Good afternoon, everyone, and welcome to this oral evidence session of the Welsh Affairs Committee. My name is Ruth Jones, and I am the Chair of the Committee. I am really delighted that, over the two panels today, we have all nine universities represented in Wales here before us. Thank you so much to this panel for taking the time to come to meet us in person. It is really helpful. We are very much aware that there are a great many challenges facing Welsh universities today, which is why we called this session. We understand that this is a difficult time, and we are concerned. We want to understand further detail of the issues that are facing you, and how we might best highlight those issues and, maybe, solutions. Because of time constraints today, we will not be able to address all the issues with both panels. If you do not feel that you have had a chance to say your thing in your panel, please feel free to write to us afterwards with anything glaring that you think we need to know. That would be really helpful. Could I ask any members of the Committee to declare any interests? There are none. Can I ask our witnesses to start with a one-liner saying who you are and where you are representing?

Hello. My name is Professor Rachael Langford. I am the president and vice-chancellor of Cardiff Metropolitan University in Cardiff.

I am Dr Ben Calvert, vice-chancellor of the University of South Wales, based in Pontypridd, Cardiff and Newport.

I should declare that I know Ben, because I have been to a number of graduation ceremonies, which have been fabulous.

Prynhawn da. Diolch yn fawr iawn am y gwahoddiad. I am the vice-chancellor of the University of Wales Trinity St David, and the name itself tells many stories. Thank you very much for the invitation.

Prynhawn da. Good afternoon. My name is Joe Yates, and I am the vice-chancellor and chief executive of Wrexham University.

I am Ben Lewis, director of the Open University in Wales.

Thank you ever so much. First of all, let us start with the biggest elephant in the room. We know that universities across Wales are currently experiencing a really acute financial crisis. How did we get to this place? It may be that you want to tell a story for your particular university, or perhaps it is about the global issues. If somebody says something, you do not need to repeat it—just say that you second that, or whatever. If I start off with Professor Rachael Langford first, how did we get to this financial situation?

There are several combined causes. One of them would be around the tuition fee, which has been well rehearsed, and its non-indexation from 2012-13 onwards. The tuition fee is, of course, rising, both in Wales and in England, but it will rise well below the level to which it would have risen had it been indexed across that period. If it had been indexed across all of that period against inflation, it would now be reaching around £16,000 per year, which is a significant difference. That fee will be worth around £5,200 per student in real terms by 2030. It is worth the reminding the Committee and all of us that the work that universities do is not just teaching and learning. It is also research and development. Many universities in Wales have a significant amount of old, historically important estate, which is costly. Research and development facilities are costly. In terms of teaching itself, it is so vital to do it well. It is so important that our students in Wales get the best possible experience, but that also costs money. That would be my first point. There are a number of other policy issues, which, as you will all be aware, have come in quite short order. The first was what I would certainly consider to be a fairly significant market intervention around the deletion of student visas for dependants arriving to study in the UK. There was very little time for universities to adjust to that across Wales as a whole, as well across as the UK, and that has been difficult. It will be difficult for any business to absorb that amount of change in their business model in that short a period. Certainly from my perspective, in a post-1992 institution, an additional issue has been the increases in the employer contribution to the teachers’ pension scheme, which have been mitigated for some parts of the public sector, but not for universities in England or Wales. The Scottish Government have done some work on that. The national insurance increase is a compound increase. It is an increase in the employer’s contribution, but also a lowering of the floor at which that contribution needs to be made. All of those factors, compounded, have had quite a significant impact. I would note as well that Government—and particularly Welsh Government—have, where possible, provided extra funding. We certainly had some additional money for capital this year for the journey to net zero, but none of that has outweighed the impacts of the other factors that I have raised.

That really gives us pretty good coverage, but I may add a bit of colour to it. If we take international student recruitment, that change led to a £22 million income reduction for USW in one single year. As a consequence, you cannot manage that cost reduction in a single year. You have to enter into a process of looking at your business model. If the undergraduate fee does not cover the cost of teaching, and there is no other income-side solution to the cost-side challenge, you are, fundamentally, in a position where you need to really review your business model. As I say to my staff, how do you make something cost 90p when it is costing you £1.10 and you are getting only £1 for it? That is the challenge that we have to address. That is the scale of the sort of challenge. In terms of the teachers’ pension, the estimate is that, for every 1,000 staff who are in TPS, it is about £8.2 million more than if you were running them through USS. Those who have a teacher’s pension are at a competitive disadvantage. For us, that would be 90-odd or 100 staff who we are not able to employ, but people who are not in TPS might be able to employ. That also gives a sense of the scale of that disadvantage. The welcome increase in the fees does not cover the cost of the national insurance rise that Rachael mentioned earlier. As a consequence, you have compound challenges. What Rachael perhaps did not mention was inflation post covid, which really exposed the extent to which the fee did not cover the cost of delivery.

Ditto and ditto. Sometimes, when I am asked this question, I take a broader response. All of the details are true, and all of that detail has led to enormous challenge. The main job of seeking to run universities is managing balance. Some of the balance has changed over the course of the years, in particular from the introduction of fees. That has led to increased marketisation and a very competitive environment, and we are constantly looking to balance by managing that sustainability, but also doing what education is really all about, which is giving those opportunities for the future. We cannot get too focused on the past. We need to make sure that we are sustainable, but we also need to realise that, when we are doing that, we must not take our eye off the future direction of travel. It is a big topic, and I suspect others articulate it better than I do.

You are all here under your own merits, I assure you.

I would echo the comments made by colleagues. They were points that I was going to pick up as well. Just to reinforce those, and maybe to add to them, universities have carried on trying to deliver against their mission, which is about delivering skills, research and innovation. It is about reaching out to communities across Wales, and also making sure that we are having a transformational impact on those individuals and communities. What that means for our university in particular is reaching out into marginalised communities and trying to widen participation. I know that that is a mission shared by colleagues around the table. That does bring additional cost and investment. To give a flavour of that, 19% of my students recruited from Wales have some kind of identifiable disability. We also recruit a really high number of students from state schools, and those who are first in their family to come to university. We have continued to try to deliver that mission within the constraints of the cost base, which colleagues have articulated. I will say a couple of further things, just to flesh it out. In terms of utilities, these are things that impact on universities. In terms of TPS, that is not a choice for the post-1992 sector. That is something that we are legally required to engage with, and we do not receive a subsidy for that, as some other parts of the different sectors do.

That makes sense. Thank you.

Our model and our situation is quite different from the traditional providers. As you will know, we have about 16,000 learners who are all based and live in Wales. We have grown since the Diamond funding reforms, and continue to grow a little. What is different for us is that part-time funding has declined in real terms by £6.1 million since the Diamond reforms, so our growth has been in spite of that. Those non-traditional models are challenged by that level of funding, which is why we have been talking to Welsh Government about the question of the part-time fee loan going up. As with other colleagues here, we are serving communities with diverse needs. You will be aware that many of our students are carers or people seeking to return to work, and a very high proportion have disabilities, so many of those issues that colleagues have described would be similar for us, even though the model is quite different.

