Thank you. Just before we move on to Hefin David, can I just ask you what your view, then, is on the statement included by auditors in the accounts of Trinity Saint David that there is material uncertainty?

Yes, I'll pick up on that. The material uncertainty largely relates—there is a note in the accounts that explains the factors that are being taken into account, but it largely relates to some significant cash receipts that have been subject to timing delays and the fact that the timing of these is essentially outside the control of the institution. The main delay relates to the receipt of funding for the Egin project, which was due to be received from the Swansea city deal. That funding has been delayed, but the sums due to the university are still due to the university—it's the issue of the timing of those receipts that is causing a cash pressure. Receipt of that funding would certainly reduce the cash flow pressure at the university at the moment. Just in terms of cash flows, all universities have to ensure that they are maintaining enough cash in their system to meet their payments as they fall due. Most of their costs are incurred on a monthly basis, staff costs in particular, but the income flows into universities are now less regular. In days gone by, that funding would largely flow from us and that would also come on a monthly basis. The funding from the Student Loans Company now, for example, comes in chunks. A quarter of that money comes in in October, a quarter in February, and the majority of it, half of it, doesn't come into the university in cash until May. So, that's quite a different cash management scenario for universities to manage; it requires holding cash balances to do it.

Okay, thank you. Just before I bring Hefin in, we're going to need to have a bit of agility, as Dai Lloyd would call it, in our questioning and our answers if we're going to cover the ground that we need to cover. So, Hefin.

How can we be assured that governance arrangements across the eight institutions are sufficiently rigorous but also consistent?


Yes, I'll pick up on that. The material uncertainty largely relates—there is a note in the accounts that explains the factors that are being taken into account, but it largely relates to some significant cash receipts that have been subject to timing delays and the fact that the timing of these is essentially outside the control of the institution. The main delay relates to the receipt of funding for the Egin project, which was due to be received from the Swansea city deal. That funding has been delayed, but the sums due to the university are still due to the university—it's the issue of the timing of those receipts that is causing a cash pressure. Receipt of that funding would certainly reduce the cash flow pressure at the university at the moment. Just in terms of cash flows, all universities have to ensure that they are maintaining enough cash in their system to meet their payments as they fall due. Most of their costs are incurred on a monthly basis, staff costs in particular, but the income flows into universities are now less regular. In days gone by, that funding would largely flow from us and that would also come on a monthly basis. The funding from the Student Loans Company now, for example, comes in chunks. A quarter of that money comes in in October, a quarter in February, and the majority of it, half of it, doesn't come into the university in cash until May. So, that's quite a different cash management scenario for universities to manage; it requires holding cash balances to do it.

Okay, thank you. Just before I bring Hefin in, we're going to need to have a bit of agility, as Dai Lloyd would call it, in our questioning and our answers if we're going to cover the ground that we need to cover. So, Hefin.

How can we be assured that governance arrangements across the eight institutions are sufficiently rigorous but also consistent?

So, the first point to make, of course, is that universities are autonomous, as you know—


Okay, thank you. Just before I bring Hefin in, we're going to need to have a bit of agility, as Dai Lloyd would call it, in our questioning and our answers if we're going to cover the ground that we need to cover. So, Hefin.

How can we be assured that governance arrangements across the eight institutions are sufficiently rigorous but also consistent?

So, the first point to make, of course, is that universities are autonomous, as you know—

I've just written 'independent and autonomous'.


How can we be assured that governance arrangements across the eight institutions are sufficiently rigorous but also consistent?

So, the first point to make, of course, is that universities are autonomous, as you know—

I've just written 'independent and autonomous'.

Yes, all of that. And they are charities and so on, so they have expectations in respect of that in any case. The university governing body obviously is an important part of the machinery, particularly in terms of generating constructive challenge for the executive within universities. The governing bodies all are expected to behave in a way that is consistent with the guidance produced by the Committee of University Chairs, the CUC guide, which identifies good practice. So, it’s a higher education code of governance and all Welsh universities work to that code. That code is itself up for review at the moment. So, that is an opportunity for that to be strengthened. Just in terms of governing bodies, it's also important that governing bodies engage in a process of continual refreshing, because that gives you a greater variety of perspectives, which is important. But it’s also important they have people who understand the higher education business as well as from other contexts. Getting that mix right is important. As it happens at the moment, there are also issues about ethnicity and gender balance. Half the chairs of Welsh university governing bodies are female. Half the vice-chancellors are female. That’s a positive position for Wales to be in. But I think our view would be that when you get an increase in the contextual pressures that we’ve been discussing already this morning, the role of the governing body actually becomes even more significant. So, we have encouraged the sector, both the chairmen of the university councils, but also the vice-chancellors, to engage in a process of an independent review of governance in Wales. We’ll be alongside that. We’ll be supporting that. But, actually, it’s important that they own it. And it hasn’t been hard for us to encourage that—they have been keen to take this opportunity to take stock. The Welsh higher education system is part of a UK system—they don’t want to be a million miles away from the rest of the UK in terms of expectations, but there is scope in Wales, given the scale of the sector, to actually construct something that is more challenging, I think, in terms of expectations, than might be the common denominator across the UK, and maybe some more exemplification. Importantly, in this exercise, we are not just interested in governance process. It’s going to be quite hard to do this, but I’m very keen that we engage—and the sector are up for this—in governance culture, because, actually, you can do process checks and you’ll have the right structure of committees and have the right sort of papers going, but, in the end, it’s the dynamic within that room and who’s asking which questions and how well informed they are, and whether it's an open culture or is it a defensive culture—these are really what influences the quality of decision making.


So, the first point to make, of course, is that universities are autonomous, as you know—

I've just written 'independent and autonomous'.

Yes, all of that. And they are charities and so on, so they have expectations in respect of that in any case. The university governing body obviously is an important part of the machinery, particularly in terms of generating constructive challenge for the executive within universities. The governing bodies all are expected to behave in a way that is consistent with the guidance produced by the Committee of University Chairs, the CUC guide, which identifies good practice. So, it’s a higher education code of governance and all Welsh universities work to that code. That code is itself up for review at the moment. So, that is an opportunity for that to be strengthened. Just in terms of governing bodies, it's also important that governing bodies engage in a process of continual refreshing, because that gives you a greater variety of perspectives, which is important. But it’s also important they have people who understand the higher education business as well as from other contexts. Getting that mix right is important. As it happens at the moment, there are also issues about ethnicity and gender balance. Half the chairs of Welsh university governing bodies are female. Half the vice-chancellors are female. That’s a positive position for Wales to be in. But I think our view would be that when you get an increase in the contextual pressures that we’ve been discussing already this morning, the role of the governing body actually becomes even more significant. So, we have encouraged the sector, both the chairmen of the university councils, but also the vice-chancellors, to engage in a process of an independent review of governance in Wales. We’ll be alongside that. We’ll be supporting that. But, actually, it’s important that they own it. And it hasn’t been hard for us to encourage that—they have been keen to take this opportunity to take stock. The Welsh higher education system is part of a UK system—they don’t want to be a million miles away from the rest of the UK in terms of expectations, but there is scope in Wales, given the scale of the sector, to actually construct something that is more challenging, I think, in terms of expectations, than might be the common denominator across the UK, and maybe some more exemplification. Importantly, in this exercise, we are not just interested in governance process. It’s going to be quite hard to do this, but I’m very keen that we engage—and the sector are up for this—in governance culture, because, actually, you can do process checks and you’ll have the right structure of committees and have the right sort of papers going, but, in the end, it’s the dynamic within that room and who’s asking which questions and how well informed they are, and whether it's an open culture or is it a defensive culture—these are really what influences the quality of decision making.

And how different are those cultures across institutions?


I've just written 'independent and autonomous'.

