximum limit came in, and some institutions, mostly in England—there was one in Wales—chose to pitch their fee levels really quite low, relative to that £9,000, and caught a cold in the student recruitment market because fee levels denote quality in the student mind. So, the price sensitivities work quite differently. So, again, if you've got a relatively better invested part of the system, then that might well be one of the reasons why it looks more attractive. llyr gruffydd am: That latter factor would affect the whole of the cohort, not just the international recruitment, of course. The implementation of the Diamond recommendations is crucial to that because that's re-balancing where the policy of investment goes. mark reckless am: If I heard you correctly earlier, you said that the applications from non-EU students were also down by 8 per cent or 9 per cent. So, forgive me a certain scepticism about the explanation of the fall in the EU students being that they did get the fee grant and now they do not. If that's the explanation, why are we seeing the same fall in non-EU applications? dr david blaney: Well, I think the Welsh domiciled are also now having to face the prospect of finding a loan for the whole of the fee. There's also a demographic dimension here with the downturn in the 18-year-old school-leaver profile, and that actually is happening in Wales at a slightly later point than in England. mark reckless am: But this is non-EU students, and I think you said, Bethan, an 8 per cent or 9 per cent fall in them as well. mark reckless am: All English or all Welsh? bethan owen: Well, I contrasted the Welsh position with the English position where they were seeing growth. If you look, then—and we don't have the detailed information, but, again, what UCAS publish is some analysis by tariff. They analyse by type of institution—in other words, the grades that you need to get into institutions—and there is a trend for growth being in the higher tariff institutions. So, there's a mix effect in there as well, and I think there's undoubtedly an element of perception of how welcome overseas and international students are, and that's something that we know the sector are working on with Government. mark reckless am: Why would that affect Wales more than England? Do you think there's been perhaps too great a negativity about Brexit in the sector? bethan owen: I think it's the mix of institutions that we have. When we look at the mix of institutions that we have, we will probably see a differential impact between Cardiff University and others. john griffiths am: Okay, Mark? Sorry, David, did you want to add anything? dr david blaney: I was just going to say that we would expect to see quite differential performance in the English sector, so the overall numbers are being brought up by substantial increased performance with some of that sector, and it's a question of how many of that type of institution you have in Wales. mark reckless am: So, performance is increasing amongst the English universities, but not amongst the Welsh, you think. dr david blaney: I think performance is increasing, but increasing substantially with some of the English sector, not all of it. So, you get an average for the sector that is increased performance, but actually the stronger players within that sector, with the stronger international profiles, are bringing that up, and we have fewer in Wales that have that sort of presence. darren millar am: Would it be fair to say, then, that the universities over the border in England are better at selling themselves internationally than our Welsh institutions? Or is it just this fact that we've got fewer very high tariff universities versus the English market? dr david blaney: I suspect, and this is speculation—I suspect that it's a bit of both. I would then come back to the point I was making about the Anglocentric nature of the UK media. darren millar am: But, forgive me, don't international students just look at the UK as a whole? How are we comparing to Scotland, for example, or Northern Ireland, in terms of their universities? Do you have a comparative figure for Scottish universities? bethan owen: I haven't got that one with me for now, but there will be one in the data. bethan owen: Again, it's a combination of being part of the UK but differentiating, and the ability to differentiate the strengths of Wales, so attracting those students to Wales specifically, on top of the UK draw. dr david blaney: So, in terms of the efforts that have been made, there's a programme now that is being run by the sector in Wales—it's 'Study in Wales'. But that is a determined collective effort to present Wales as a good place to study, with particular messages about what distinguishes studying in Wales from studying more broadly in the UK. In a sense, that is responding to the need to increase the presence of Wales in an international market. It will take a while to actually have an impact, but I think that's exactly the sort of work the sector need to be doing more of. mark reckless am: What are those messages on why prospective students should study in Wales? dr david blaney: One of them in particular is relative safety. We know that one of the considerations, particularly for parents of overseas students, is are they going to go to a safe environment, and we know that the perception of international students who study in Wales is that this is a comfortable and safe place to be. That's partly a function of the size of our larger cities—quite a lot smaller than many of the cities in England. So, we've got a UK-quality system, a UK degree, and the strength of that brand is