UCU Cymru has given us evidence that the past financial mistakes made by universities, such as private sector involvement in buildings, have contributed to the financial crisis. Do you have anything to say in rebuttal to that, or could the universities have done a better job at managing that sort of issue?

I took up my post in August this year, so I have been in role for nine months. That is not an issue that I recognise in terms of Wrexham University. I would say that universities have been managing what are quite challenging financial positions due to the constraints around the tuition fee. I could not really comment on the issue of private sector involvement from my perspective.

It is a really important question. Clearly, each of us deals with the deck of cards that is handed to us. The landscape around us has changed enormously, as we have just touched on. We are all enormously diverse universities. I almost do not recognise necessarily that there is one traditional pattern of university; we are all, in our ways, very different. My university is fabulously, richly different, because it is in all sorts of different places, and is made up of a number of historic and more recent entities. There is certainly a building legacy to address. I have made no secret of the fact that we have 139 buildings and we would face a significant cost, were we to seek to address the demands of getting them up to a high standard. Part of the change that we are all living through is that learning, teaching and students’ expectations are very different, and so buildings that may have been relevant 100 or 200 years ago are not necessarily the ones that are fit for 2025 and the future. I have been in role for just under two years now, but part of our job as vice-chancellors is to make sure that, whatever the legacy, we are facing the future with confidence. That is how I position the challenges that we face. Maybe we will have an opportunity a little later to look at, for example, the Lampeter issue that we have. It may be seen as an issue or a problem, but we now see a really significant but different future, because it reflects different expectations.

Don’t worry, I am sure we will be coming back to Lampeter. Dr Ben Calvert, you are from a newer university. Do you want to say anything about the UCU Cymru statement?

The implication there is that there has been a leadership or management failure somewhere. I would not necessarily advocate that. If you look at the data for the whole sector, the expectation is that, next year, something like 72% of institutions may be in deficit. That suggests something much more structural than simply saying, “There’s been some kind of leadership failure.” People make decisions in different contexts and circumstances. In a growing market and a more stable environment, those might have seemed sensible decisions to make. They are not decisions that we made, and we have tended not to do that, but you can understand why, in a particular context, those might have seemed sensible decisions. The context is important. We have described to you some of the structural shocks to the sector that have happened and that have exposed, in a sense, the underlying challenge of the fee. Nobody expected to take an institution through covid. Nobody expected double-digit inflation afterwards. Nobody expected policy change to the extent that we have seen. The same Government had a strategy to increase student recruitment internationally to 600,000, and then there was a policy change that led to a £22 million reduction for us in one year. It is perhaps rather simplistic to paint this as a foresight challenge for institutions. The more important thing is how we arrive at a way of working in a business model that sustains the mission and purpose of our institutions at a rate that we can afford, particularly when we do not see obvious financial solutions to that in terms of getting more money from Government at this time. We just have to do the difficult things that we have to do to make the places work.

I do not recognise that description for our institution, but, if union colleagues have knowledge that I do not have, I would be more than interested to hear what that refers to. We do not, as far as I am aware, have any private finance arrangements on estate. We have a relatively limited estate, with two campuses in Cardiff. What I would say is that it is clear from our accounts that we had a 45% fall in the number of international students enrolling to study with us between 2022-23 and 2023-24, which is a stark shortfall in the income that we had projected. It is also worth recognising that, while taking Elwen’s point about not looking backwards, the sector also had the unplanned events of the covid era and was coming out of that and setting itself on a surer financial footing when the international student reduction happened.

Thank you very much. Ben Lewis, I do not want to leave you out of this, but I am conscious that you have a different model. Do you have anything to add?

I will not talk to you about buildings—I am sure that you are busy enough that you do not need that. It is worth mentioning that a benefit of our operation and the way that the university works as a pan-UK operation is that it creates an economy of scale in terms of the curriculum and the labs that we have on our campus in England, which are used for teaching materials that are then deployed nationally across the UK. That is probably relevant to mention. It is also worth the Committee remembering that the reforms in the 2010s created access for private providers to come into the market that the OU is in, which does create challenge, and I suppose that that is what the unions are alluding to in a different context. It would be remiss not to keep it in mind for our context as well.

Good afternoon and thank you for joining us. I would like to follow up on the points that were made about national insurance contributions, so it is a question for all of you. How has the increase in national insurance impacted university finances? Was it something that you had expected? Has it played a role in the staffing cuts that we are seeing largely across the board in Wales?

I would quantify it as an additional cost to us of £1.6 million. In the round, along with other cost pressures and the fall in income, it will have had an impact on the restructuring and remodelling that we have had to do.

For us, it is about £2.5 million. As Rachael said, it is the compound issue here. It is the income decline. It is the inflationary pressures. In a sense, we are in what I would describe as a perfect storm. As a singular issue, it is relatively small compared with a £20 million reduction in international fee income, but it does not help. The fee rise that we have had covers just over half of that, so it is not fully covered.

I do not think that it was expected. It was around the time that we were taking decisions as to whether we would implement the pay rise in real time from the beginning of the last academic year or whether we needed to delay it. The NI increase was more or less the same sum of money as what the implementation of the pay rise would be. We are enormously grateful to our unions, which supported the decision that we took to delay the implementation of that pay rise. They were fantastically prepared, with challenge, as one would expect. Interestingly, they are giving evidence today before the Senedd’s Children, Young People and Education Committee as well. I hope that the way that I characterise our relationship is one that would chime with our unions. Because we have been able to work really well together, I am delighted to say that we are going to be able to implement that pay rise earlier than we had agreed we would, not because we are awash with cash, but because we have been working in partnership effectively and now at least have moved the dial sufficiently to be able to do that. So, yes, it did have an impact.

It was not expected, and it did have an impact. That impact, alongside the increases in teachers’ pension, incremental drift and all those things, presents significant challenges. As part of that broader package, that does present challenges for us.

From an OU point of view, it was not anticipated, but we are structured on a UK basis, so it is a UK-wide question in terms of the impacts of it. We have been in a return-to-surplus savings plan since about 2022, so it is being accounted for as part of our savings plan overall.

Thank you all for attending this afternoon. I should like to direct my question to Professor Evans, if I may. It relates to the campus at Lampeter. I do not need to explain the importance of the campus, not only to the local economy, but to the identity of the town of Lampeter. The announcement that undergraduate teaching would be coming to an end at the end of this academic year was a real blow to the town. Looking to the future, we can all agree that it is important that the campus is not left unused or empty, and so I am keen to understand what the university has in store for the campus, particularly to ensure that it does not go unused. The facilities there are fantastic, and it is really important both for the community and, indeed, the town itself that it remains an important part of the town’s future.