Yes, all of that. And they are charities and so on, so they have expectations in respect of that in any case. The university governing body obviously is an important part of the machinery, particularly in terms of generating constructive challenge for the executive within universities. The governing bodies all are expected to behave in a way that is consistent with the guidance produced by the Committee of University Chairs, the CUC guide, which identifies good practice. So, it’s a higher education code of governance and all Welsh universities work to that code. That code is itself up for review at the moment. So, that is an opportunity for that to be strengthened. Just in terms of governing bodies, it's also important that governing bodies engage in a process of continual refreshing, because that gives you a greater variety of perspectives, which is important. But it’s also important they have people who understand the higher education business as well as from other contexts. Getting that mix right is important. As it happens at the moment, there are also issues about ethnicity and gender balance. Half the chairs of Welsh university governing bodies are female. Half the vice-chancellors are female. That’s a positive position for Wales to be in. But I think our view would be that when you get an increase in the contextual pressures that we’ve been discussing already this morning, the role of the governing body actually becomes even more significant. So, we have encouraged the sector, both the chairmen of the university councils, but also the vice-chancellors, to engage in a process of an independent review of governance in Wales. We’ll be alongside that. We’ll be supporting that. But, actually, it’s important that they own it. And it hasn’t been hard for us to encourage that—they have been keen to take this opportunity to take stock. The Welsh higher education system is part of a UK system—they don’t want to be a million miles away from the rest of the UK in terms of expectations, but there is scope in Wales, given the scale of the sector, to actually construct something that is more challenging, I think, in terms of expectations, than might be the common denominator across the UK, and maybe some more exemplification. Importantly, in this exercise, we are not just interested in governance process. It’s going to be quite hard to do this, but I’m very keen that we engage—and the sector are up for this—in governance culture, because, actually, you can do process checks and you’ll have the right structure of committees and have the right sort of papers going, but, in the end, it’s the dynamic within that room and who’s asking which questions and how well informed they are, and whether it's an open culture or is it a defensive culture—these are really what influences the quality of decision making.

And how different are those cultures across institutions?

I think it’s very hard to say. We don’t sit in the governing bodies of those institutions. Very occasionally we get to observe one. Typically, that’s at a point where there are sufficient difficulties going on that we feel that we need to—


Yes, all of that. And they are charities and so on, so they have expectations in respect of that in any case. The university governing body obviously is an important part of the machinery, particularly in terms of generating constructive challenge for the executive within universities. The governing bodies all are expected to behave in a way that is consistent with the guidance produced by the Committee of University Chairs, the CUC guide, which identifies good practice. So, it’s a higher education code of governance and all Welsh universities work to that code. That code is itself up for review at the moment. So, that is an opportunity for that to be strengthened. Just in terms of governing bodies, it's also important that governing bodies engage in a process of continual refreshing, because that gives you a greater variety of perspectives, which is important. But it’s also important they have people who understand the higher education business as well as from other contexts. Getting that mix right is important. As it happens at the moment, there are also issues about ethnicity and gender balance. Half the chairs of Welsh university governing bodies are female. Half the vice-chancellors are female. That’s a positive position for Wales to be in. But I think our view would be that when you get an increase in the contextual pressures that we’ve been discussing already this morning, the role of the governing body actually becomes even more significant. So, we have encouraged the sector, both the chairmen of the university councils, but also the vice-chancellors, to engage in a process of an independent review of governance in Wales. We’ll be alongside that. We’ll be supporting that. But, actually, it’s important that they own it. And it hasn’t been hard for us to encourage that—they have been keen to take this opportunity to take stock. The Welsh higher education system is part of a UK system—they don’t want to be a million miles away from the rest of the UK in terms of expectations, but there is scope in Wales, given the scale of the sector, to actually construct something that is more challenging, I think, in terms of expectations, than might be the common denominator across the UK, and maybe some more exemplification. Importantly, in this exercise, we are not just interested in governance process. It’s going to be quite hard to do this, but I’m very keen that we engage—and the sector are up for this—in governance culture, because, actually, you can do process checks and you’ll have the right structure of committees and have the right sort of papers going, but, in the end, it’s the dynamic within that room and who’s asking which questions and how well informed they are, and whether it's an open culture or is it a defensive culture—these are really what influences the quality of decision making.

And how different are those cultures across institutions?

I think it’s very hard to say. We don’t sit in the governing bodies of those institutions. Very occasionally we get to observe one. Typically, that’s at a point where there are sufficient difficulties going on that we feel that we need to—

Do you have the option to observe at any point?


And how different are those cultures across institutions?

I think it’s very hard to say. We don’t sit in the governing bodies of those institutions. Very occasionally we get to observe one. Typically, that’s at a point where there are sufficient difficulties going on that we feel that we need to—

Do you have the option to observe at any point?


I think it’s very hard to say. We don’t sit in the governing bodies of those institutions. Very occasionally we get to observe one. Typically, that’s at a point where there are sufficient difficulties going on that we feel that we need to—

Do you have the option to observe at any point?


Do you have the option to observe at any point?

We can ask. But in the main, actually, our presence would change the dynamic of that anyway, so I'm not sure that's necessarily helpful. But we are keen to see what we can achieve with the sector in addressing these issues of what constitutes constructive challenge.


We can ask. But in the main, actually, our presence would change the dynamic of that anyway, so I'm not sure that's necessarily helpful. But we are keen to see what we can achieve with the sector in addressing these issues of what constitutes constructive challenge.

I take from that that there might be different approaches in different institutions. Is your aim to see consistency in the same approaches, then?


We can ask. But in the main, actually, our presence would change the dynamic of that anyway, so I'm not sure that's necessarily helpful. But we are keen to see what we can achieve with the sector in addressing these issues of what constitutes constructive challenge.

I take from that that there might be different approaches in different institutions. Is your aim to see consistency in the same approaches, then?

I think we’d like to see a consistent minimum set of expectations. I think there are differences, because there are people involved. In the end, it’s about personalities, it’s about people’s background and it’s about their knowledge. And we have a role to play in this as well, so we have a toolkit that we produce for governors, which, essentially, is a set of information that locates their university in the context of the UK, across a number of factors. So, if they had been told something that is not perhaps as true as it might be by the executive, they can see that in the data. Whether that toolkit needs a refresh—I’m sure it probably does, it’s been there for a while now—. So, part of that is what information we can provide to help governing bodies be properly informed as well.


We can ask. But in the main, actually, our presence would change the dynamic of that anyway, so I'm not sure that's necessarily helpful. But we are keen to see what we can achieve with the sector in addressing these issues of what constitutes constructive challenge.

I take from that that there might be different approaches in different institutions. Is your aim to see consistency in the same approaches, then?

I think we’d like to see a consistent minimum set of expectations. I think there are differences, because there are people involved. In the end, it’s about personalities, it’s about people’s background and it’s about their knowledge. And we have a role to play in this as well, so we have a toolkit that we produce for governors, which, essentially, is a set of information that locates their university in the context of the UK, across a number of factors. So, if they had been told something that is not perhaps as true as it might be by the executive, they can see that in the data. Whether that toolkit needs a refresh—I’m sure it probably does, it’s been there for a while now—. So, part of that is what information we can provide to help governing bodies be properly informed as well.

Yes, and this is the independence and autonomy thing. This is quite distant from Government—unlike other institutions, where you can prescribe some of these approaches.


I take from that that there might be different approaches in different institutions. Is your aim to see consistency in the same approaches, then?

I think we’d like to see a consistent minimum set of expectations. I think there are differences, because there are people involved. In the end, it’s about personalities, it’s about people’s background and it’s about their knowledge. And we have a role to play in this as well, so we have a toolkit that we produce for governors, which, essentially, is a set of information that locates their university in the context of the UK, across a number of factors. So, if they had been told something that is not perhaps as true as it might be by the executive, they can see that in the data. Whether that toolkit needs a refresh—I’m sure it probably does, it’s been there for a while now—. So, part of that is what information we can provide to help governing bodies be properly informed as well.

Yes, and this is the independence and autonomy thing. This is quite distant from Government—unlike other institutions, where you can prescribe some of these approaches.

Yes, and in the end I don't think there's any pushback from the sector in terms of wanting to operate in accordance with best practice.


I think we’d like to see a consistent minimum set of expectations. I think there are differences, because there are people involved. In the end, it’s about personalities, it’s about people’s background and it’s about their knowledge. And we have a role to play in this as well, so we have a toolkit that we produce for governors, which, essentially, is a set of information that locates their university in the context of the UK, across a number of factors. So, if they had been told something that is not perhaps as true as it might be by the executive, they can see that in the data. Whether that toolkit needs a refresh—I’m sure it probably does, it’s been there for a while now—. So, part of that is what information we can provide to help governing bodies be properly informed as well.