available in Wales, but it's available in a way that is safer and more supportive, I think is the messaging that's coming through. darren millar am: I just wonder to what extent you have been able to plan in your financial forecasts for the next few years ahead for the potential impacts of Brexit. What have you built in, if anything? bethan owen: In terms of our funding, we receive our funding annually, but the sector provides us with financial forecasts, and we use those for monitoring sustainability. We are due to receive a full forecast at the end of this month, and we obviously have updated information from institutions. darren millar am: And they're three-year forecasts that come through to you, aren't they? bethan owen: They are four plus the current year. So, we've got numbers to 2019-20 at the moment, and expect to go to 2020-21. darren millar am: And what are the universities expecting? What do they anticipate? bethan owen: Well, for 2017-18, which is the year we're about to end now, they were expecting £38 million income from European students, and approximately £91 million from the various European programme funding sources, and that's about 8 per cent of the total income—£1.5 billion—of the sector. The forecasts are assuming that that continues, albeit that institutions have various scenarios that they have for all sorts of scenarios that we can all speculate on, and, as I mentioned earlier, the balancing act of maintaining infrastructure and resources and staff in the short term is where we are at the moment, or where the sector is at the moment. And there are also signs that the banks and lending institutions are becoming a bit more risk-averse in providing borrowing to institutions, and of more differentiation between individual institutions being made than has possibly been the case in the past. The sector made an operating deficit, again looking at all Welsh institutions collectively last year, 2016-17, of £17 million. And we're expecting a similar collective level of deficit for this financial year, if not slightly higher. Now, these are managed deficits and we are not currently seeing critical short-term cash availability issues in the sector. However, the increase in funding from Diamond is a key part of enabling the sector to return to longer-term financial sustainability. You can manage in the short-term, but there comes a point when the big cost reductions and infrastructure reductions have to be made. And, again, having mentioned the pressures on pay, pensions and other challenges, it is difficult to gauge whether, if those factors come into play as well, some of these cost reductions may have to be made before funding comes in to replace—either Diamond funding or the European replacement funding. darren millar am: So, would it be fair to say that, in terms of the funding arrangements, and, in terms of the student numbers, one reason why we've got this recruitment problem is this lack of investment in the capital infrastructure that we've seen in recent years because of the financing arrangements from the Welsh Government, and the fee regime that we had previously, and the student finance regime that we had previously, not getting more cash into our Welsh universities perhaps, and that, over the next few years, there's going to have to be much more significant investment in capital if we're to raise the game and be more competitive, yes? bethan owen: Yes, that would be fair to say. darren millar am: So, to what extent are they planning for more capital investment in those financial strategies that they've been preparing and presenting to you? bethan owen: They are all planning for capital investment. This year, 2018-19, is the first time that we've had capital funding in our remit letter—so, we've got £10 million of capital funding, which is very welcome, with a prospect of a further £20 million. That will make a difference, particularly to those institutions who are not finding it as easy to borrow from financial institutions. However, there are internal governance processes that are putting tight restrictions and expectations of what that money will be invested in. But they all have plans to do it and they need the confidence that their forecasts and long-term future funding prospects are secure enough that they can get the confidence of borrowers then, and service the costs of those borrowers. What clarity is there from the Welsh Government at the moment in terms of how much they anticipate the Diamond dividend will be, and what proportion of that is going to be released to HEIs in the future? bethan owen: I was very carefully not describing it as a dividend—a re-establishing of funding that we had in the past for higher cost and innovation and maintaining research funding. The timescales are difficult, because we have an annual remit letter, and we can work with Welsh Government officials, and they can only give us a sense of when they think the funding will be released. But 2018-19 is the start of the system, and because of cohort protection—so, protecting those students who came in on a different deal to the deal from 2018-19—in the early years there is an element of double cost; there's a cost of seeing out the old system and the different cost of implementing the new system. So, at the moment, we're certainly not in a position to tell the sector with any degree of certainty what funding would be beyond what we've allocated for 2018-19, with some sense of what 2019-20 numbers we're working with because we allocate our money over an academic year—so, by definition, we've already made assumptions of four months of the 2019-20 funding, albeit that's