Back in January 2015, the Learned Society of Wales’s (LSW) submission to the Diamond Review committee predicted that without significant change to the growing and un-controlled current fee‐grant support leaving Wales, there would be less central funding available to support important HEFCW activities. In particular, the LSW submission raised serious concerns that the fee‐grant demand might inevitably encroach upon the crucially important Quality Research (QR) funding that has long underpinned Wales’s productive research development.

The proposed cuts by the Welsh Government back in December of £41M (32%) to the Higher Education Funding Council for Wales (HEFCW) revenue budget for 2016/17 brought this prediction into sharp relief as such cuts would have clearly encroached upon the QR budget. Indeed, the scale of the proposed cuts for the total HEFCW funding budget dropping from £129M in 2015/16 to £87M for 2016/17 would have meant that the tuition fee grant going to universities outside Wales would have exceed the entire HEFCW budget designed to support Wales’s universities related investment.

The reason why QR funding (derived from the REF performance) is critically important for Wales is that it has been a major contributor to the success of the Welsh University sector’s improved research performance over the past decade. QR funding provides the essential core-funding base from which all Universities plan their strategic investments and lever further research funding from the research councils. In Wales, the annual £70M QR investment has enabled universities to competively win some 60% further investments from UK Research Councils. This has also been key in gaining substantial grants from the EU structural funding and the Horizon 2020 programme.

Unlike England and other larger EU countries where much of the R&D expenditure comes from business, Welsh Universities produce over 84% of all the research outputs and nearly half of all the Research & Development investment. The annual QR grant, administered by HEFCW remains the single largest regular source of research income for the University sector’s research activities and remains a distinctive pillar of the wider successful UK dual support system. Despite its importance, the Welsh percentage of the UK’s QR funding has unfortunately been falling, from 4.3% in 2007/8 to 3.9 in 2014/15 significantly below the 4.8% share expected on the basis of its share of the UK population. This is in contrast to Scotland, where over the same period QR has risen from 12.4% in 2007/8 to 14.2% in 2014/15 nearly double the % share for its population.

Remarkably, despite a shortfall in the number of science, technology, engineering, mathematics and medicine (STEMM) researchers and operating with only 2% of the total UK Gross Domestic Expenditure (GDP) on Research and Development (R&D), Welsh universities have performed resiliently and efficiently, managing to punch above their research income in terms of research outputs, efficiency and impact. This was confirmed by the independent Elsevier report (2013) which showed that Wales’s research citation impact had grow impressively over the past decade exceeding the world and EU averages and in the process overtake several well-performing but similar-sized countries, many of which spent a much greater percentage of their GDP on R&D. The 2014 REF results also confirmed that the Welsh research sector, although small, produced high levels of world-leading research and with Welsh universities scoring particularly well on the new impact measure where nearly half of the research submitted was rated world-leading and above the UK average.

As Wales’s relies hugely on its universities for much of its research base, any cuts to the recurrent QR source of funding is likely to have significant short term and long term impact on existing and planned research activities of universities. Consequently last Tuesday’s Welsh Government decision to reduce the proposed cuts from 32% to 8% was a prudent move particularly given the Welsh Government own overarching commitment consistent to ensure a strong, accessible world class and sustainable higher education system for Wales. In 2012, the Welsh Government science strategy, Science for Wales and subsequent Policy Statement on Higher Education (2013) set out the compelling case to build a strong science base for Wales that would support the country’s economic and national development. Knowledge-based societies are widely regarded as essential drivers of global competitiveness and key elements of national government strategies intent on sustainable economic and social improvement. With this in mind, a vibrant research sector is considered imperative when growing a country’s productivity and economic prosperity.

Importantly, the Welsh Government’s Ser Cymru strategy in 2012 came with a significant new investment of £50m to boost the university’s science research base and attract new scientific talent to Wales. The welcome capacity building initiatives of the Ser Cymru II programmes headed by the current Chief Scientific Advisor also demonstrates the strategic intent and productive partnership when Government and universities work together to achieve the common aim of growing Wales’s research and economic capacity.

The recent proposed Welsh Government cuts, however, make the findings of the Diamond Review of Higher Education Funding and Student Finance Arrangements in Wales more relevant and pressing as the current HE funding system in Wales is clearly not sustainable in the short term.

It will be important that the final recommendations of the Diamond Review provide a long-term financially sustainable future that ensures support for a high quality UK competitive higher education sector in Wales

Professor Peter Halligan