Yes, and this is the independence and autonomy thing. This is quite distant from Government—unlike other institutions, where you can prescribe some of these approaches.

Yes, and in the end I don't think there's any pushback from the sector in terms of wanting to operate in accordance with best practice.

Yes, and I totally defend independence and autonomy.


Yes, and this is the independence and autonomy thing. This is quite distant from Government—unlike other institutions, where you can prescribe some of these approaches.

Yes, and in the end I don't think there's any pushback from the sector in terms of wanting to operate in accordance with best practice.

Yes, and I totally defend independence and autonomy.

Absolutely. The challenge is all of us being clear what constitutes best practice.


Yes, and in the end I don't think there's any pushback from the sector in terms of wanting to operate in accordance with best practice.

Yes, and I totally defend independence and autonomy.

Absolutely. The challenge is all of us being clear what constitutes best practice.

So, what about risk appetite? Do you feel that any governing bodies are exhibiting what might be considered to be an imprudent risk appetite?


Yes, and I totally defend independence and autonomy.

Absolutely. The challenge is all of us being clear what constitutes best practice.

So, what about risk appetite? Do you feel that any governing bodies are exhibiting what might be considered to be an imprudent risk appetite?

I don't think so, and this manifests itself in two ways. So, we would see this coming through in forecasts, and we would see it coming through in requests for borrowings, predominantly. Actually, we'd see it in other ways as well. Our links into institutions are many and various, and we have our formal stuff, but we all have links into institutions that are informal and we—. One of the beauties of the scale of the sector in Wales is we can see the institutions in a way that they can't hope to in England. It's just completely different. And so we would see it in other ways. But we have, in some instances, I think it's fair to say, helped institutions to think again about some of their aspirations. So, where we've seen things and we think, 'That just looks ridiculously optimistic,' we've just asked the questions. We don't say, 'No, you can't do that,' because they are autonomous, they make the decisions, but we try to make sure that they're asking the right questions.


Absolutely. The challenge is all of us being clear what constitutes best practice.

So, what about risk appetite? Do you feel that any governing bodies are exhibiting what might be considered to be an imprudent risk appetite?

I don't think so, and this manifests itself in two ways. So, we would see this coming through in forecasts, and we would see it coming through in requests for borrowings, predominantly. Actually, we'd see it in other ways as well. Our links into institutions are many and various, and we have our formal stuff, but we all have links into institutions that are informal and we—. One of the beauties of the scale of the sector in Wales is we can see the institutions in a way that they can't hope to in England. It's just completely different. And so we would see it in other ways. But we have, in some instances, I think it's fair to say, helped institutions to think again about some of their aspirations. So, where we've seen things and we think, 'That just looks ridiculously optimistic,' we've just asked the questions. We don't say, 'No, you can't do that,' because they are autonomous, they make the decisions, but we try to make sure that they're asking the right questions.

So, would you see that governing bodies are falling short in doing that themselves, in that, where they become strategic decisions that require due diligence, are the governing bodies themselves presenting that challenge? Or the fact you've just said that, does that suggest to us that, actually, they are falling short?


So, what about risk appetite? Do you feel that any governing bodies are exhibiting what might be considered to be an imprudent risk appetite?

I don't think so, and this manifests itself in two ways. So, we would see this coming through in forecasts, and we would see it coming through in requests for borrowings, predominantly. Actually, we'd see it in other ways as well. Our links into institutions are many and various, and we have our formal stuff, but we all have links into institutions that are informal and we—. One of the beauties of the scale of the sector in Wales is we can see the institutions in a way that they can't hope to in England. It's just completely different. And so we would see it in other ways. But we have, in some instances, I think it's fair to say, helped institutions to think again about some of their aspirations. So, where we've seen things and we think, 'That just looks ridiculously optimistic,' we've just asked the questions. We don't say, 'No, you can't do that,' because they are autonomous, they make the decisions, but we try to make sure that they're asking the right questions.

So, would you see that governing bodies are falling short in doing that themselves, in that, where they become strategic decisions that require due diligence, are the governing bodies themselves presenting that challenge? Or the fact you've just said that, does that suggest to us that, actually, they are falling short?

I think there's a mixture of things going on. We have a slightly different perspective and we have a perspective that is very intimately informed in terms of how the institution is performing. So, you have a governing body with a range of perspectives, and you will also have people who are very committed and very enthusiastic about the institution, and just occasionally it's helpful to get a slightly external perspective on these things. So, I don't think it's a shortfall as such, but I just think—


I don't think so, and this manifests itself in two ways. So, we would see this coming through in forecasts, and we would see it coming through in requests for borrowings, predominantly. Actually, we'd see it in other ways as well. Our links into institutions are many and various, and we have our formal stuff, but we all have links into institutions that are informal and we—. One of the beauties of the scale of the sector in Wales is we can see the institutions in a way that they can't hope to in England. It's just completely different. And so we would see it in other ways. But we have, in some instances, I think it's fair to say, helped institutions to think again about some of their aspirations. So, where we've seen things and we think, 'That just looks ridiculously optimistic,' we've just asked the questions. We don't say, 'No, you can't do that,' because they are autonomous, they make the decisions, but we try to make sure that they're asking the right questions.

So, would you see that governing bodies are falling short in doing that themselves, in that, where they become strategic decisions that require due diligence, are the governing bodies themselves presenting that challenge? Or the fact you've just said that, does that suggest to us that, actually, they are falling short?

I think there's a mixture of things going on. We have a slightly different perspective and we have a perspective that is very intimately informed in terms of how the institution is performing. So, you have a governing body with a range of perspectives, and you will also have people who are very committed and very enthusiastic about the institution, and just occasionally it's helpful to get a slightly external perspective on these things. So, I don't think it's a shortfall as such, but I just think—

The kind of honest broker role, kind of.


So, would you see that governing bodies are falling short in doing that themselves, in that, where they become strategic decisions that require due diligence, are the governing bodies themselves presenting that challenge? Or the fact you've just said that, does that suggest to us that, actually, they are falling short?

I think there's a mixture of things going on. We have a slightly different perspective and we have a perspective that is very intimately informed in terms of how the institution is performing. So, you have a governing body with a range of perspectives, and you will also have people who are very committed and very enthusiastic about the institution, and just occasionally it's helpful to get a slightly external perspective on these things. So, I don't think it's a shortfall as such, but I just think—

The kind of honest broker role, kind of.

The machinery depends on having a body like HEFCW doing some of that role, and the people who lend money to institutions are absolutely clear about that. So, we have relationships with the banks; they come and see us every now and again—typically not to talk about individual clients but just to talk about what we do and how we do it. Interestingly, for example, when Michael Barber got up before Christmas and said there will be no bail-outs of universities, we had banks on the phone to us within a couple of days, wanting just to talk about how it is in Wales and is it still how it used to be. So, they are very keenly aware of what we do. So, it's not really a governance failure; it's just that the machinery includes us.


I think there's a mixture of things going on. We have a slightly different perspective and we have a perspective that is very intimately informed in terms of how the institution is performing. So, you have a governing body with a range of perspectives, and you will also have people who are very committed and very enthusiastic about the institution, and just occasionally it's helpful to get a slightly external perspective on these things. So, I don't think it's a shortfall as such, but I just think—

The kind of honest broker role, kind of.

The machinery depends on having a body like HEFCW doing some of that role, and the people who lend money to institutions are absolutely clear about that. So, we have relationships with the banks; they come and see us every now and again—typically not to talk about individual clients but just to talk about what we do and how we do it. Interestingly, for example, when Michael Barber got up before Christmas and said there will be no bail-outs of universities, we had banks on the phone to us within a couple of days, wanting just to talk about how it is in Wales and is it still how it used to be. So, they are very keenly aware of what we do. So, it's not really a governance failure; it's just that the machinery includes us.

