MEMORANDUM SUBMITTED BY

THE HIGHER EDUCATION FUNDING COUNCIL FOR WALES (HEFCW) (CBPS 46)

Introduction

1. We understand the scope of the Committee's inquiry is to include an examination of:

· the extent to which cross-border public services are currently provided for and accessed by the Welsh population;

· the arrangements currently in place to coordinate cross-border public service provision; and

· the funding of cross-border public services.

Background

2. Our expectations of a pan-UK system of higher education are, in some respects at least, of relatively recent origin.

3. Prior to 1992, higher education provision was run broadly on a UK-wide basis for the older, 'traditional' universities. However, for the 'public sector' institutions, although there was a national framework for some aspects (e.g. quality assurance through the Council for National Academic Awards) the polytechnics and HE colleges were funded and run by each local authority, with very different approaches, levels of funding, etc.

4. Scotland historically has had a different approach, with school highers, students going to university younger and four year degrees. This tended to militate against cross-border flow even before fee arrangements started to differ.

5. Under the Further and Higher Education Act 1992, separate funding councils were established for England, Wales and Scotland, and separate arrangements for Northern Ireland.

6. HEFCW's responsibilities under the 1992 Act are for the administration of funds made available by the Welsh Assembly Government in support of the provision of education, the undertaking of research by higher education institutions, and the provision of prescribed courses of higher education at further education institutions. The Council also has responsibility to secure provision for assessing the quality of education provided in institutions for whose activities it provides financial support.

7. In addition, under the Education Acts 2002 and 2005 HEFCW is responsible for funding and accrediting providers of initial teacher training for school teachers and commissioning research to improve the standards of teachers and teacher training.

8. HEFCW's mission is to promote internationally excellent higher education in Wales, for the benefit of individuals, society and the economy, in Wales and more widely. Working with partners, we deploy funds from the Welsh Assembly Government and others in order to:

· secure higher education learning and research of the highest quality;

· maximise the contribution of higher education to the culture, society and economy of Wales; and

· ensure high quality, accredited teacher training provision across Wales

9. In addition to our funding responsibilities, we provide advice to the Welsh Assembly Government on the funding needs, aspirations and concerns of the higher education sector in Wales.

10. At the same time, much policy towards research, science and innovation remained at UK level, via the Research Councils and related central government apparatus (now the Department for Innovation, Universities and Skills - DIUS), although HEFCW funding (as the largest single source) makes an essential contribution to the Welsh research infrastructure.

11. Further devolution of HE policy took place after the Higher Education Act 2004, which set out a new statutory framework governing the introduction of flexible tuition fees for higher education provision in England and Wales and resulted in student support and fee setting powers transferring to the Welsh Assembly Government.

12. Policy for higher education in Wales rests, therefore, with the Welsh Assembly Government, whose main instrument on matters other than student fees and finance is HEFCW. The main policy framework was set in 2002, after a major review, with the publication in March of that year of Reaching Higher: Higher Education and the Learning Country. A strategy for the higher education sector in Wales [1]. There have been a number of more recent policy statements also of significance to higher education, notably the Assembly Government's Science Policy [2] and, following the 2007 election, One Wales [3].

Extent to which cross-border HE is currently provided for and accessed by the Welsh population

13. Until very recently, there has been very little sense of the full-time student market making any strong distinction between Wales and England (after allowing for the UK-wide pattern of geographical distribution of students at universities within a certain radius from home). Part time students, in contrast, have always had a strongly local affiliation.

14. In broad terms, the latest figures for full-time students (AY 2006/07) show, for undergraduates, and for all students (including postgraduates), the following distribution in terms of domicility and country of study. It is evident that there is very substantial movement of students in both directions across the Wales-England border.

