The Welsh Government has announced a wholesale review of university funding and organisation, as institutions in Wales grapple with a combined operating deficit of more than £97m, even after years of cuts and job losses.
An independent panel will start work next month, with a first report due next summer, aimed at changing policy on university and student funding by the 2028-29 academic year.
Terms of reference announced
Announcing the terms of reference for the review, Cefin Campbell, deputy minister for skills and tertiary education, said universities are facing serious challenges that demand bold, structural reform, rather than incremental fixes.
The review will also examine the movement of Welsh students outside of Wales for higher education, and the graduate destinations and outcomes of students in and from Wales.
Financial pressures
The review comes as universities in Wales are more than £97m in operating deficit, with matters likely to get worse before they get better and more job cuts likely.
The financial black hole has swelled by £20m compared to the £77m deficit in 2023-24, although some of the increase is down to one-off costs of redundancies as part of job cuts in recent years to try to balance budgets.
Institutions have faced rising costs and falling income for years, with a fall in numbers of higher paying international students and greater competition for domestic students amid virtually static home tuition fees.
Concerns over student drain
These pressures affect universities around the UK as well as Wales, but there is concern in some quarters that higher achieving students from Wales head to universities across the border, with only Cardiff University in the elite Russell Group here.
That means grant and loan money, as well as students, draining away from Wales.
In his Written Statement outlining the terms of reference for the review, Mr Campbell warned: "The scale and urgency of these pressures means that the underlying funding sustainability of Welsh universities and the Welsh student support system must now be addressed. Wales needs a national response to this critical national challenge."
Review's aims
The Welsh Government will appoint an independent panel to make recommendations on the funding and organisation of higher education in Wales.
The panel is asked to make recommendations for policy to, among other things:
- Enable a sustainable and resilient higher education sector and ensures it delivers the skills Wales needs
- Increase the proportion of Welsh Government student support funding which is spent in Wales, and incentivise more Welsh students and graduates to study, work and train in Wales
- Increase the numbers of students undertaking higher education through the medium of Welsh and bilingually
- Ensure students from all backgrounds can access higher education if they are suitably qualified by ability and attainment
- Enable universities to deliver globally competitive research bringing economic investment to Wales.
Scope of the review
The panel will be asked to consider widening participation, the funding and delivery of alternative pathways through higher education, including part-time provision, level 4 and 5 qualifications, higher education in colleges, and higher and degree apprenticeships, as well as postgraduate and doctoral provision.
Also on the list is an examination of the terms and conditions of Welsh Government student loans, including the financial effects of graduate debt and repayments.
Timeline and reactions
The panel will offer recommendations on funding and student support next summer before handing its full report to the deputy minister in winter 2027 to 2028 for him to consider the panel's recommendations for future policy.
The Welsh Government will then seek to make changes to funding student support policy, informed by the review, in time for the start of the 2028 to 2029 academic year.
Professor Elwen Evans, KC and chair of Universities Wales, which represents institutions, welcomed the move, saying: "A successful review can help ensure the policy and funding framework keeps pace with that transformation and gives universities the stability needed to continue innovating in the years ahead."
ColegauCymru Chief Executive, David Hagendyk, said the pressures facing universities must not be considered in isolation, adding that "it is essential that any funding implications from the review do not undermine the financial position of further education".
He added: "It is crucial that the role of further education colleges in widening participation and meeting regional skills needs is considered as part of the review. Colleges can offer flexible and accessible provision as part of a rich mix of higher education across Wales."