not approved yet in the budgetary process. darren millar am: But you're not being given a steer at all as to what you expect the additional resource that you might have to make available to Welsh universities might be as a result of Diamond. dr david blaney: I think it's fair to say that officials have been as helpful as they can be with us, in terms of the planning assumptions we make and indications about whether or not we are being too ambitious or not ambitious enough. So, I think they're being very helpful; as Bethan said, they're constrained by the process—they can't pre-empt a budget process. The other question I think you asked was how much of the money released by the new arrangements will come into higher education. At the moment, we are expecting all of it to come into higher education, as the product of the arrangement between the current Cabinet Secretary and the current First Minister. The extent to which any changes there cause that to come under threat is something I can't judge at the moment. But we have had in our remit letter from the Cabinet Secretary a clear indication that we can expect our resource to grow over the next few years, as the Diamond process unfolds. llyr gruffydd am: Bethan said in an earlier answer that, I think, the financial forecasting from universities forecast something pretty consistent in terms of what they're hoping to be receiving in income, for example. So, does that tally, really, or are they going to be recruiting additional students from the UK market or—? What's the plan? bethan owen: I was reflecting on the last point when we had consistent information across the sector. bethan owen: I'm expecting that the forecast that we get at the end of this month will reflect the reduced applications we've seen, and an element of that will be reflected in reduced improvements as well. So, we don't really know, then, whether—it's unlikely that they are going to expect a consistent fee income, really. dr david blaney: I think it's fair to say we would expect them to respond to what they're seeing in the UCAS process. Even if they didn't, they would all, in any case, have sensitivities for what they would do if things don't come out in the way they hope. And if they didn't have that then we would be on their case, of course, because we want them to be properly sighted. darren millar am: Can I just ask, in terms of the impact of Brexit, have you done any assessment of what you think might happen, or have any of the institutions made available to you any assessments of what they think is likely to happen to their individual institutions, going forward? You've mentioned scenarios earlier on, David, so what scenarios have you set out? dr david blaney: There's a Welsh Government HE Brexit working group, which is chaired by one of the Government directors, and we sit on that. And we have provided that group with early summaries of the risks and the potential impact, in terms of the exposure of the sector to EU-sourced funding. We have, as part of that working group, explored those issues that it would be really very helpful for either the Welsh Government to try to put in place or for the Welsh Government to persuade UK Government to do. And I think, in our submission, we identified a number of areas of what we would consider to be a helpful action, and that has been worked through that working group. We know that it has informed Welsh Government's position, in terms of what it does and also in terms of the conversations that they have with Her Majesty's Government. Beyond that, what we haven't done in that working group is share the work that institutions are doing individually to look at how they would respond to different scenarios. We are not able to do that here either because, inevitably, they would have varying degrees of unpalatability and they would have to be managed very, very carefully. You take cost out, which is essentially the response, you actually take people's jobs out, and all of that has to be managed carefully. So, that's not really a matter for public consideration, but we do know that the institutions are looking at a range of scenarios on what they would do. Bethan mentioned earlier on that the current deficit for the sector is a managed deficit—it's not something that has taken them by surprise. They are responding to what they see as the dip between where Diamond was reporting and where the money starts flowing. Similarly, I think we're comfortable that there is a managed approach to the scenarios that they're testing within institutions. The bigger issue really, in a public policy context, is the potential damage for the sector to be able to deliver for Wales in terms of research and skills development and all the other contributions. darren millar am: So, you're confident that they're taking a robust approach to planning for various scenarios, going forward, are you, as individual HEIs? dr david blaney: Yes, and as the deal becomes more clear politically, then they will obviously have greater clarity in terms of which of these scenarios they need to work up more fully, but they are sighted on it. Can I just ask about fee and access plans, and how Brexit might impact them? To what extent do you think that they could be impacted? dr david blaney: I think there are two dimensions to maybe touch upon there. So, we're just in the process now of finalising our consideration of fee and access plans for the 2019-20 academic year. We, as part of that process, go through similar—we look at their financial sustainability, which is based on their forecasts—data to the stuff we've just been discussing. And also, of course, the