Yes, absolutely. Ben Lake, you are our local MP in Lampeter, in Ceredigion. Ann Davies is just over the river in Carmarthenshire. Steve Witherden is a graduate of Lampeter. We know how important Lampeter is to Wales and to many beyond. As you can anticipate, it was not a decision that was taken in any way lightly. If it is any consolation, I have been very nervous about coming to this Committee, because I have never been in this sort of environment before, but the public meeting that we had, which you attended, in Lampeter was probably as good a training session as I might have for a hostile Committee session. We were down to 92 undergraduate students who were doing humanities courses there. It was not sustainable. If I just take some figures, it costs £2.7 million to keep the lights on and the utilities running, with a significantly smaller amount of income from student fees. This is all part of the balance. When I was talking earlier about balance, it is that balance between our main income, which is student fees, and ensuring that we do our best by our students, and what is not a legal but a moral obligation that we feel to place. Place is incredibly important. While Lampeter may be one of our places, it is a key place. It was a difficult decision. I am grateful that you posited the question in the sense that we are not closing the campus. We were never closing the campus. What we were looking to do was to try to preserve the delivery of humanities by moving it to a campus where we could seek to make that more resilient, while looking at options for Lampeter campus. We have stakeholder engagement. Ben, along with Elin Jones, the local Senedd representative, is very actively involved in that activity. The next meeting is next Thursday. There is a session in Lampeter today as well, focusing on some of the proposals. I am sorry that this is long. I will tell you what I am going to do, if I may. I see Lampeter as an example of why things have perhaps gone awry in the sector. I also see it as an answer for the future, because there are exciting developments taking place, which I hope we will be in a position to share more broadly, probably by the autumn. Rather than taking up more air time, might I consider inviting this Committee—a lot of you are based round and about the area—to come to Lampeter? One of the balances that I am talking about at the moment is around where we can share things and be totally transparent, but there are sometimes things that are private and sensitive to third parties, as well as governance processes with third parties, that we cannot share. We have to keep that balance so that we do not lose opportunities by oversharing our potential possibilities. Can I leave it there? Come and visit us.

It might be helpful if you could write to us when you are able to, rather than trying to organise a visit. I know that some people are very keen, but could you write to us with those details when they are available?

We will, but it will take a while for things to evolve. This is an opportunity that reflects what tertiary sector education might look like. It reflects Medr. It reflects Welsh Government’s ambitions around education.

In the interest of time, I am going to ask for brevity in questions and answers, please.

I like to think that we do a remarkably good job at that. For me, it is one of the absolute privileges of my job. There was one that you left out, which is Cardiff, where we have WAVDA.

No, it is fine. We also have a research centre for Celtic and advanced Welsh studies in Aberystwyth, so it is a really convoluted set-up. It is part of the joy to be involved in running that, and it has a really important part in that Arfor identity of Wales as well.

Dr Calvert, USW is currently facing the prospect of cuts. You are working through a consultation period now. How are you making sure that you are getting the best for staff and students? Are there any aspects of the funding challenges that might specifically affect USW more than others, for instance?

There are other challenges that make life difficult for us. We have different ships sailing into different storms—let me put it that way. A significant proportion of our students are mature. About a third of them will be over 30. We have the highest percentile of students from the lowest quintiles of deprivation coming to USW. When you look at the participation challenges, that is where the biggest gaps are. I am also on the UCAS board, and we can see significant movements. Across the UK, there has been a 10 percentage point decline in mature student applications to universities. As Rachael and Elwen mentioned earlier, we are seeing marketisation. We are also seeing movements of students as a consequence of the income challenge in the sector. Last year, higher tariff institutions took 14% more students than they normally would, so you perhaps have people who are working in markets that they traditionally would not work in. Given those dynamics, the participation challenge in Wales, which we have not talked about, where we have an eight percentage point differential to England, is probably the place where the larger competitive challenge is for us. That is over £40 million of income, if you take that as 4,000-odd students who are not coming into the Welsh higher education sector but who could be. It is that wider piece. What is the market doing? How is it responding to these pressures that lead to particular challenges in particular institutions? What can we do about that? The participation challenge is a long-term, collective piece of work. We cannot solve that. We have to work with schools. We have to work with advice and guidance. We have to work with aspirations. We have to work with our communities to do it, but those are the forces that are particularly impacting us.

This is a question for Ben Lewis. The Open University has a different operating model from the other universities that we are hearing from today. Can you tell us about the challenges and the opportunities that this brings to you in the current climate?

Yes, of course. In terms of the opportunities, our student numbers in the whole of the UK grew during the covid pandemic, and then have dropped back since about 2022, but in Wales, they have grown consistently since the Diamond reforms. That has provided us with a very positive opportunity for student number growth, which continues to work out well for us in Wales, so that is certainly a positive. Our part-time model suits the way that lots of people live and want to learn these days, and that is reflected in our numbers. There is a vulnerability there, though, in that we are quite reliant on the maintenance settlement in Wales and the maintenance arrangements that were brought in by Diamond, because they certainly helped. The model is not the only factor that has helped in our student number growth, but it has definitely helped, so there is a vulnerability there. There is, again, a wider UK-wide issue around private sector competition that I mentioned before. A further challenge would be around the overall funding envelope in Wales and the point that I made at the very start around funding for part-time study at university not keeping up with what the Diamond review recommended in 2016. We can quantify that and send you the figures on that, if you like, but it is pretty transparent and clear.

Others may want to jump in too, but what flexibility do you have to react quickly to industry demand around skills? Are you having those conversations about upskilling in these industries?

I am glad that you have asked that. We would very much like to do more in that space. We have been talking to Welsh Government about what we could do in Port Talbot and the wider region around reskilling. We are certainly interested in wider conversations about that and how we can contribute to that. If that is something that we can follow up on with you, that would be great. That would be very welcome.

That would be helpful in writing. Thank you very much.

Moving on to looking at international students now, I would be really interested in your views on the UK Government’s immigration White Paper and the impacts that it will have on your universities. Alongside that, do you have any concerns about the ability that you may have to comply with the strengthened visa requirements being imposed on you?

In terms of the concrete proposals in the paper, I recognise that they are only proposals at the moment and I am sure that more will wash through. The proposed 6% levy on international student fee income would be another cost to us of £1.6 million, which is very significant. It is significant across the sector in Wales. I suppose if that were invested in order to improve participation, for example, that might be something where we could have a really productive conversation. To the earlier point about planning well in advance to make sure that we are resilient, we are well aware of that. In terms of other things raised in that paper around the thresholds for visa compliance, we work exceptionally hard at Cardiff Met—and I know that my colleagues do—to make sure that we are compliant at all times. That additional 5% will be difficult. In order to do that successfully, we need much better and closer working with UKVI. That would be the point there. We often do not get flags early enough for us to take action, if action needs to be taken, at an appropriate point.