Percentages:

Percentages:

15. Wales has the highest proportion of all UK Administrations of full-time students from outside the country of institution (50 per cent of full-time undergraduates at Welsh HEIs come from outside Wales). The majority of these come from England (80 per cent). In contrast, over 70 per cent of full-time undergraduates at English, Scottish and Northern Irish institutions come from the country of institution

16. With the introduction of variable top up fees in England in 2006/07, and Wales in 2007/08, it was to be expected that there might be some disturbance of traditional patterns of student movement. The fact that the eventual support settlement for Welsh (and EU) domiciled students studying in Wales differed from that for students from other domiciles was likely to add to this disturbance (students who normally live in Wales and study at a Welsh University are able to receive a non-means tested fee grant of up to £1,890 a year, which does not have to be repaid).

a) the underlying accepted applicants trend

17. Insufficient time has elapsed since the variable fee developments to be fully confident about trends. There is, however, some early evidence that the market may have shifted, in that the proportion of full-time undergraduates accepted to Welsh institutions who are Welsh domiciled has seen an increase over the last three years, from 48 per cent in 2005/06 to 53 per cent in 2007/08. There is a corresponding decrease in the proportion of accepted applicants of English domicile to institutions in Wales.

18. The proportions of accepted applicants that come from the country of institution do not show the same pattern in England and Scotland as they do in Wales, with the proportion of accepted applicants to English institutions who are English domiciled being 85 per cent in both 2005/06 and 2007/08 and the proportion of accepted applicants to Scottish institutions who are Scottish domiciled decreasing from 72 per cent to 70 per cent. In Northern Ireland, the proportion of accepted applicants who were from Northern Ireland went from 91 per cent in 2005/06 to 92 per cent in 2007/08, and was 94 per cent in 2006/07.

19. Accepted applicants to Welsh HEIs from Wales were the only group that applied to institutions in their country of domicile to show an increase in 2006/07. The overall number of accepted applicants to Welsh HEIs also increased in 2006/07 compared to 2005/06. In contrast, the overall number of accepted applicants to other UK countries decreased for each country in 2006/07. Comparing 2005/06 to 2007/08, accepted applicants to Welsh, English and Scottish institutions increased, by 4 per cent, 2 per cent and 1 per cent respectively.

b) the trend in applications

20. Applications to Wales have also increased, with a 15 per cent increase between 2004/05 and 2006/07. Over the same period, applications to England increased by 5 per cent. Applications from Welsh domiciles to Wales increased by 29 per cent, whilst the percentage of applications from English domiciles to Wales increased to a lesser extent, by 8 per cent. Applications to England from Welsh domiciles decreased by 5 per cent whilst those from English domiciles increased, by 6 per cent.

21. In partnership with Higher Education Wales, we are exploring further the question of cross-border application patterns. It is a complex issue, and one on which it is important to be clear about the reality of any changing trends.

22. To the extent that real changes are confirmed, cross-border changes in the fees and student support arrangements may be part of the explanation.

23. So too, however, may be another factor. It is essential to the purpose of devolution to take distinctive approaches to issues, the better to serve local needs. That being so, this distinctiveness may have consequences when applied to activities that span the boundary of administrative divisions. It is not impossible that, if there is indeed a shift in the perception of an England-Wales market, it may be connected to perceptions of this distinctiveness in Welsh policy. We return to this point in the discussion of funding below.

24. It is worth adding that we have good subject coverage in Welsh HEIs, the main exception being Veterinary Science, and so we do not think that application trends are being significantly driven by differential availability of subjects across the UK.

Arrangements in place to coordinate cross-border HE provision

25. Since 1992, the HE funding councils have recognised the reality, at some level, of a UK-wide HE market in terms of domestic, and international, students (and also staff). They have, therefore, sought to ensure that each other is well informed about locally distinctive aspects of HE policy, doing so via cross-observer status on each other's boards, twice-yearly meetings between their chairs and chief executives, and regular dialogue between officers.