fee plans themselves make assumptions about how many students of different types, from different domains, are going to be recruited. So, clearly, if there is a continuing downward pressure on EU student recruitment, then that will reduce the amount of fee income that's going to come in, unless they can find other students, and that will reduce the amount of investment in the various activities that are identified in the fee plans. If institutions are becoming aware that the basis upon which they've submitted a fee plan is fundamentally different from the reality, then they can come into us for a change to their fee plan. If it's not fundamentally different, but there are always differences between what you plan and what happens three years later—. We also monitor after the event and, if there are differences, we would then obviously require institutions to explain those differences. Conversely, if they'd had more students, and potentially more investment, we'd want to know what they'd spent it on, and if they've done different things, we'd want to understand that as well. The only other thing that's perhaps worth saying is that, in the 2019-20 fee and access plans—they're not published yet, so I can't give you the full detail—five universities have made reference to Brexit and the Brexit impact, and things they want to do through their fee and access plan to try and address some of those issues, so they're in there as well. darren millar am: But we've already said, haven't we, that it may be nothing to do with Brexit, this dip in EU recruitment, because there are other factors like the attractiveness of the estates and the environment that young people might be educated in? But they're making assumptions that it's linked to Brexit, are they? dr david blaney: Not really. There are things they want to do to enhance and to protect student mobility, and some of that will be funded through fee plan investment. So, the Brexit conversation between the EU and the UK Government might or might not sustain Erasmus engagement, and if it doesn't, then they need to find other ways of trying to support that sort of thing. What else do you do to assure yourselves that Welsh higher education institutions are effectively planning for Brexit? bethan owen: We've touched on contingency plans, but, in an environment of uncertainty, I think it's difficult for any of us to know what the right scenario is. I think rather than looking at worst-case scenarios, what the sector is also focusing on is the promotion and looking for additional or increased sources of funding. So, we touched on strengthening the Global Wales engagement in order to sell Wales, so more focus on marketing Wales overseas, but also within the UK. The other area where the sector is working at a UK level very hard is making the arguments to UK Government for maintaining access to the successor to Horizon 2020, which is arguably a larger part of the whole funding infrastructure—students is one part, but the whole funding infrastructure for maintaining research capacity. So, working with UK universities to make arguments at UK Government level for maintaining access to those sources of funding is also a part of what the institutions are doing. That group, which is the Welsh Government group, is being advised by members on it, and that's informing Welsh Government officials when they engage with UK Government as well. mark reckless am: Do universities seek your advice on what the risks and, indeed, opportunities of Brexit may be and what you think they should be doing to plan for them, or is your role more one of monitoring what they do as opposed to advising what they should do? bethan owen: They are autonomous institutions and ultimately their governing bodies are responsible for ensuring their sustainability. It's not a relationship where we would advise and direct, but it is a relationship where we would question the scenarios if we consider from our experience that we would have expected other scenarios to have been tested. mark reckless am: I understand you don't direct, of course, but my question was about advising. You're overseeing, or monitoring—or whatever you like to describe the role as—quite a number of institutions, and presumably you therefore have particular expertise within your organisation, and I just wondered whether higher education institutions are doing enough to draw on that. bethan owen: I think we can advise—we can advise based on data and information that we can see. The big thing in this whole Brexit scenario is the uncertainty and the extent to which our speculation is better informed than the governing bodies or the sector collectively is probably the issue. So, there's a relationship with the sector and there's a relationship with individual institutions, and they are different. So, some of these conversations are happening in various ways, where we're all gaining intelligence about what might be a sensible set of planning assumptions. Then, if we see an institution that is manifestly giving signs of not being sighted on some of these risks, either through their forecast or through other assurance activity, we will challenge. We have an annual cycle, with two points in the year where we reassess the overall risks of individual institutions, and that's based on a whole range of hard data but also a range of soft data. We have lots of conversations and we take all of that in the round and form an assessment about the financial sustainability of the institutions but also the extent to which we think their governance and management arrangements are properly sighted and facing properly the challenges that