Okay, that's important. And one of the things, from a distance—I mean, I've been involved in different ways in an institution, and looking at the institutions from a distance. There are people, as you say, involved, and people always make the difference in different cultures. Do you find that the relationships between executive teams and governors is effective, and are they sufficiently robust and challenging as well? Those executive permanent staff and the governors—is there challenge there?


The kind of honest broker role, kind of.

The machinery depends on having a body like HEFCW doing some of that role, and the people who lend money to institutions are absolutely clear about that. So, we have relationships with the banks; they come and see us every now and again—typically not to talk about individual clients but just to talk about what we do and how we do it. Interestingly, for example, when Michael Barber got up before Christmas and said there will be no bail-outs of universities, we had banks on the phone to us within a couple of days, wanting just to talk about how it is in Wales and is it still how it used to be. So, they are very keenly aware of what we do. So, it's not really a governance failure; it's just that the machinery includes us.

Okay, that's important. And one of the things, from a distance—I mean, I've been involved in different ways in an institution, and looking at the institutions from a distance. There are people, as you say, involved, and people always make the difference in different cultures. Do you find that the relationships between executive teams and governors is effective, and are they sufficiently robust and challenging as well? Those executive permanent staff and the governors—is there challenge there?

I would say, in the main, yes. Occasionally, we help the governors to ask the right questions, so occasionally that external perspective we've just discussed is helpful in that regard. Actually, there are times when there are tensions between the executive and governing bodies, inevitably—that's not something that's remarkable—and we can feel that as well. We have conversations with both governing bodies and executives.


The machinery depends on having a body like HEFCW doing some of that role, and the people who lend money to institutions are absolutely clear about that. So, we have relationships with the banks; they come and see us every now and again—typically not to talk about individual clients but just to talk about what we do and how we do it. Interestingly, for example, when Michael Barber got up before Christmas and said there will be no bail-outs of universities, we had banks on the phone to us within a couple of days, wanting just to talk about how it is in Wales and is it still how it used to be. So, they are very keenly aware of what we do. So, it's not really a governance failure; it's just that the machinery includes us.

Okay, that's important. And one of the things, from a distance—I mean, I've been involved in different ways in an institution, and looking at the institutions from a distance. There are people, as you say, involved, and people always make the difference in different cultures. Do you find that the relationships between executive teams and governors is effective, and are they sufficiently robust and challenging as well? Those executive permanent staff and the governors—is there challenge there?

I would say, in the main, yes. Occasionally, we help the governors to ask the right questions, so occasionally that external perspective we've just discussed is helpful in that regard. Actually, there are times when there are tensions between the executive and governing bodies, inevitably—that's not something that's remarkable—and we can feel that as well. We have conversations with both governing bodies and executives.

And that can become apparent from a public point of view as well—you know, media reports and—.


Okay, that's important. And one of the things, from a distance—I mean, I've been involved in different ways in an institution, and looking at the institutions from a distance. There are people, as you say, involved, and people always make the difference in different cultures. Do you find that the relationships between executive teams and governors is effective, and are they sufficiently robust and challenging as well? Those executive permanent staff and the governors—is there challenge there?

I would say, in the main, yes. Occasionally, we help the governors to ask the right questions, so occasionally that external perspective we've just discussed is helpful in that regard. Actually, there are times when there are tensions between the executive and governing bodies, inevitably—that's not something that's remarkable—and we can feel that as well. We have conversations with both governing bodies and executives.

And that can become apparent from a public point of view as well—you know, media reports and—.

Yes, sometimes these things can spill, and the governing bodies also include student representation, staff representation, who are typically union reps, and so, you know, there are all sorts of—. I'm not in any way saying that people are indiscreet, but there are all sorts of interests that are sitting around that table that have to be managed within a governance context. So, sometimes it can spill. And these tensions are not all-out war, but there are sometimes differences of view and they have to be worked through, and that's governance working properly, I think.


I would say, in the main, yes. Occasionally, we help the governors to ask the right questions, so occasionally that external perspective we've just discussed is helpful in that regard. Actually, there are times when there are tensions between the executive and governing bodies, inevitably—that's not something that's remarkable—and we can feel that as well. We have conversations with both governing bodies and executives.

And that can become apparent from a public point of view as well—you know, media reports and—.

Yes, sometimes these things can spill, and the governing bodies also include student representation, staff representation, who are typically union reps, and so, you know, there are all sorts of—. I'm not in any way saying that people are indiscreet, but there are all sorts of interests that are sitting around that table that have to be managed within a governance context. So, sometimes it can spill. And these tensions are not all-out war, but there are sometimes differences of view and they have to be worked through, and that's governance working properly, I think.

Okay, which is—some of the work you've suggested will help towards that.


And that can become apparent from a public point of view as well—you know, media reports and—.

Yes, sometimes these things can spill, and the governing bodies also include student representation, staff representation, who are typically union reps, and so, you know, there are all sorts of—. I'm not in any way saying that people are indiscreet, but there are all sorts of interests that are sitting around that table that have to be managed within a governance context. So, sometimes it can spill. And these tensions are not all-out war, but there are sometimes differences of view and they have to be worked through, and that's governance working properly, I think.

Okay, which is—some of the work you've suggested will help towards that.


Yes, sometimes these things can spill, and the governing bodies also include student representation, staff representation, who are typically union reps, and so, you know, there are all sorts of—. I'm not in any way saying that people are indiscreet, but there are all sorts of interests that are sitting around that table that have to be managed within a governance context. So, sometimes it can spill. And these tensions are not all-out war, but there are sometimes differences of view and they have to be worked through, and that's governance working properly, I think.

Okay, which is—some of the work you've suggested will help towards that.

And a last question: you've identified one university as high risk, five as medium, and two as low in the short to medium term. You're obviously not going to tell us which, but what I'm interested in is the direction of travel, and whether those that are 'medium'—are they at any point at risk of becoming 'high' in the near future?


Okay, which is—some of the work you've suggested will help towards that.

And a last question: you've identified one university as high risk, five as medium, and two as low in the short to medium term. You're obviously not going to tell us which, but what I'm interested in is the direction of travel, and whether those that are 'medium'—are they at any point at risk of becoming 'high' in the near future?

I think it's fair to say that the direction of travel is that we're seeing an increased risk profile in the sector in Wales, and it's about the financial pressures that we've already discussed this morning. And that is why the efforts that the Minister has gone to to secure the Diamond settlement, and, indeed, other bits of money now and again, are so important. So, she's doing what she can, and that's really good, but we always knew that, between the point of the Diamond recommendations being made and the full implementation, there was going to be a valley to cross. The new machinery costs more as you phase out the old as well. So, the amount of funding was always going to be under pressure; there's a demographic dip, and there are the other contextual factors we've discussed. We always knew there was going to be a valley. And the institutions have been working very hard to try not to take cost out now that they really don't have to take out, because they don't want to reduce capacity, which they'll struggle to recover again when the financial position improves. So, they are seeing deficits, which are managed deficits, where they're spending more than their income in order just to keep the capacity in. So, they're being as responsible as we could expect them to be in this.


And a last question: you've identified one university as high risk, five as medium, and two as low in the short to medium term. You're obviously not going to tell us which, but what I'm interested in is the direction of travel, and whether those that are 'medium'—are they at any point at risk of becoming 'high' in the near future?

I think it's fair to say that the direction of travel is that we're seeing an increased risk profile in the sector in Wales, and it's about the financial pressures that we've already discussed this morning. And that is why the efforts that the Minister has gone to to secure the Diamond settlement, and, indeed, other bits of money now and again, are so important. So, she's doing what she can, and that's really good, but we always knew that, between the point of the Diamond recommendations being made and the full implementation, there was going to be a valley to cross. The new machinery costs more as you phase out the old as well. So, the amount of funding was always going to be under pressure; there's a demographic dip, and there are the other contextual factors we've discussed. We always knew there was going to be a valley. And the institutions have been working very hard to try not to take cost out now that they really don't have to take out, because they don't want to reduce capacity, which they'll struggle to recover again when the financial position improves. So, they are seeing deficits, which are managed deficits, where they're spending more than their income in order just to keep the capacity in. So, they're being as responsible as we could expect them to be in this.