26. They have also recognised that certain functions are best delivered on a broadly UK-wide basis, either in order to ensure consistency of delivery standards, or to seek economies of scale, or both. Examples include teaching quality assurance, research assessment, professionalisation of teaching, data gathering, and IT network infrastructure. There is also recognition of a common market in terms of staff pay and conditions, and values such as respect for academic freedom and institutional autonomy. These in turn are rooted in a deep-seated appreciation that higher education in the UK as a whole operates in a tough international competitive environment for students, staff, research standing, and so on. All the funding bodies keep these considerations firmly in mind, as well as bending their energies to the policy ambitions of their local territories.

27. To this end, funding council officers participate in standing groups established by themselves, or by the sector, across the UK. Examples of such pan-UK activities include:

Association of Heads of University Administration (AHUA)

British Universities' Finance Directors Group (BUFDG)

Estate Management Statistics & Space Management Groups

Equality Challenge Unit

Funders Forum (DIUS)

HE and Public Engagement Steering Group

Higher Education and Research Opportunities in the UK

Higher Education Academy

Higher Education Statistics Agency (HESA)

High Level Policy Forum (Europe Unit)

Joint Information Systems Committee

Leadership Foundation for Higher Education

Measuring and Recording Student Achievement (Burgess Group)

Quality Assurance Agency (QAA)

Research Assessment Exercise (RAE) 2008 Steering Group

Research Councils (individual Concordat meetings)

SKILL (National Bureau for Students with Disabilities)

Supporting Professionalism in Admissions (SPA) Steering Group

Sustainability Integration (SIGnet) Group

Teaching Quality Information Groups

UK Higher Education Performance Indicators Steering Committee

UK Healthcare Education Advisory Committee

UKERNA (JANET network)

28. In addition, the Training and Development Agency (TDA) for Schools in England is contracted by the Welsh Assembly Government to promote teaching as a career in Wales. This enables major publicity media campaigns to cover Wales, in both the English and Welsh mediums. The TDA has appointed a Teacher Adviser, Wales to work with providers of Initial Teacher Training, and other partners, to ensure a Welsh dimension to the TDA's recruitment work in Wales.

29. We also engage from time to time in studies that specifically address cross-border issues. For example, in 2003 a question arose about the provision of HE in the Marches. HEFCE invited HEFCW to join in a review of provision in Herefordshire, Powys and Shropshire, resulting in a report published by HEFCE in 2005 [4].

30. Informal dialogue also takes place between the English and Welsh funding councils about other possibilities, as they arise from time to time, concerning potential cross-border collaborative (and sometimes also competitive) activity between institutions. The two councils are clear that, where a good case exists according to each council's criteria and policy environment, there should be no impediment to joint funding. Each council would be able to fund only that part of the activity that fell within its jurisdiction, but it ought to be possible to fit together an English-funded element with a Welsh-funded element, to make a whole that is greater than the sum of the parts.

Funding of cross-border HE services

31. Where activities, as illustrated above, are organised on a joint basis across the funding councils, or indeed across a wider set of partners, funding is managed jointly according to negotiated shares. For purposes of good governance and accountability, it is usually agreed that one council (typically HEFCE) will act as lead on behalf of the others, with the others maintaining close interest in developments via some form of funders group.

32. There is well established custom and practice in these matters, so that usually the main focus of discussion is about the nature of the activity and the deliverables sought, rather than about the partition of funding or the governance arrangements.

33. There is another dimension of funding, however, that merits some mention. We refer here to the consequence of devolution that decisions about funding for higher education, be it for institutions or for student support, are now made according to local criteria in the four territories of the UK. This necessary consequence of devolution opens up the possibility of (potentially significant) divergence, not only in the specific priorities to be attached to particular aspects of HE, but also in the overall levels of funding available in the four territories. Given our earlier discussion of possible developments in the behaviour of the student market, it is easy to see that perceptions of relative levels of funding, with implications for such things as facilities, quality of buildings, attractiveness to staff (and hence also to students), and so on, could over time have profound consequences. It follows that, were such divergences to become significant, the picture we have presented above would change.