After the change to the dependants rule, the sector’s ask was for policy stability, because the market reacts very quickly to change. The White Paper has introduced further change to policy, and the market is reacting to change, so we are seeing deflated demand across the sector for next year as well. It will have an impact in that regard. In terms of the change to the metrics, USW’s performance is currently within those metrics, but, as Rachael said, it is very tight. You can see that that is bumpy from one year to the next. Sometimes you get challenges in one market that you have to address, and it can be bumpy. There needs to be sensitivity in how they are applied, maybe taking a longer-term position and looking at applying them over a number of years. We need to assess what UKVI’s behaviour is going to be like in terms of visa issuance, and how we react to that. One of the important parts of that is that, where we have had bumpiness in the past, we have been proactive in talking to UKVI about it in partnership. That model of partnership is really important and needs to be kept. The other element of this, which is not currently proposed for Wales, is the levy component. We would not want to see that. We would not want to see an unnecessary tax on institutions as part of this process. I know that that is not being proposed in Wales, but it is just a point that we would want to make for the sector.

Ditto. Will you forgive me one sentence on skills in reply to Llinos? It is right to say that each of the vice-chancellors in this room was talking about regional skills before we came in. It is a big agenda for all of us.

I would support the comments that colleagues have made. I know that it is not proposed in Wales, but the levy will be a concern for a sector that is already experiencing significant financial challenges, as we have already talked about. The other point that I would like to make is to position international recruitment as just one aspect for how universities engage globally. Our global engagement and the soft power that that brings, whether that is around driving innovation, research or skills, or whether it is bringing that innovation back into Wales, is really powerful and something that universities bring. It delivers benefits for our communities, for our economy, and to the public sector in terms of innovation. I know that all of us around the table will be able to point to examples of how that global engagement plays back. We have just signed some MOUs with some universities in Canada. Again, that really aligns with the priorities around advanced manufacturing development in north-east Wales. This is part of a wider global engagement strategy within each university.

That is really interesting. Thank you.

The levy does affect the OU. We recruit as a national UK institution, so it is directly relevant to us. It is worth also mentioning that we have a proportion of international students in the UK. On the wider question of the economic growth of UK plc, it is also worth mentioning to you that we have 4,500 students registered who study with us at a distance. I support all my colleagues’ points as well, but it is important to keep in mind the distinct way that the OU operates with whatever reforms are coming forwards, and the impacts that they can have on our specific way of operating.

I will just add one very quick point, if that is okay. There was an interesting report done last week or the week before by the Blair institute on impacts around international recruitment in institutions. It is an interesting read, because it demonstrates that the sharpest impacts are in institutions that are like ours, so post-1992, doing the skills work, and in poorer parts of the country. There are disproportionate impacts there as well that we just need to be aware of. That is the bit of the market where it is tightest.

Let me start with the Welsh language. We have quite a significant share of provision in the Welsh language, and have treated the Welsh language as if it were a protected characteristic throughout our restructuring process. We have been really mindful of ensuring that there is no reduction in our Welsh-medium provision at the university as we move forward. We have a KPI around the number of students able to take education through the medium of Welsh at the university, which we continue to track towards. I am confident that we will remain in a good place, but I am also mindful that it is really important that we keep an eye on that. We have received a letter from the Comisiynydd, as well as from Coleg Cymraeg, on those very issues, and we have responded. In terms of keeping Welsh Government apprised of what we are doing, that has happened at every stage. We have also apprised the Secretary of State for Wales and our local MP, Alex Barros-Curtis, of what we are doing with restructuring. In terms of competition law, it is not my view—and my view may not be shared by others—that competition law, as it stands, prevents us from doing appropriate things looking forward. Where we need to collaborate for the benefit of the learners and the population of Wales, we are able to do so while remaining compliant with competition law. CMA guidance is a slightly different thing. As far as I understand it, it is frequently focused not so much on provision but on our clarity with consumers, so that students and others engaging with us know what services and product—if we use that language—they will receive. I am not concerned about our ability to do the right thing for Wales and the UK, and globally, within the context of existing competition law.

I will not add anything on Welsh language. The same points would apply. We also have kept Welsh Government apprised of all the changes that we are making. They have been briefed in advance on proposals that we are making around courses, closures and so on, so that has certainly been there. I would add that it is not just about HE-to-HE collaboration. We collaborate in other systems as well. We are a group structure but we also have alliances with our FE partner colleges. For example, we do an awful lot of collaboration on degree apprenticeships through a co-design model, where, when we design apprenticeships, they often start in the FE colleges and then progress to USW. It is possible and there are clear opportunities to do that. When we look at the Welsh higher education system, there are many points of collaboration. There is an awful lot of collaboration around learning and teaching, as well as things such as learner analytics. There is significant collaboration around research. We have the Wales Innovation Network, where we do an awful lot of collaborative research. Indeed, we have some existing collaborations around shared services, for example our library service for Wales. There are already strengths that we can build on. It does get a bit harder in terms of mapping provision that you are currently running, but we are in mature conversations not just with Welsh Government, but in our region—for example, the Cardiff capital region—about what future skills look like, what those pipelines look like, and who is best to do what. Those are productive and good conversations that we can have.

I am very conscious of time, so I will just ask one very quick question.

We can go over by five minutes.

Given what we have heard about the very significant challenges that you are all facing, how confident is each of you that the sector can recover? We know that the situation facing the University of South Wales is very different from the one in Wrexham, for example. A £22 million deficit in one year as a result of one specific policy change is very significant. How confident are you that the sector can recover?

I can speak only for my own institution, but I understand from colleagues that we are not particularly divergent. We are working incredibly hard to make sure that we can recover and that we are still here in 10 years’ time to serve learners and our communities. I think that we will do it, but, in order to achieve that, I do think that we need a few degrees more coherence in the UK policy environment in terms of immigration policy, education policy, Treasury policy and R&D policy. One thing that has been particularly difficult to plan for is that divergence and slight lack of coherence. It feels a little bit like we are tumbling around in the washing machine at times, and we are not quite sure which way things are going to come out. Where we can get clarity and connectedness sooner, that would be helpful.

Policy stability would certainly help, because, frankly, it aids your ability to plan. I think that we will be okay. The University of South Wales is in a strong cash position. What I would say is that cash is going to be very important to institutions across the whole of the UK sector. Where there is cash tightness, it affects your ability to invest in change, whether that is rationalising your estate or developing your IT system so that you can automate. There are all sorts of things that you might not be able to do but that would be the productive and progressive things that you need to do in order to realign your costs to your income. We think that we are able to do that, but it is going to be hard. We are in a strong position. What I would also say, though, is that there is a fundamental issue around the relationship between cost and income for teaching. If that remains, it is going to carry on being challenging. While we would welcome index-linked fees—and Rachael and I were having a conversation at a committee about this only the other day—for widening the participation of students, that gets very difficult. We do not want to make it so expensive that they will not come. The wider UK reform and the review of fees and funding that has been proposed has to look at what the sustainable proposition looks like in the long term. In the short term, we will manage our way through it, but there needs to be a clearer sense of what people want from higher education and what they are prepared to pay for.

I agree. I hope that I do not sound too Pollyannaish, but I am optimistic. We are making tough decisions—Lampeter—but it is for a purpose. It is to ensure future resilience and sustainability. This is the “Yma o Hyd” narrative, if you like: we will still be here, but we are going through a period of change. Change is painful, but it is for a purpose, and that is very much how I see it.