And, if you're back in a year or two's time, the next few years, are we confident that there won't be more in the high-risk category? You said you don't see collapse, but are we confident there won't be more in the high-risk category?


And a last question: you've identified one university as high risk, five as medium, and two as low in the short to medium term. You're obviously not going to tell us which, but what I'm interested in is the direction of travel, and whether those that are 'medium'—are they at any point at risk of becoming 'high' in the near future?

I think it's fair to say that the direction of travel is that we're seeing an increased risk profile in the sector in Wales, and it's about the financial pressures that we've already discussed this morning. And that is why the efforts that the Minister has gone to to secure the Diamond settlement, and, indeed, other bits of money now and again, are so important. So, she's doing what she can, and that's really good, but we always knew that, between the point of the Diamond recommendations being made and the full implementation, there was going to be a valley to cross. The new machinery costs more as you phase out the old as well. So, the amount of funding was always going to be under pressure; there's a demographic dip, and there are the other contextual factors we've discussed. We always knew there was going to be a valley. And the institutions have been working very hard to try not to take cost out now that they really don't have to take out, because they don't want to reduce capacity, which they'll struggle to recover again when the financial position improves. So, they are seeing deficits, which are managed deficits, where they're spending more than their income in order just to keep the capacity in. So, they're being as responsible as we could expect them to be in this.

And, if you're back in a year or two's time, the next few years, are we confident that there won't be more in the high-risk category? You said you don't see collapse, but are we confident there won't be more in the high-risk category?

Well, I think what I would always say about this process is that it doesn't guarantee 100 per cent accuracy. We can only go on what we can see. So, I wouldn't—. HEFCW is innately cautious as an organisation, so I'm not going to say we're confident, but that doesn't mean to say we're worried either.


I think it's fair to say that the direction of travel is that we're seeing an increased risk profile in the sector in Wales, and it's about the financial pressures that we've already discussed this morning. And that is why the efforts that the Minister has gone to to secure the Diamond settlement, and, indeed, other bits of money now and again, are so important. So, she's doing what she can, and that's really good, but we always knew that, between the point of the Diamond recommendations being made and the full implementation, there was going to be a valley to cross. The new machinery costs more as you phase out the old as well. So, the amount of funding was always going to be under pressure; there's a demographic dip, and there are the other contextual factors we've discussed. We always knew there was going to be a valley. And the institutions have been working very hard to try not to take cost out now that they really don't have to take out, because they don't want to reduce capacity, which they'll struggle to recover again when the financial position improves. So, they are seeing deficits, which are managed deficits, where they're spending more than their income in order just to keep the capacity in. So, they're being as responsible as we could expect them to be in this.

And, if you're back in a year or two's time, the next few years, are we confident that there won't be more in the high-risk category? You said you don't see collapse, but are we confident there won't be more in the high-risk category?

Well, I think what I would always say about this process is that it doesn't guarantee 100 per cent accuracy. We can only go on what we can see. So, I wouldn't—. HEFCW is innately cautious as an organisation, so I'm not going to say we're confident, but that doesn't mean to say we're worried either.

Right, okay. So, to answer my question: are we likely to see more in the high-risk category or not?


And, if you're back in a year or two's time, the next few years, are we confident that there won't be more in the high-risk category? You said you don't see collapse, but are we confident there won't be more in the high-risk category?

Well, I think what I would always say about this process is that it doesn't guarantee 100 per cent accuracy. We can only go on what we can see. So, I wouldn't—. HEFCW is innately cautious as an organisation, so I'm not going to say we're confident, but that doesn't mean to say we're worried either.

Right, okay. So, to answer my question: are we likely to see more in the high-risk category or not?


Well, I think what I would always say about this process is that it doesn't guarantee 100 per cent accuracy. We can only go on what we can see. So, I wouldn't—. HEFCW is innately cautious as an organisation, so I'm not going to say we're confident, but that doesn't mean to say we're worried either.

Right, okay. So, to answer my question: are we likely to see more in the high-risk category or not?


Right, okay. So, to answer my question: are we likely to see more in the high-risk category or not?

And, just to add, I think the key bit of that is maintaining the attractiveness of Welsh universities to students, because a large proportion are coming not from just Wales, but from England and internationally—so, that's a key part—and also that our research portfolio is invested in, and that also brings economic benefits. So, I think those are the two that we are [correction: need to be] able to maintain: the institutions as attractive options for students, and that our research capacity is invested in.


And, just to add, I think the key bit of that is maintaining the attractiveness of Welsh universities to students, because a large proportion are coming not from just Wales, but from England and internationally—so, that's a key part—and also that our research portfolio is invested in, and that also brings economic benefits. So, I think those are the two that we are [correction: need to be] able to maintain: the institutions as attractive options for students, and that our research capacity is invested in.

Thank you. I've got a supplementary from Siân Gwenllian.


And, just to add, I think the key bit of that is maintaining the attractiveness of Welsh universities to students, because a large proportion are coming not from just Wales, but from England and internationally—so, that's a key part—and also that our research portfolio is invested in, and that also brings economic benefits. So, I think those are the two that we are [correction: need to be] able to maintain: the institutions as attractive options for students, and that our research capacity is invested in.

Thank you. I've got a supplementary from Siân Gwenllian.

Just in the interest of transparency, are you able to tell us which universities are in which categories of risk?


And, just to add, I think the key bit of that is maintaining the attractiveness of Welsh universities to students, because a large proportion are coming not from just Wales, but from England and internationally—so, that's a key part—and also that our research portfolio is invested in, and that also brings economic benefits. So, I think those are the two that we are [correction: need to be] able to maintain: the institutions as attractive options for students, and that our research capacity is invested in.

Thank you. I've got a supplementary from Siân Gwenllian.

Just in the interest of transparency, are you able to tell us which universities are in which categories of risk?

We don't publish that; we publish numbers. So, that's, I'm afraid, where we're going to stick.


Thank you. I've got a supplementary from Siân Gwenllian.

Just in the interest of transparency, are you able to tell us which universities are in which categories of risk?

We don't publish that; we publish numbers. So, that's, I'm afraid, where we're going to stick.

They didn't even try to—[Inaudible.] [Laughter.]


Just in the interest of transparency, are you able to tell us which universities are in which categories of risk?

We don't publish that; we publish numbers. So, that's, I'm afraid, where we're going to stick.

They didn't even try to—[Inaudible.] [Laughter.]

Okay. Thank you. The next questions then are from Janet Finch-Saunders.


We don't publish that; we publish numbers. So, that's, I'm afraid, where we're going to stick.

They didn't even try to—[Inaudible.] [Laughter.]

Okay. Thank you. The next questions then are from Janet Finch-Saunders.

Good morning. Can you explain your overall approach to the 2019-20 allocations and what your priority for allocations has been?


They didn't even try to—[Inaudible.] [Laughter.]

Okay. Thank you. The next questions then are from Janet Finch-Saunders.

Good morning. Can you explain your overall approach to the 2019-20 allocations and what your priority for allocations has been?

We publish our funding allocations, and we published the 2019-20 allocations on 4 June. For 2019-20, we're allocating £149 million, and, as David said, this is the first year that we've been able to start putting funding, additional funding, in from the Diamond recommendations for investment in the sector. So, that means we've been able to increase our recurrent teaching funding by £7 million—not a significant amount, but it's a start. And we have maintained QR, which is our funding for research, quality research, and postgraduate research, at least at the same levels of £76 million, as it's been that in previous years. We've increased part-time funding by £1 million to £26 million, and we've started to increase support for expensive subjects—that's medicine, dentistry and conservatoire provision—and higher cost subjects—those are the sciences and the STEM. So, we made a start on that and increased that support by about £6 million to £20 million in total. And, in addition to that, we have strategic funding that we're maintaining for Reaching Wider projects and the Sêr Cymru project. And then, in addition to our recurrent funding, we have had strategic funding in our remit letters for the last two years. So, we're developing programmes for civic mission, community engagement, collaborations between higher education and further education, and, more recently, we had funding at the end of March to start to implement the recommendations of Graeme Reid's report for research investment, and also for developing mental health and well-being. That strategic funding is very welcome, but to be able to build those activities into our core funding, which we hope Diamond will bring, would be more sustainable for institutions.