they face. In some ways, we say it's not about the challenges they face; it's about how they face the challenges. Our alarm bells really ring when we get the sense that, actually, either an executive or a governing body hasn't really noticed. There are medium-term real challenges, both because of Brexit and because of other contextual factors, but at the moment the sector is a managed sector, which is good. It's not always like that, but we're in, I think, a good place at the moment. So, our role is definitely to challenge where we don't think they are making sensible assessments, but it's not to say that their assessment is wrong and ours is right; it's just to have a conversation about, 'Why have you done this and what has informed your thinking?' It's slightly more one step back and slightly more subtle, but it is, as you imply, us using the intelligence we gain from all of those conversations when we talk to individual institutions as well. We had evidence last week from some of the higher education institutions, including Cardiff University, and it's very interesting, in relation to Erasmus+ and the mobility funding for students that, I think, only 40 per cent of the mobility funding in Cardiff is paid for by Erasmus+. I note that you've been consulting on national measures for higher education performance and that one possibility is using international mobility as a performance indicator. I was just wondering whether you might go further and expect universities to actually make commitments to funding international mobility from their own fee incomes as part of that. bethan owen: Again, reflecting on the latest fee and access plans, seven of the universities are referring to mobility—either they have targets in them or are explaining what their plans are—so they are including an element of it from their own income and fee and access income. However, Erasmus is such a well-established and long-term plan—if we were looking at a scenario where that infrastructure wasn't available, to implement anything similar to that would be much less efficient and much more costly. Ideally, you'd want something that all Welsh institutions could take part in, and that takes some investment and some co-ordinating. I think it's easy to underestimate the accumulation of time that has gone into establishing Erasmus. llyr gruffydd am: And the point was made clearly last week that the brand is internationally recognised. When you enter into Erasmus+, you know exactly what you're going to get, and all of that. But there have been criticisms as well about degrees of flexibility and this, that and the other, so I'm just wondering whether—and there is presumably going to be some change on that front although I'm hoping we can buy into it, as others have done who aren't in the EU—that emphasis on encouraging institutions to look more proactively at funding their own mobility efforts would be positive. dr david blaney: I think the— llyr gruffydd am: Sorry—especially if it means that they do more of it. I think the Welsh sector is definitely committed to trying to find ways of promoting and resourcing that sort of mobility. There are signs that some of the restrictive elements of the Erasmus programme are going to change anyway, because that's under development and that's positive. There have been positive noises as part of the Brexit negotiations about wanting to carry on being able to access the Erasmus programme. Nothing is agreed until it's all agreed apparently, so we'll have to see on that one. That would be far better, I think, as Bethan indicates, than trying to replace it with a made-in-Wales only, but you could have a made-in-Wales on top. All of these challenges also create opportunities because they stimulate thinking, and so the fact that seven of the eight universities are already now using their fee plans as a vehicle for thinking about this is positive, and I think we can take that on from there. llyr gruffydd am: Because that 40/60 split struck me as being the opposite to what I perceived the situation to be. A key part of your role is to work in partnership with students, so I'd just like to ask what work have you done with students, in terms of maybe protecting their interests as the Brexit scenario evolves? dr david blaney: Well, as you say, we do work with students. We were the first of the funding councils in the UK to have a memorandum of understanding with the National Union of Students in Wales. So, we have close links with NUS Wales and we're very proud of that, and it's very productive. We we're, again, ahead of the rest of the UK in requiring all HE providers to have student charters and there are elements of student protection within the student charter. The UK-wide quality code also has elements in it where arrangements have to be specified about the protection of student interests. That is particularly, in essence, around circumstances where a provider gets into difficulties and they might wish to close a course or something more drastic and then what arrangements are in place to make sure that those students who are in train are protected. So, that is there and we've worked hard with the sector and with NUS Wales to get those measures in place. There's more development work in train at the moment, so we've asked Universities Wales to construct a protection that takes account of the approach to protecting the student interests in higher education. We're also requiring further education institutions who are regulated and deliver higher education to do similar or the same, and that's very important. The students who are HE students in FE are absolutely not second-best, and