Research funding

34. This paper has concentrated on cross-border services as related to students. It is worth adding, though, that there continues to be a strong sense of a UK-wide community, but with a strong local focus as well, over research, knowledge exchange, and other 'third mission' activity.

35. Concordats between the Welsh Assembly Government and each of the Research Councils provide for annual meetings to discuss strategies and priorities, and to consider the performance of Welsh HE in winning funding. There is a well-established pattern of Wales winning a lower share (typically about 3.5%) of research council income than might be expected from its relative scale. HEFCW works with the Research Councils to try to address this issue by, for example bringing them into Wales to address meetings of senior university research leaders and managers and by seeking to foster better research performance within the sector.

36. HEFCW's underlying strategy for research, with a strong emphasis on reconfiguration and collaboration, is also leading to significant new research groupings, with greater mass and scope, with the aim of increasing competitiveness. Notable steps in this respect include the merger of Cardiff University and the University of Wales College of Medicine, the Aberystwyth-Bangor Research and Enterprise Partnership, the Wales Institute for Cognitive Neuroscience, the Wales Institute of Mathematical and Computational Sciences, the Low Carbon Research Institute, and the Wales Institute of Social and Economic Data and Methods.

37. In addition, we work closely with the other funding councils over major research issues, such as the joint running of the RAE and the planning of the Research Excellence Framework. The Assembly Government and HEFCW also participate actively in the DIUS-led UK-wide research Funders Forum, which serves to maintain a UK-wide perspective on overall levels of funding, CSR submissions, full economic costing, research careers, and many other matters.

38. Reference to DIUS leads to a final observation about research. The establishment of this new department sharpens considerably, in a welcome way, the focus on innovation across the entire UK, and also the attention given to universities within government in England. However, there is likely, in the nature of an organisational development of this kind, to be an inclination to seek to pull more closely together the UK-wide dimensions of DIUS's work (principally through the Research Councils and the Technology Strategy Board) and the England-only dimensions (principally, for this discussion, HEFCE). This would be understandable, but from the perspective of devolved parts of the UK it does carry a potential risk. This is that the desire for greater strategic coherence might take insufficient account of the diversity of agendas across the UK, and so result in too 'England-oriented' a focus for the 'UK-facing' aspects of the work of DIUS. This is a risk which will require sensitive handling by all parties. In this regard, the reassertion of the value of the dual support system in the March 2008 DIUS white paper, Innovation Nation, is welcome, with its reference to how the two arms of the system 'combine to drive excellence in the research base with flexibility to respond to changes and opportunities' (para.5.13). What is important, from a devolved perspective, is to maintain the UK-wide focus of the Research Council arm.

Conclusion

39. As devolution of government across the UK leads to increasingly divergent policy positions, the higher education funding councils play challenging roles in seeking to marry their local HE provision into wider local policy ambitions while also maintaining sufficient commonality and competitive strength to support reasonable movement of students and staff into and across what remains a recognisably UK HE system. Finding a way to maintain that balance, in the face of existing and potential patterns of student and staff mobility, will be critical to the future of higher education in Wales, and to the ambitions of the Welsh Assembly Government.

20 March 2008

[1] Reaching Higher : http://new.wales.gov.uk/topics/educationandskills/policy_strategy_and_planning/further_and_higher_education/reaching_higher/?lang=en

[2] The Assembly's Science Policy 2006: http://new.wales.gov.uk/about/departments/dein/publications/science-policy-2006?lang=en

[3] One Wales: http://new.wales.gov.uk/about/strategy/strategypublications/strategypubs/onewales/?lang=en

[4] Options for higher education in Herefordshire, Powys and Shropshire, available at: http://www.hefce.ac.uk/pubs/rdreports/2005/rd07_05/