From Wrexham’s perspective, we are a new university, but our antecedents go back to the late 1800s. Universities have evolved and adapted many times during their history. That has happened for Wrexham as it has for other universities. How we evolve and adapt to the current pressures that we face is really important. There needs to be a long-term solution to the funding issues that we have talked about today. I echo colleagues’ comments around a real thirst for some policy stability but I would go back to the point that I made earlier about the mission of universities. Universities are critical in terms of social mobility. The reports from the Sutton Trust show the amplified and magnified impact that we have, particularly for people growing up in marginalised communities. The evidence base is there. Also, as we move forward, universities are absolutely at the heart of the knowledge economy. We are in a really dynamic space with emerging technologies. We have real priorities that we can see, whether that is in the UK around the industrial strategy; in Wales around the developments in terms of Medr; in north Wales, our region, around the development of advanced manufacturing, creative and digital, public sector innovation with the workforce; or with the Mersey Dee Alliance and what is happening with that economic cluster. The point that I am trying to make is that universities do need to survive, because we are at the heart of delivering real impact for place and communities. I share a level of optimism around the future; I think that we will adapt. We have done it in the past, but the plea is for more stability in terms of policy to enable us to do that, and to do that well.

We can be confident that people in Wales want what we are offering, because you can see that from our student numbers. That is great, and we have good partnerships to enable that growth to continue and to direct it to where it is most needed or where there is most demand for it. A greater policy connection and awareness of the demand for that, and the impact that that can have, is needed. I would argue that there is benefit in thinking more strategically about moving away from this focus on having 18-year-olds full time and the benefits that that would bring economically, and having a joined-up policy approach to that.

That concludes our questions for the first panel. I just want to thank all five of you for taking the time to come and appear in person before us today. I also need to wish Dr Ben Calvert a happy retirement next year. I know that it is a long way off.

It is a long way off.

Thank you to all five of you for coming before us today. Witnesses: Professor Jon Timmis, Professor Edmund Burke, Professor Wendy Larner and Professor Paul Boyle.

Good afternoon and welcome to our second panel of witnesses for this Welsh Affairs Committee with our Welsh universities. I want to say thank you to all four of you for joining us online today. It is great that we have had all nine universities represented today, which is a real coup. My name is Ruth Jones and I am Chair of the Committee. I am going to start by asking you to briefly introduce yourselves. I am conscious that we are five minutes late coming in, so I would be grateful if you could spare us five minutes at the end to make sure that we get all the questions in. Thank you very much.

Prynhawn da. I am Edmund Burke. I am the vice-chancellor of Bangor University.

I am vice-chancellor of Swansea University and, at the moment, the chair of Universities Wales.

Prynhawn da. I am Wendy Larner, vice-chancellor of Cardiff University.

Prynhawn da. I am Jon Timmis, vice-chancellor of Aberystwyth University.

Thank you very much, all four of you. We heard from the first panel about the acute financial crisis that is happening at the moment. Can you give me a bit of detail on why you think this has happened and, in particular, why now?

What we have had is really a perfect storm of issues coming together. Until this year, we had not had an uplift in student fees in Wales since 2012-13. Inflation has been running really high during parts of that period. International student numbers have dropped significantly in very recent years as a result of Government policy. National insurance contributions are significant. All of this has come together to create a real financial challenge for the sector and, in particular, for the universities in Wales.

Thank you very much. Professor Paul Boyle, do you have anything to add? Rather than repeat things, if something has already been said, could you just add new points, please?

I would agree with all the points. I would simply add that we are aware of the scale of the problem. In 2024, the sector as a whole in Wales was recording a deficit of around £77 million. That was before the impact of some of the changes that we have seen, for example, to the international students, so I anticipate that this year is going to be a very difficult one.

I agree with what my colleagues have said. What I would add is the importance of our research, which is crucial for Wales and the world. We also heavily subsidise that, so this is where the downturn in international students is really important. It is about the implications of that not just for our home students, but for our research.

I would agree with all of that and just add two quick things. One is around the timing of some of the things that have happened over the few years that Edmund talked about. Some of them have been longer term, and others quite recent, such as the national insurance increase. When combined, that is challenging. Picking up on Wendy’s point around the research piece, I would also mention the civic piece and the importance of universities in the local region, which is particularly acute here in Aberystwyth, as you might imagine. We do an awful lot of civic work. The financial implications of that are very challenging for us, as they are for all of us.

We heard from the first panel about the important work and collaboration going on with the Welsh Government and the way that they are supporting you as universities. Is there anything that the UK Government could do better to support Welsh universities?

The UK Government, of course, took the decision recently to increase fees with inflation. We welcomed that decision, and it was a positive step, but, as Edmund has already pointed out, the national insurance contributions that we now have to make wiped that out overnight, effectively, so it has made no difference. In particular, given the precedent that has been set and the concept that these fees will have to rise with inflation at the very least, it would be extremely helpful to us to have some reassurance that that is definitely going to happen year on year, and that we can expect an inflationary uplift. We have also listened to the UK Government, who have listened to our concerns, and there have been good conversations. They have talked about a review of the system over the summer period. Of course, we would really welcome some conversations about that review. Everything that has been described to you so far is a system based on cross-subsidy. In the past, the UK Government have set us targets to try to attract more international students. More recently, of course, they have taken a decision to reverse that and to reduce student numbers through the changes to some of the visa rules. That instability and volatility is exceptionally difficult to manage when so much of our system is cross-subsidised. Wendy was absolutely right. For many years, we have cross-subsidised our research and innovation activity with international fees. In addition to that, we are now cross-subsidising our home student teaching with international fees. The system of cross-subsidy can work only if that cross-subsidy continues. There are, of course, additional external factors beyond the control of the UK Government, or any of us, to add into that mix. We must come up with a system that brings stability and has long-term sustainability at its heart. The first step in that, I would argue, is surely to recognise that we have to accept that fees will rise with inflation, at least to keep the stability of the current system, but that will not be enough to put us in a position where we are all financially stable.

Thank you very much. Professor Jon Timmis, do you have anything else to add that the UK Government could be doing?

To reinforce the point around policy stability, which was discussed in the previous panel as well, if you have a stable policy landscape, it really is much easier to plan, so I would absolutely request that. Building on Paul’s point around the tuition fee increase, that is not a long-term solution. The UK Government really need to look at what a fit-for-purpose funding mechanism for higher education would be. That needs to take into account what UK Government and the devolved nations want from their higher education systems and what they are prepared to pay for it. What does that stable funding model look like? To reinforce the point I made earlier around the civic piece—this is one that I will keep coming back to—we do an awful lot of work there. If we have stability and a solid funding mechanism, we can do the kind of work that we want to do and that we recognise is a moral and, in places, ethical thing to be doing in our regions. Without that stability, it is very difficult.

I agree with what colleagues have said. In terms of the new industrial strategy, please do not forget about Wales. I know you will all work very hard on our behalf, but the Welsh universities have a crucial role to play in delivering the aspirations of the Westminster Government. We look forward to playing our part in that. Do not forget about us.