they should have the same protections. llyr gruffydd am: But is all this a general piece of work? It's not Brexit-specific, although, no doubt, it may—. The other dimension around Brexit is the immigration status of EU students, and that's, kind of, beyond our pay scale—that's a UK Government issue. llyr gruffydd am: Is that something that you have a view on? dr david blaney: It's clearly in the interest of the enrichment of the curriculum and the student experience for students in Welsh institutions to be able to have students from other EU countries in the mix. Now, of course, you have a statutory duty as well to assess the academic quality of the work in our higher education institutions, and I'm just wondering what potential impacts you think that Brexit might have on that particular aspect. dr david blaney: I think there are possibly a couple of things to say, and one, in a sense, echoes what I was just saying in the final part of my previous response, which is that part of the quality of the student experience is the richness that you get from having students in your cohort who have different backgrounds and different perspectives. So, if there is a continuing reduction in the number of EU students coming into Welsh institutions, then that richness deteriorates. That doesn't mean to say that the base or the threshold standard of what's required for a degree will come under pressure, it's just about the richness on top of that, which will be, in a sense, a quality-enhancement issue. That would be something that we would wish to try to protect against, but in the end you can't force EU students to come—you have to try and look attractive, and we've touched on that. The baseline requirement assessment of quality will not be affected by Brexit, except in so far as the machinery we use to discharge our statutory responsibility, which is through the Quality Assurance Agency, which themselves are accredited with European Association for Quality Assurance in Higher Education, the European machinery for higher education quality. And there's a set of standards around that, and we would obviously wish not to be in a position where our ability to use and adhere to those standards is adversely impacted upon. Those standards will still exist, and it will be possible for the British system to adhere to them, even if they're not actually able to play in the same way. Then the only other thing I would say is that one of the factors that can cause the quality of the learning and teaching experience to be likely to become inadequate is when institutions come under financial pressure, just because their capacity to maintain the same sort of student experience can get under pressure. So, clearly, we will be looking for and making sure that institutions manage the financial pressures, if there are any—and there are some at the moment, as we've described—and manage those carefully. And in all of that, we will expect institutions to do their duty to make sure that the commitments they've already made to students are carried through. So, where students have already started on the course, they need to be able to finish that course—you can't just pull the plug out. A lot of what you've told us in the last three quarters of an hour or so will have costs attached, depending on the impacts. Certainly, we're in choppy waters as a sector anyway, and the risk is that things will be even more choppy, if you'll excuse that level of political interpretation, over the years to come. I'm just wondering what advice you might have given the Welsh Government in terms of what level of transition funding, or Brexit transition funding, might be required by the sector, and if you have, what the Welsh Government might have told you. bethan owen: I mentioned earlier that, obviously, we've provided information in terms of the assumptions that the sector are making on income. I think the extent to which that needs to be replaced or supported with transition funding depends absolutely on what the final arrangements for Brexit are, but it's an appropriate point to refer to the report that Professor Graeme Reid has produced, commissioned by Welsh Government. But, again, the Reid recommendations in that report build on the Diamond recommendations, and as soon as Diamond is in place—and Reid is providing recommendations in addition, to establish funding on the basis that the funding needs to be available in Wales to maintain and develop and strengthen the research and innovation infrastructure that we have. llyr gruffydd am: Are you not worried, though, that the clock is ticking and that we really don't know what the situation is at this point? dr david blaney: Do you mean the Brexit situation? llyr gruffydd am: The Brexit clock, yes. dr david blaney: Uncertainty is unhelpful, because as I've said several times, the sector is a managed sector at the moment. We're not seeing maverick stuff, but actually you can only manage, really, what you can see and what you can reasonably predict. So, the longer the uncertainty persists, the more difficult that is for institutional management and, indeed, for the rest of the machinery to support them. darren millar am: Chair, can I just ask a question? john griffiths am: Yes, Darren. darren millar am: In terms of uncertainty, though, we've still got this uncertainty over whether the extra cash that the Government's going to have to spend as a result of Diamond being implemented is coming to the HE sector. They've given a political commitment, but you've got absolutely no other assurance of the sums of money that are coming in. We've got the reform of tertiary education arrangements