Okay. Thank you. The next questions then are from Janet Finch-Saunders.

Good morning. Can you explain your overall approach to the 2019-20 allocations and what your priority for allocations has been?

We publish our funding allocations, and we published the 2019-20 allocations on 4 June. For 2019-20, we're allocating £149 million, and, as David said, this is the first year that we've been able to start putting funding, additional funding, in from the Diamond recommendations for investment in the sector. So, that means we've been able to increase our recurrent teaching funding by £7 million—not a significant amount, but it's a start. And we have maintained QR, which is our funding for research, quality research, and postgraduate research, at least at the same levels of £76 million, as it's been that in previous years. We've increased part-time funding by £1 million to £26 million, and we've started to increase support for expensive subjects—that's medicine, dentistry and conservatoire provision—and higher cost subjects—those are the sciences and the STEM. So, we made a start on that and increased that support by about £6 million to £20 million in total. And, in addition to that, we have strategic funding that we're maintaining for Reaching Wider projects and the Sêr Cymru project. And then, in addition to our recurrent funding, we have had strategic funding in our remit letters for the last two years. So, we're developing programmes for civic mission, community engagement, collaborations between higher education and further education, and, more recently, we had funding at the end of March to start to implement the recommendations of Graeme Reid's report for research investment, and also for developing mental health and well-being. That strategic funding is very welcome, but to be able to build those activities into our core funding, which we hope Diamond will bring, would be more sustainable for institutions.

Thank you. Now, the Minister talks of one skills system. How do your allocations to the 2019-20 academic year support and incentivise collaboration between HE and FE?


Good morning. Can you explain your overall approach to the 2019-20 allocations and what your priority for allocations has been?

We publish our funding allocations, and we published the 2019-20 allocations on 4 June. For 2019-20, we're allocating £149 million, and, as David said, this is the first year that we've been able to start putting funding, additional funding, in from the Diamond recommendations for investment in the sector. So, that means we've been able to increase our recurrent teaching funding by £7 million—not a significant amount, but it's a start. And we have maintained QR, which is our funding for research, quality research, and postgraduate research, at least at the same levels of £76 million, as it's been that in previous years. We've increased part-time funding by £1 million to £26 million, and we've started to increase support for expensive subjects—that's medicine, dentistry and conservatoire provision—and higher cost subjects—those are the sciences and the STEM. So, we made a start on that and increased that support by about £6 million to £20 million in total. And, in addition to that, we have strategic funding that we're maintaining for Reaching Wider projects and the Sêr Cymru project. And then, in addition to our recurrent funding, we have had strategic funding in our remit letters for the last two years. So, we're developing programmes for civic mission, community engagement, collaborations between higher education and further education, and, more recently, we had funding at the end of March to start to implement the recommendations of Graeme Reid's report for research investment, and also for developing mental health and well-being. That strategic funding is very welcome, but to be able to build those activities into our core funding, which we hope Diamond will bring, would be more sustainable for institutions.

Thank you. Now, the Minister talks of one skills system. How do your allocations to the 2019-20 academic year support and incentivise collaboration between HE and FE?

So, there are probably two dimensions to this. First of all, we have provided £3.5 million of separate funding specifically targeted to improve and increase collaboration between HE and FE. So, we put out a circular inviting proposals for that, and it was competitive, so we funded what was the best of the proposals, and we constrained it to be available only to pump-prime new activity or to add value to existing activity, but not just to keep things ticking over. We had seven bids submitted from across the three Welsh regions on a whole range of activities, which we probably haven't got time to go into now. I've got a long list here, but, for example, in south-east Wales, the University of South Wales is leading on a bid partnering with Cardiff University, Cardiff Met, with the Open University and all the FE players in the region. So, we were really pleased, actually. We tried to get it within regions, because that's how you get the biggest impact for learners in the area and also for smaller enterprises in terms of innovation work. So, that is a specific bit of funding designed to incentivise HE-FE collaboration. And then we direct fund a couple of FE institutions for delivery of higher education for historical reasons, and we also have our funding going through to support franchise activity between HE and FE. There are about 5,000 students who are studying HE programmes under franchise in FE colleges in Wales, and our funding method has, historically for some time now, protected that money. So, we try to prevent universities from taking the money out of franchise and onto campus, because we think it's important to try to encourage local provision within particular localities. And, certainly in areas where public transport infrastructure is perhaps not what it might be, for people to move to universities can be quite a disincentive, so—. But we encourage it that way as well.


We publish our funding allocations, and we published the 2019-20 allocations on 4 June. For 2019-20, we're allocating £149 million, and, as David said, this is the first year that we've been able to start putting funding, additional funding, in from the Diamond recommendations for investment in the sector. So, that means we've been able to increase our recurrent teaching funding by £7 million—not a significant amount, but it's a start. And we have maintained QR, which is our funding for research, quality research, and postgraduate research, at least at the same levels of £76 million, as it's been that in previous years. We've increased part-time funding by £1 million to £26 million, and we've started to increase support for expensive subjects—that's medicine, dentistry and conservatoire provision—and higher cost subjects—those are the sciences and the STEM. So, we made a start on that and increased that support by about £6 million to £20 million in total. And, in addition to that, we have strategic funding that we're maintaining for Reaching Wider projects and the Sêr Cymru project. And then, in addition to our recurrent funding, we have had strategic funding in our remit letters for the last two years. So, we're developing programmes for civic mission, community engagement, collaborations between higher education and further education, and, more recently, we had funding at the end of March to start to implement the recommendations of Graeme Reid's report for research investment, and also for developing mental health and well-being. That strategic funding is very welcome, but to be able to build those activities into our core funding, which we hope Diamond will bring, would be more sustainable for institutions.

Thank you. Now, the Minister talks of one skills system. How do your allocations to the 2019-20 academic year support and incentivise collaboration between HE and FE?

So, there are probably two dimensions to this. First of all, we have provided £3.5 million of separate funding specifically targeted to improve and increase collaboration between HE and FE. So, we put out a circular inviting proposals for that, and it was competitive, so we funded what was the best of the proposals, and we constrained it to be available only to pump-prime new activity or to add value to existing activity, but not just to keep things ticking over. We had seven bids submitted from across the three Welsh regions on a whole range of activities, which we probably haven't got time to go into now. I've got a long list here, but, for example, in south-east Wales, the University of South Wales is leading on a bid partnering with Cardiff University, Cardiff Met, with the Open University and all the FE players in the region. So, we were really pleased, actually. We tried to get it within regions, because that's how you get the biggest impact for learners in the area and also for smaller enterprises in terms of innovation work. So, that is a specific bit of funding designed to incentivise HE-FE collaboration. And then we direct fund a couple of FE institutions for delivery of higher education for historical reasons, and we also have our funding going through to support franchise activity between HE and FE. There are about 5,000 students who are studying HE programmes under franchise in FE colleges in Wales, and our funding method has, historically for some time now, protected that money. So, we try to prevent universities from taking the money out of franchise and onto campus, because we think it's important to try to encourage local provision within particular localities. And, certainly in areas where public transport infrastructure is perhaps not what it might be, for people to move to universities can be quite a disincentive, so—. But we encourage it that way as well.

Thank you. Then, finally from me, the council's remit letter for the 2019-20 academic year from the Minister does ask you to consider how you'd increase openness and transparency around the use of fee income. So, what are the issues here, and how will you take this forward?


Thank you. Now, the Minister talks of one skills system. How do your allocations to the 2019-20 academic year support and incentivise collaboration between HE and FE?