I am sure we will not.

The point around stability has been well made. Another point that I would want to make is sustainability. Without indexing—without the amount of income per student rising with inflation—the system is inherently unsustainable. We need to have sustainability. That is not necessarily a call for a rise in fees—there are different ways to fund universities—but the amount of money that a university receives per student has to rise with inflation. Otherwise, by definition, the system is unsustainable. We need to bear that in mind. It is really important that universities work in partnership with the Welsh and UK Governments. Universities have so much to contribute to the aims and goals of Government. We want to work with Government, but we need a stable and sustainable financial environment in which to work.

Good afternoon, all of you. Thank you for joining us today. I want to look at the replacements for the EU structural funds that we used to receive in this country. We have had a very tumultuous period of funding changing, with the SPF coming in and the current Government now announcing the local growth funding. I would be really interested to hear what your universities hope to see from the replacement for the SPF—the local growth fund—and how you would link in with that.

Thank you for the question. I am having computer issues, so if the image is not quite what you expect, that is why. We are very pleased to be an active partner in the Cardiff capital region initiative along with our fellow Cardiff universities. In terms of that tension between the combined mayoral authorities and the devolved nations, and the regions within the devolved nations, we see enormous opportunity here to be working with our partners in the region to draw additional investment into Wales. For me, that feels like a key opportunity.

Whatever replaces the funding needs to very much recognise the role of place. A lot of different places have different requirements; they have different demographics. I am saying some obvious things, but these are really important when you are looking at funding mechanisms. What we would need in the rural economy of west Wales is very different from what might be needed in the capital, for example. Some of the European funding was good at recognising that. Whatever we do, we have to have that. To give a bit of flavour to that, we have some great strengths in Aberystwyth, particularly around IBERS, which is the biosciences research centre that we have. Some of you will know about the work that we do there. We need to invest strategically in that. There are things that we can do here in Aberystwyth that you cannot do pretty much anywhere else in the UK. It is really important to be able to preserve that through some targeted funding mechanisms.

I would very much agree with Professor Timmis’s point around place. Taking a regional view is very important. A greater emphasis on research and innovation is also important, linked to that view of place and the region, and the contributions that a university makes to its local community.

You have raised a really important issue around the structural funds. As you know, Wales benefited very significantly from the structural funds previously for very good reasons: those funds were allocated based on economic need and they were designed to help drive economic growth in the regions in which they were invested. We saw very good investment. One thing that was particularly valued about those funds was the scale of projects that we were able to embark on and the ability for us to collaborate very easily not just with our fellow universities, which of course we did, but with businesses and other parties. At my university alone, over the period from 2006, we were involved in £300 million-worth of projects. Just in the more recent structural fund period, it was £150 million-worth of projects. When you realise that our university has an annual turnover of £350 million or so, it gives you a sense of the scale of projects that were being invested in. I am not going to try to pretend—no one would—that every single project that was funded was perfect, but we had some stellar projects on that list. They were really driving fantastic returns not just for universities but, much more importantly, for the Welsh economy. Those funds were ended effectively at a cliff edge. They were taken away and replaced, as you are very aware, with the UK’s shared prosperity fund in the first instance, which was spread much more thinly across the UK. It did not allow for large-scale projects and did not very easily allow you to collaborate in large partnerships. Notwithstanding the fact that we are very happy to be involved in a number of those projects and we see some value from those, the problem is that the structural funds provided a different scale of ambition that really helped to drive economic growth. We were very supportive of some of the proposals that Welsh Government made about how they would hope to continue funding research and innovation in this way, were it the case that the UK shared prosperity fund had been allocated more in proportion with the way that the structural funds had been allocated. We could see that the level of ambition in those proposals were much stronger. I agree with our colleagues. Any solution absolutely has to be a place-based solution. We have to recognise the strengths and areas that we want to propel, and all of us in different parts of Wales and indeed within the UK will have different strengths. It is essential to try to move back to a system that allows the sort of ambitious projects to be funded that, I am afraid under the current funding system, just does not happen.

I would like to start with Professor Larner, please. Are you satisfied that UKRI’s competitive grant funding process serves Welsh universities well?

No. That is the short answer. We know that the proportion of the funding that comes to Wales is not what it should be on a per capita basis. We need to get smarter about putting together those big ambitious bids that my colleagues have been alluding to. We have a lot of opportunity here. The place-based agenda will serve us well, but we have some work to do in that regard.

Wendy is right. We are not receiving the proportion of funds that we would like to receive. Those funds have increased slightly. If you look at the last two years of UKRI data, we were receiving about 2% of the funds into Wales and that has gone up to about 3%. It has increased slightly. It is also the case that our success rates, when we do apply, are relatively good. It is really important to make sure that we have the research base available to make those applications. Wendy is absolutely right; there is more that we can do to channel the large-scale ambitious bids, which we need to do. One of the things that we have done as a group of universities across Wales is establish WIN, which is the Wales Innovation Network. This has been designed specifically to bring us all together and encourage us to get more large-scale bids together. Indeed, we have seen real evidence of success with that, and we have seen some really good awards that have come into Wales as a result. As a group of universities, we are proactively trying to put in place mechanisms to help ourselves improve, but it is also the case that we need to continually talk to UKRI about ways that we can bring more funds towards Wales. One of those is around the place agenda that has just been mentioned. That place agenda is something that UKRI is giving a lot of thought to, but there is still work to be done in the way that it is allocating funds and the decisions that it is taking around how it allocates place-based mechanisms.

I will shift across now to north and mid-Wales, starting with Professor Burke. Cardiff and Swansea receive much of this funding in Wales, but how important is it to other institutions? Is it allocated fairly?

It is very important to all institutions. It is important to my institution, as a research-intensive university. I understand some of the issues that UKRI has around volume and demand, but we need to have conversations. The point has already been made around place. That is really important. Some of the demand management mechanisms that are used tend to lock in historical success rates. We need to have a conversation with UKRI about that. There is work to do. We need to engage. Wales should be receiving more than it is. Three per cent is not enough. We need to have those discussions and make sure Wales does better in the future than it has done in the past.

I would agree with everything that has been said, but I would like to reflect on why it is important. I have been lucky enough to go around my academic departments recently talking to my academic staff, PhD students and postdocs about the research that they do. I have said this to many people, but I wish you could do what I have done. I wish you could talk to people and see the incredible work that my colleagues are doing at this institution through their research, despite having a lower amount of money with which to do it. That is everything from helping design cameras that are going on the Mars rover to going up Mount Everest to looking at the historical implications of cultural change and applying that in South America. I could go on. It is really important that we do support the research and the impact that research has not only financially, because it will give a potentially good return in terms of increased productivity, but socially and regionally. We do a lot of work here in Aberystwyth, as I know colleagues do around Wales, with our communities. It is really important to do that research. That is just a reflection on why the question is so important.