in Wales, which are also under way, so it's a bit of a perfect storm for you, isn't it, really, with all of these three things happening at the same time? dr david blaney: We're certainly kept busy. darren millar am: But two of those things are in the gift of the Welsh Government to sort out for you, aren't they? dr david blaney: Well, the policy on the reform of the post-compulsory sector absolutely is a Welsh Government policy. The extent to which they can pre-empt a budgetary process and give us clear sight of the amount of money in future years is—. My understanding is that that's difficult for them to do, and I would repeat what I said earlier: officials have been as helpful as I think they can be in respect of that. , you're right, we've only got a political commitment between two people currently in post. darren millar am: that statement about the savings accrued from Diamond being reinvested wholly into the HE sector has not been repeated, frankly, has it, since the coalition deal was struck? dr david blaney: No, but it hasn't been rescinded either, so—. darren millar am: No, but there have been opportunities—repeated opportunities—in the Chamber, where the Cabinet Secretary's been asked to repeat that commitment, and the First Minister's been asked to repeat that commitment and has not given that commitment. That must concern you, and must concern your university sector even more than, perhaps, some of the elements of Brexit that we're discussing. dr david blaney: Bethan has outlined earlier on in this session the fact that institutions are currently running deficit budgets in order not to lose the infrastructure on the assumption that the Diamond money will come in. If anything were to cause significant perturbation, either to the timeline of that or to it coming in at all, then there would be much more of what Medwin Hughes calls 'houskeeping' that would be required, and that would be significant. So, at the moment—I don't like the expression 'valley of death', but there is a valley to cross, and I think the sector is reasonably confident about how wide and how deep that valley is. So, there are several valleys that they're crossing—the metaphor fails, doesn't it, really, but I think you get the drift? So, there are a number of challenges and they can see their way out of some of those challenges, but if any one of these starts to get significantly disrupted, then that would be a real issue for them. Could I go on to ask about other barriers to Welsh universities gaining more funding from UK research councils? What would you say those barriers are? dr david blaney: Well, I think there are a couple of things, really, to say. The first one—and we'll sound like a stuck record if we're not careful—is that there's an issue about investment and the Reid report makes this very clear. So, he has reaffirmed research that had been done previously that identifies that, actually, the quality of the research base in Welsh universities and the productivity of that Welsh research base are both good, there's just not enough of them, and that, in the end, is a product of investment decisions. They have particularly looked at the deficit in science, technology, engineering and mathematics areas, and I always say that research is not just STEM. , STEM is important, and I'm not denying the deficit in that area, but we have to also remember that the research agenda for Wales is not just STEM—it's arts, humanities, it's social sciences. The Welsh impact in its research is better than anywhere else in the UK, so that's good. So, they do very well, and we just really need to invest a little bit further—so continue to do very well, but put it on a broader front. If you want to be able to play into the UK-wide research funding, then the investment has two dimensions to it. One is just having enough researchers to be able to play into those increasingly larger projects rather than small-scale projects. If you haven't got the critical mass, it's very hard to make the case that you can play. And the second thing is that UK-wide research pots nearly always fund at about 80 per cent of the total cost of the research, and the other 20 per cent is meant to be found from the core research funding for the university, and if you're in a situation where your core research funding is not competitive, then you're not going to be competitive at getting that money. I think it's fair to say that the Welsh sector has not been sufficiently focused on getting in on the conversations with the research councils, making sure they're in the various committees and so on. We are intending to do a bit of work to see if we can systematise that a bit better—that engagement—because there's no doubt about it: it's not to say that this system is in any way inappropriate, but the more you're in the conversations, the more likely you are to be better placed to respond to the research challenges that come up. One final question: in terms of the researcher collaborations and networks that exist, do you see potential difficulties after Brexit for the continuation and enhancement of those, and are there any particular lessons to learn from Sêr Cymru II? dr david blaney: I think that there are two things to say here as well. First of all, the Brexit deal might or might not impact adversely on the capacity of Welsh and, indeed, UK research infrastructure to play into broader collaborative activity across Europe, and, in a sense, that's a function of the deal whatever the deal looks like, and we'll have to wait and see. But we've mentioned playing into Horizon Europe, and being able to continue with that would be an important