So, there are probably two dimensions to this. First of all, we have provided £3.5 million of separate funding specifically targeted to improve and increase collaboration between HE and FE. So, we put out a circular inviting proposals for that, and it was competitive, so we funded what was the best of the proposals, and we constrained it to be available only to pump-prime new activity or to add value to existing activity, but not just to keep things ticking over. We had seven bids submitted from across the three Welsh regions on a whole range of activities, which we probably haven't got time to go into now. I've got a long list here, but, for example, in south-east Wales, the University of South Wales is leading on a bid partnering with Cardiff University, Cardiff Met, with the Open University and all the FE players in the region. So, we were really pleased, actually. We tried to get it within regions, because that's how you get the biggest impact for learners in the area and also for smaller enterprises in terms of innovation work. So, that is a specific bit of funding designed to incentivise HE-FE collaboration. And then we direct fund a couple of FE institutions for delivery of higher education for historical reasons, and we also have our funding going through to support franchise activity between HE and FE. There are about 5,000 students who are studying HE programmes under franchise in FE colleges in Wales, and our funding method has, historically for some time now, protected that money. So, we try to prevent universities from taking the money out of franchise and onto campus, because we think it's important to try to encourage local provision within particular localities. And, certainly in areas where public transport infrastructure is perhaps not what it might be, for people to move to universities can be quite a disincentive, so—. But we encourage it that way as well.

Thank you. Then, finally from me, the council's remit letter for the 2019-20 academic year from the Minister does ask you to consider how you'd increase openness and transparency around the use of fee income. So, what are the issues here, and how will you take this forward?

The reporting of the income and expenditure is largely provided, probably more so in narrative form in the accounts and the financial statements and annual reports of institutions. A number of institutions also provide graphs and more easily accessible information to understand the income and expenditure of universities. But we would accept that this information isn't easy to access at the moment. There are examples of good practice across the sector in presenting as simply as possible what the income sources are for universities and how they spend their money. And we're going to be working with the Welsh universities and sector bodies to improve the accessibility of that information for Welsh institutions. More transparent reporting of income and expenditure, and not just fee income, is actually very important for understanding how income cross-flows work in universities. Some reasonably simplistic analyses can assume that all the student fee just covers the direct costs of academic provision, but there's much more to the student experience than that, so there are costs: there are the infrastructure costs, the student support costs, even the community engagement and all the research activities bring benefits to the teaching and fee provision. So, more transparency of all the universities' income sources and expenditure and a better understanding of the income cross-flows and why you can't look at universities in isolation of student provision and research, you have to look at the whole—so, we'll be working with them to improve that information.


So, there are probably two dimensions to this. First of all, we have provided £3.5 million of separate funding specifically targeted to improve and increase collaboration between HE and FE. So, we put out a circular inviting proposals for that, and it was competitive, so we funded what was the best of the proposals, and we constrained it to be available only to pump-prime new activity or to add value to existing activity, but not just to keep things ticking over. We had seven bids submitted from across the three Welsh regions on a whole range of activities, which we probably haven't got time to go into now. I've got a long list here, but, for example, in south-east Wales, the University of South Wales is leading on a bid partnering with Cardiff University, Cardiff Met, with the Open University and all the FE players in the region. So, we were really pleased, actually. We tried to get it within regions, because that's how you get the biggest impact for learners in the area and also for smaller enterprises in terms of innovation work. So, that is a specific bit of funding designed to incentivise HE-FE collaboration. And then we direct fund a couple of FE institutions for delivery of higher education for historical reasons, and we also have our funding going through to support franchise activity between HE and FE. There are about 5,000 students who are studying HE programmes under franchise in FE colleges in Wales, and our funding method has, historically for some time now, protected that money. So, we try to prevent universities from taking the money out of franchise and onto campus, because we think it's important to try to encourage local provision within particular localities. And, certainly in areas where public transport infrastructure is perhaps not what it might be, for people to move to universities can be quite a disincentive, so—. But we encourage it that way as well.

Thank you. Then, finally from me, the council's remit letter for the 2019-20 academic year from the Minister does ask you to consider how you'd increase openness and transparency around the use of fee income. So, what are the issues here, and how will you take this forward?

The reporting of the income and expenditure is largely provided, probably more so in narrative form in the accounts and the financial statements and annual reports of institutions. A number of institutions also provide graphs and more easily accessible information to understand the income and expenditure of universities. But we would accept that this information isn't easy to access at the moment. There are examples of good practice across the sector in presenting as simply as possible what the income sources are for universities and how they spend their money. And we're going to be working with the Welsh universities and sector bodies to improve the accessibility of that information for Welsh institutions. More transparent reporting of income and expenditure, and not just fee income, is actually very important for understanding how income cross-flows work in universities. Some reasonably simplistic analyses can assume that all the student fee just covers the direct costs of academic provision, but there's much more to the student experience than that, so there are costs: there are the infrastructure costs, the student support costs, even the community engagement and all the research activities bring benefits to the teaching and fee provision. So, more transparency of all the universities' income sources and expenditure and a better understanding of the income cross-flows and why you can't look at universities in isolation of student provision and research, you have to look at the whole—so, we'll be working with them to improve that information.


Thank you. Then, finally from me, the council's remit letter for the 2019-20 academic year from the Minister does ask you to consider how you'd increase openness and transparency around the use of fee income. So, what are the issues here, and how will you take this forward?

The reporting of the income and expenditure is largely provided, probably more so in narrative form in the accounts and the financial statements and annual reports of institutions. A number of institutions also provide graphs and more easily accessible information to understand the income and expenditure of universities. But we would accept that this information isn't easy to access at the moment. There are examples of good practice across the sector in presenting as simply as possible what the income sources are for universities and how they spend their money. And we're going to be working with the Welsh universities and sector bodies to improve the accessibility of that information for Welsh institutions. More transparent reporting of income and expenditure, and not just fee income, is actually very important for understanding how income cross-flows work in universities. Some reasonably simplistic analyses can assume that all the student fee just covers the direct costs of academic provision, but there's much more to the student experience than that, so there are costs: there are the infrastructure costs, the student support costs, even the community engagement and all the research activities bring benefits to the teaching and fee provision. So, more transparency of all the universities' income sources and expenditure and a better understanding of the income cross-flows and why you can't look at universities in isolation of student provision and research, you have to look at the whole—so, we'll be working with them to improve that information.

Thank you. We're going to go to Hefin David now for some questions on part-time student funding.


The reporting of the income and expenditure is largely provided, probably more so in narrative form in the accounts and the financial statements and annual reports of institutions. A number of institutions also provide graphs and more easily accessible information to understand the income and expenditure of universities. But we would accept that this information isn't easy to access at the moment. There are examples of good practice across the sector in presenting as simply as possible what the income sources are for universities and how they spend their money. And we're going to be working with the Welsh universities and sector bodies to improve the accessibility of that information for Welsh institutions. More transparent reporting of income and expenditure, and not just fee income, is actually very important for understanding how income cross-flows work in universities. Some reasonably simplistic analyses can assume that all the student fee just covers the direct costs of academic provision, but there's much more to the student experience than that, so there are costs: there are the infrastructure costs, the student support costs, even the community engagement and all the research activities bring benefits to the teaching and fee provision. So, more transparency of all the universities' income sources and expenditure and a better understanding of the income cross-flows and why you can't look at universities in isolation of student provision and research, you have to look at the whole—so, we'll be working with them to improve that information.

Thank you. We're going to go to Hefin David now for some questions on part-time student funding.

Part-time student numbers are bucking the trend in Wales, as I understand it, and we are seeing a bigger increase in Wales of part-time numbers than elsewhere in the UK. How is that going to be sustainable within current arrangements?


Thank you. We're going to go to Hefin David now for some questions on part-time student funding.

Part-time student numbers are bucking the trend in Wales, as I understand it, and we are seeing a bigger increase in Wales of part-time numbers than elsewhere in the UK. How is that going to be sustainable within current arrangements?

We've allocated £26.5 million in 2019-20 to support part-time provision, and we have been able in 2019-20 to fund some growth. So, there is growth in that funding to allow those institutions and incentivise those institutions who have recruited more students than last year to continue to do so. That came at an overall additional cost of £1.9 million, and, based on what we're hearing from student support, we're expecting to see that requirement increase. So, it's one of the areas where we'll need to look at how we prioritise Diamond funding. And at the moment, our intention—but subject to knowing the quantum of it—is to continue to support and fund growth in part-time provision.


Thank you. We're going to go to Hefin David now for some questions on part-time student funding.