For my final question on this topic, Chair, if I may, I would like to hear from the entire panel. I will go back to Professor Larner to begin. In the 2022-23 academic year, Welsh universities received less funding per researcher from UKRI research councils than any other UK nation. What barriers have your universities encountered in securing this funding?

That is a good question, and I am not quite sure how to answer it, to be honest. I would go back to my earlier points about having an institutional environment that encourages people to be really ambitious and to pull together those big interdisciplinary grants that receive significant funding from UKRI. Some of the work that we are doing here at Cardiff University is precisely to reposition ourselves. We are very clear about where we have clear areas of excellence that we can then leverage, bringing that additional funding into Wales. My answer is that we have historically been a bit too siloed. I want us to be more ambitious. Having that level of ambition will address the challenge that we are exploring through these questions.

One of the things for us is that the context in Wales, of course, is different in so many ways. You have heard about the issues, for example, in north and west Wales, but, as a nation, we do not have the scale of industry that some other regions in the UK have, for example. Certain schemes that are funded through UKRI lend themselves to collaborations between large-scale industry and universities. Notwithstanding the fact that we have some great relationships and we have some good projects of that type, we do not have as many of those large-scale companies as some other regions, so there are certain funding rounds that are more difficult for us. On the other hand, we have larger numbers of SMEs and smaller businesses that we are trying to work with collaboratively. When there are programmes developed for SME involvement, we can step up and compete. This is just one small example, but the challenge for us is that those schemes tend to be less well funded than some of the much larger schemes that are designed to try to bring big business together with universities. That is a practical example. We also have to think about how things are funded within Wales. Some of the funding that comes to universities comes in an allocation that is given out either by Research England to English universities or by what will be Medr in Wales. We have had a bit less of the knowledge exchange-type funds in Wales over the years and a bit less of what is called quality research money—QR money. As a result, the foundations that we are building on are slightly less extended. There are various things that come together, but that level of ambition is critical. As I said earlier, the establishment of WIN was one step in the right direction—it will not solve everything—to bring us together as universities so that we can collaborate more actively.

I partially answered your second question in my answer to your first question around demand management and locking in historically poor success rates. Some of those mechanisms assign quotas based on previous success. We have to have engagement and conversations with UKRI because it can give a false view of the success rates. What the success rates do not capture is the proposals that were not allowed to be submitted because of demand management mechanisms based on the past. If we base everything on the past, Wales will stay at 3%. We have to look to the future and engage with our colleagues at UKRI around this issue.

Very briefly, I want to pick up on Paul’s point around QR and KE funding being more generous in other nations in the UK. That is really important, especially if you are interacting with an SME. We do a lot of that here. We do not have large industry in Aberystwyth, just in case you did not realise; we are dealing with lots of small companies. The time it takes to engage with us is, for them, a huge amount of time. One hour or two hours is very expensive for a small company. Any extra support that we can get to help with that knowledge exchange and working with those businesses would be very welcome. That is why this is such an important issue.

I lived in Aberystwyth for a year, so I am well aware.

Can I just ask a quick follow-up question, please, to Professor Burke and Professor Larner? You have talked about the importance of having greater ambition in terms of what we are doing and the importance of research and development to the UK’s industrial strategy. We all know it is important and we want Wales to do more. Given the challenges that your universities are facing and the restructuring that is potentially happening—going on to a new footing—how confident are you that you will be able to do more of that important work around putting these bids in?

The work that we are doing within the university is, in fact, to deliver on our strategy. Our strategy is very clear about identifying areas of interdisciplinary research excellence right across the university—this is not a story about STEM—through which we can deliver on that level of ambition. Our research applications have gone up in the last six months, not down. That is really interesting and really important. We are getting our internal house in order so we will be able to deliver more effectively. We have done a major restructuring of our research support services. We have just signalled our intention to establish a stand-alone subsidiary to deliver research innovation, which is an arrangement that many research-intensive universities like ours already have. The work that we are doing is precisely to position ourselves more effectively for the future.

My answer is similar. We are having to make savings to ensure the financial sustainability of the institution, but this is a research-intensive institution. It is a key part of our strategy. We are looking to protect the future, and that future is research intensive. Although we are having to make savings—we have no choice but to make the savings that we need to make—they are around protecting the activity of the institution. Bangor University is very much a research-intensive university. This restructuring is about protecting that, not eroding it.

This is a question that we asked the previous panel, but it is an important one that needs to be put to this panel as well. What are your views on the UK Government’s immigration White Paper and the impact it will have on your universities?

It is a challenging White Paper in some ways for the sector, if you look at the things that are being proposed, such as the levy. That is probably an England-only one, though, as it is a devolved matter. If the levy were to come in, for example, a significant amount of money would come out of an already challenged financial sector. Looking at the graduate route and the change to that, that will undoubtedly affect demand. When students come here, we know they want to be able to get work experience and stay for a period of time to do that. If you look at the changes in the various thresholds around compliance, that will be challenging for many in the sector, I suspect. If any of these changes go through, we are going to have to have a period of adjustment in order to get ready for these things. We cannot have a situation where they change overnight and this is something that happens very quickly. That would have quite significant implications across all those different aspects.

In addition to what has already been said, I want to talk about the implications for our international staff. Universities, as my own accent underlines, are international places for both staff and students. Our aim is to attract the best and the brightest from all around the world. The kind of policy signals that suggest we are not open to that and are not welcoming have implications not just for student recruitment but for our staff recruitment. I have spent quite a bit of time reassuring our international staff over the last few weeks. This, too, has implications for our universities in the UK.

Professor Burke, on the same theme, are you concerned about your ability to comply with the strengthened requirements being imposed on institutions around sponsoring student visas?

Yes, it is a concern. I am confident that our university will be able to do that. I want to echo what my colleagues have said around the importance of internationalisation. We are an international university. We have a global outlook. Our international students provide something very special for the culture and ethos of a bilingual university. It is concerning that the flexibility around those metrics is being eroded. I am confident in my own university’s ability to stay within the metrics. The 6% levy would cost my institution around £1.6 million. As we have already heard, the changes to national insurance contributions have more or less wiped out the two raises that we received in Wales through 2024. This would almost certainly wipe out another inflationary uplift, if indeed we get it.

I will start with a slightly broader point about asking students to come to universities to study here. We have acknowledged that there is a cross-subsidy of income and it is valuable to universities. This is a much bigger issue about soft power, diplomacy and the way that Wales can be part of the outer world. If I look to the deep partnerships that my institution has today, many of them are based on alumni from many years ago who came to this university and want to work with Wales because they grew to love the nation. There is, in my view, no time more important than this to be thinking about those soft power relationships across the world. Things are really tense at the moment. Having deep partnerships across the world is really important. Specifically on the White Paper, undoubtedly it will have another negative effect on our recruitment—it cannot do anything but. It is going to restrict the length of time that people can stay, therefore fewer students will choose to come to the UK. Like Edmund, I am confident that we can meet compliance, but one thing that we must remember is that some of those compliance measures can, on occasion, go up or down. They are not always static. Whatever system comes in needs to take into account the fact that one-off peaks are not the way to design a system. We need some stability in that system because certain things can happen that are not necessarily in the control of the university. There needs to be some sensible debate about how, if those are to be introduced, they will be done. On the levy, I am completely aligned. To add a levy would simply be another way of taxing universities at a time when we really cannot afford any more tax. There has been some talk that possibly universities would raise their fees to offset the levy. Frankly, if we could raise our fees, we would be doing it. Our fees are set as ambitiously as they can be. If we raise them, we will lose more students. It really will not work. I cannot see that collecting a levy for the amount it would raise makes sense administratively. Certainly in Wales, the cost of collecting that levy would, I am sure, outweigh the actual benefit of having collected it. It felt to me a very last-minute addition to the White Paper. I did not feel that the Welsh Government had had a proper chance to be engaged in conversations about how it would work. At the very least, I am hoping that if it is introduced, it is not introduced in Wales.