part of that capacity. It's not just the money, it's being in the club and it's the signalling that we're in the game. And then the other part of my response to this would be that, actually, Wales will need to continue to be good at the research it does, so maintaining the quality, maintaining the impact, and hopefully growing the critical mass. The Sêr Cymru initiative has been quite important in doing that, because it's been very focused, capturing key research players, and the attractiveness that that has then to other researchers around them, and to industry collaboration, and they have been areas of real strength that we've invested in. And I think they are already showing dividends in terms of the capacity to win more research funding, and to establish an even stronger presence in the international research market. darren millar am: Just very briefly, one of the pieces of feedback that the committee members received at a stakeholder engagement event, which took place prior to this inquiry starting, to receive oral evidence, was about the research funding that is available from the charitable sector, and how poorly Wales does in attracting some of that research. I think we had some figures from the British Heart Foundation, which said they have £100 million a year available for research grants, or something like that, and we're getting 1 per cent of that coming into Wales, which is obviously pretty low down. I appreciate that research into the type of activity that they want to put their money into, Wales may not be particularly good at, and there may be other opportunities with other charities and partnerships. What work are you doing in order to build the capacity that Wales has to attract more of that charitable sector research funding into Wales? bethan owen: One of the issues is the capacity to engage with that funding, because of the overhead issue that David mentioned. Again, that could be built in to our funding, if we had the capacity to increase our quality-related research funding. darren millar am: But that pressure's the same in other parts of the UK, is it not? So the overhead funding is still an issue in England, and in other places. bethan owen: There is an increased contribution, and I think it's an element that was increased this year to acknowledge that. I'm fairly certain that some of our institutions will be very strong with the cancer charities, possibly not the heart foundation. darren millar am: So, this gearing issue that you mentioned earlier on, for every £1 that somebody else puts on the table, they can draw in another £4 on top, because that £1 will cover the overheads, whereas the rest of the research cash—. You know, we sometimes get into a conversation about the unhypothecated nature of our research funding, but actually that creates a flexibility and the infrastructure investment that allows institutions to be able to respond to these other opportunities. Without that, they can't do it, because if you're not careful, you've got institutions engaging in UK-wide or charity-based research activities where they're actually having to pay for it themselves—they're running at a loss. darren millar am: So that's the main problem; it's not that Welsh universities aren't doing their best to get this cash in. Or is it a bit of both? dr david blaney: I think, in the main, universities and researchers will get their cash from wherever they can, so I don't think it's a lack of appetite. Well, thank you, both, for coming in to give evidence to the committee this morning. You will be sent a draft of the transcript, to check for accuracy. Okay then, the next item is item 3, papers to note, the first of which is a letter from the Cabinet Secretary for Education on the school organisation code. The second is a letter from the Minister for Children, Older People and Social Care on the Childcare Funding (Wales) Bill. Paper to note 3 is a letter from the Chair of the Finance Committee regarding scrutiny of the Welsh Government's draft budget for the forthcoming financial year, which we will be discussing under item 6 on the agenda. Paper to note 4 is a letter from the Minister for Children, Older People and Social Care on parental attitudes towards managing young children's behaviour. And the final paper to note, paper to note 5, is a letter from the Minister for Children, Older People and Social Care on the children and family delivery grant, which we will discuss later on in private session, if Members are content. Item 4, then, is a motion under Standing Order 17.42 to exclude the public from the remainder of this meeting, and also for items 1 and 2 of the 20 September meeting
The impact of the Brexit deal on collaborations is still uncertain, particularly in relation to playing a role in Horizon Europe. Maintaining quality, impact, and growth in capacity is crucial for Wales. Dr. David Blaney believes that these efforts have already yielded positive results, such as increased research funding and a stronger presence in the international research market. However, the main challenge lies in securing sufficient funding. While the government recently allocated an additional £6.6 million for research, this is not sustainable or adequate. The Welsh government has also expressed its vision for research and innovation, emphasizing the need for more investment in the Welsh research base to enhance competitiveness in accessing funding at a UK level.
What are the potential difficulties for researcher collaborations and networks after Brexit? How does the loss of funds due to leaving the European Union impact these collaborations and what are the possible solutions?