That is very revealing.

Let me begin at the end. We are completely committed to our Welsh language provision, both through our School of Welsh and enhancing Welsh-medium provision across our university. That has been very clear from very early on in the consultation that we have just concluded. Stepping back a bit, this Committee has heard a great deal about the financial pressures facing the sector. Each university has approached those challenges a little differently. We have made the very conscious decision to start with our future academic footprint, building on the work we had done through our strategy. Over the last while, we have been very clear, going back to my earlier comments, about those areas of interdisciplinary excellence that we will build on in the future. I hasten to add that humanities and social sciences are among those. Yes, I understand that we went early. That was partly because we had the requirement for a 90-day consultation process and we wanted to get it done this academic year. It has been a very genuine consultation. Our plans changed as a result of that consultation, quite rightly. I am very excited about the proposed school of global humanities, for example, which includes both music and modern languages. We have landed in a much better place around nursing in south-east Wales, which was a very good thing. By and large, we have been able to get to where we need to get to through voluntary means, which is really important because none of us wants compulsory redundancies. Since we launched our plans, many universities have made similar announcements, including a number of our fellow Russell Group universities. As was mentioned earlier, everyone now is beginning to understand this is not a story about Cardiff University. This is a story about the need for systemic and structural change in the sector more generally. Almost all Welsh universities and 70% of universities across the UK are involved in restructuring at the moment. I know it has been really difficult. I know it has been really challenging, not least for our staff and our students, but we are very clear about identifying our future academic footprint and then wrapping our professional services and indeed our estate around that. That is the work that we are now doing.

I will address my question to you, Professor Burke. You and I have had many conversations about this. Bangor University is hugely important. It has an outsized impact on not only the city of Bangor but the broader region in north Wales. Notwithstanding your previous answer, I know that the changes and the process that you are going through at the moment in the university are about putting the university on to a sustainable footing for the future. How satisfied are you that the university has explored every possible avenue in terms of creative or innovative approaches to avoid potential job losses? I understand that consultation has been going on and there will be announcements in due course, but I wonder whether you could speak to that, please.

Yes, absolutely. Our consultation process has closed now. We have had over 1,000 responses, around 880 from staff and the wider community and about 130 student responses. We are scheduled to meet tomorrow as an executive board to start to make decisions. No decisions have been made as of yet. We have been analysing the consultation feedback. We will do all we can to avoid compulsory redundancies, if that is possible. We will be as creative as possible. We will listen—we are listening—to what our colleagues are saying through the consultation, but we have a financial target to make. We have to make savings of £15 million, as we announced. Our institution has been here for over 140 years. It is important that it is here for another 140 years, and many more. We have to protect the financial sustainability of the institution. We have to make those targets. I can assure you that we will do all we can to make those savings with voluntary severance if that is at all possible, but we cannot rule out compulsory redundancies.

We have discussed in quite some depth today the challenges that are being faced across the higher education sector and the particularly concerning decline in participation of Welsh young people in higher education. How confident are you that the current financial crisis is temporary and the sector can recover? How do we ensure that these rounds of redundancies at many institutions are the last for the foreseeable future?

From an Aberystwyth perspective, I am confident that we are now on top of the problems that we have had and the challenges we are facing. We are working through those at the moment. In terms of the broader sector, I am confident. I am always optimistic. I am a firm believer in the power of education and the transformative impact that it can have. I really am. For that reason, I am optimistic. It is challenging for the sector, though. To go back to what colleagues said earlier, we do need a sustainable financial model for the sector. That is absolutely key. All vice-chancellors in Wales and across the UK are committed to our institutions and want to see the best for them and what they can do. In order to have that, we have to have a financially sustainable mechanism and a stable policy landscape in which to operate.

I think about this a little differently. In my first public statement when I arrived, I said I felt this was an existential moment for universities and we would need to be different for the future. We are not seeing a temporary financial challenge; we are seeing a sector that has to reinvent itself. I am reasonably optimistic about that because universities have reinvented themselves over and over again since the medieval period, when they were first invented. We need to understand that we are moving from the operating model that worked well when patterns of global mobility looked the way they did and Government finances looked the way they did. We all understand—this is partly why we are having this session—that we are no longer in that world. We understand that there is a question about where the new revenue streams come from in a context where Governments are challenged. We are very grateful when the support comes, but we do understand that there are many competing priorities. The question is what the new operating model that will serve universities well for the next few decades looks like. That is what we are currently working on.

As far as my own institution is concerned, we have to make those savings, as I said, but that savings plan has been focused on financial sustainability. I am confident that, when we make those savings, we will be on a secure financial footing. I have to caveat that by echoing what Professor Timmis said around sustainability. We have gone well over a decade with no inflationary uplift. That cannot happen again. We could not do that for another decade. We have to have a sustainable model, otherwise all universities across the UK will find themselves in further financial difficulty. We need to work together with UK Government and Welsh Government to determine a sustainable financial model that can take us forward.

With other colleagues, we will be working as much as we can towards models in all of our institutions that are financially sustainable. As we have reiterated many times, the system at the moment does not lend itself to sustainability. We have to be cognisant that the flow of international students into the UK is unlikely to rise if we see no change to the visa rules and so on. We are working in a different system from the one we have been used to for many years. We have to accept that participation rates in Wales, sadly, seem to be dropping compared with the rest of the UK. Given that Welsh universities rely particularly on those students, proportionally more than other universities inevitably, we will see more of an effect from that. We have to balance that in the future. We also know that the demographic dip in the number of students coming through is going to start in around 2030 and beyond. This is all in the context, however, of independent reviews that demonstrate that in Wales alone we are going to need 400,000 more graduates by 2035. We know there is going to be more demand for graduate-level jobs. We need an approach to encourage young people to want to achieve the sorts of higher-level skills that they are able to achieve, with our support, to give the labour market what Wales is going to need in future. Of course, underpinning all of that is a financial model that will be more sustainable and will allow us to adjust if student numbers go up or down.

That is great. Thank you very much.

I want to say thank you to all four panel members who have joined us online today. Thank you to all four professors. It has been really useful to have you augment the first panel, if you like. Thank you so much for that. I am now bringing the session to a close.