Part-time student numbers are bucking the trend in Wales, as I understand it, and we are seeing a bigger increase in Wales of part-time numbers than elsewhere in the UK. How is that going to be sustainable within current arrangements?

We've allocated £26.5 million in 2019-20 to support part-time provision, and we have been able in 2019-20 to fund some growth. So, there is growth in that funding to allow those institutions and incentivise those institutions who have recruited more students than last year to continue to do so. That came at an overall additional cost of £1.9 million, and, based on what we're hearing from student support, we're expecting to see that requirement increase. So, it's one of the areas where we'll need to look at how we prioritise Diamond funding. And at the moment, our intention—but subject to knowing the quantum of it—is to continue to support and fund growth in part-time provision.

So, is it possible—? With the Welsh Government's policy of developing lifelong learning, is it possible that will be ever spread more thinly?


Part-time student numbers are bucking the trend in Wales, as I understand it, and we are seeing a bigger increase in Wales of part-time numbers than elsewhere in the UK. How is that going to be sustainable within current arrangements?

We've allocated £26.5 million in 2019-20 to support part-time provision, and we have been able in 2019-20 to fund some growth. So, there is growth in that funding to allow those institutions and incentivise those institutions who have recruited more students than last year to continue to do so. That came at an overall additional cost of £1.9 million, and, based on what we're hearing from student support, we're expecting to see that requirement increase. So, it's one of the areas where we'll need to look at how we prioritise Diamond funding. And at the moment, our intention—but subject to knowing the quantum of it—is to continue to support and fund growth in part-time provision.

So, is it possible—? With the Welsh Government's policy of developing lifelong learning, is it possible that will be ever spread more thinly?

That is the challenge, and there's a piece of work that we have in our sights to look again at part-time and what it is and what the various drivers are. There's a temptation, I think, at times, to see it solely in terms of skills for an economy, and it is important for reskilling and upskilling, but actually, it's important for other things as well. If we see higher education solely in terms of skilling an economy, we've missed an important part of the contribution that higher education makes. But part-time is really quite difficult, because there's part-time that is about upskilling, part time that's about reskilling, there's part-time for social purposes, there's employer-supported part-time, there's student—. So, there's a complexity there.


We've allocated £26.5 million in 2019-20 to support part-time provision, and we have been able in 2019-20 to fund some growth. So, there is growth in that funding to allow those institutions and incentivise those institutions who have recruited more students than last year to continue to do so. That came at an overall additional cost of £1.9 million, and, based on what we're hearing from student support, we're expecting to see that requirement increase. So, it's one of the areas where we'll need to look at how we prioritise Diamond funding. And at the moment, our intention—but subject to knowing the quantum of it—is to continue to support and fund growth in part-time provision.

So, is it possible—? With the Welsh Government's policy of developing lifelong learning, is it possible that will be ever spread more thinly?

That is the challenge, and there's a piece of work that we have in our sights to look again at part-time and what it is and what the various drivers are. There's a temptation, I think, at times, to see it solely in terms of skills for an economy, and it is important for reskilling and upskilling, but actually, it's important for other things as well. If we see higher education solely in terms of skilling an economy, we've missed an important part of the contribution that higher education makes. But part-time is really quite difficult, because there's part-time that is about upskilling, part time that's about reskilling, there's part-time for social purposes, there's employer-supported part-time, there's student—. So, there's a complexity there.

But they are more reactive to rises in fees.


So, is it possible—? With the Welsh Government's policy of developing lifelong learning, is it possible that will be ever spread more thinly?

That is the challenge, and there's a piece of work that we have in our sights to look again at part-time and what it is and what the various drivers are. There's a temptation, I think, at times, to see it solely in terms of skills for an economy, and it is important for reskilling and upskilling, but actually, it's important for other things as well. If we see higher education solely in terms of skilling an economy, we've missed an important part of the contribution that higher education makes. But part-time is really quite difficult, because there's part-time that is about upskilling, part time that's about reskilling, there's part-time for social purposes, there's employer-supported part-time, there's student—. So, there's a complexity there.

But they are more reactive to rises in fees.

Well, there is a sense that they are more price sensitive, yes, and so the support regime that the Government is putting in place is important, and that probably has made a difference to the numbers of part-timers entering the system this last year. But I think we need to stake stock of what is important about part-time, what the market will deliver, what the market won't deliver, what we should fund and so on. And there's a complexity around all that, as I've indicated, which we need to do a bit of work on with the sector, with the student body as well, just to take some stock of this over the next year or so.


That is the challenge, and there's a piece of work that we have in our sights to look again at part-time and what it is and what the various drivers are. There's a temptation, I think, at times, to see it solely in terms of skills for an economy, and it is important for reskilling and upskilling, but actually, it's important for other things as well. If we see higher education solely in terms of skilling an economy, we've missed an important part of the contribution that higher education makes. But part-time is really quite difficult, because there's part-time that is about upskilling, part time that's about reskilling, there's part-time for social purposes, there's employer-supported part-time, there's student—. So, there's a complexity there.

But they are more reactive to rises in fees.

Well, there is a sense that they are more price sensitive, yes, and so the support regime that the Government is putting in place is important, and that probably has made a difference to the numbers of part-timers entering the system this last year. But I think we need to stake stock of what is important about part-time, what the market will deliver, what the market won't deliver, what we should fund and so on. And there's a complexity around all that, as I've indicated, which we need to do a bit of work on with the sector, with the student body as well, just to take some stock of this over the next year or so.

Could we end up seeing significant fee increases for part-time students?


But they are more reactive to rises in fees.

Well, there is a sense that they are more price sensitive, yes, and so the support regime that the Government is putting in place is important, and that probably has made a difference to the numbers of part-timers entering the system this last year. But I think we need to stake stock of what is important about part-time, what the market will deliver, what the market won't deliver, what we should fund and so on. And there's a complexity around all that, as I've indicated, which we need to do a bit of work on with the sector, with the student body as well, just to take some stock of this over the next year or so.

Could we end up seeing significant fee increases for part-time students?

My sense is we won't. The Government wishes us to monitor, so we monitor, and that in itself is not straightforward, actually. But your comment about price sensitivity, I think, is really the nub of it. There's a limit to how much a fee increase would be acceptable to the part-time market. So, I think it's kind of self-regulating in that respect. I don't think we'll see massive fee increases; we might see a bit, but we won't see masses, I don't think.


Well, there is a sense that they are more price sensitive, yes, and so the support regime that the Government is putting in place is important, and that probably has made a difference to the numbers of part-timers entering the system this last year. But I think we need to stake stock of what is important about part-time, what the market will deliver, what the market won't deliver, what we should fund and so on. And there's a complexity around all that, as I've indicated, which we need to do a bit of work on with the sector, with the student body as well, just to take some stock of this over the next year or so.

Could we end up seeing significant fee increases for part-time students?

My sense is we won't. The Government wishes us to monitor, so we monitor, and that in itself is not straightforward, actually. But your comment about price sensitivity, I think, is really the nub of it. There's a limit to how much a fee increase would be acceptable to the part-time market. So, I think it's kind of self-regulating in that respect. I don't think we'll see massive fee increases; we might see a bit, but we won't see masses, I don't think.


Could we end up seeing significant fee increases for part-time students?

My sense is we won't. The Government wishes us to monitor, so we monitor, and that in itself is not straightforward, actually. But your comment about price sensitivity, I think, is really the nub of it. There's a limit to how much a fee increase would be acceptable to the part-time market. So, I think it's kind of self-regulating in that respect. I don't think we'll see massive fee increases; we might see a bit, but we won't see masses, I don't think.

Thank you. We've got some questions now on funding for research and innovation, and also we'd like to talk a bit about a replacement for European Union funds. Siân Gwenllian.


My sense is we won't. The Government wishes us to monitor, so we monitor, and that in itself is not straightforward, actually. But your comment about price sensitivity, I think, is really the nub of it. There's a limit to how much a fee increase would be acceptable to the part-time market. So, I think it's kind of self-regulating in that respect. I don't think we'll see massive fee increases; we might see a bit, but we won't see masses, I don't think.

Thank you. We've got some questions now on funding for research and innovation, and also we'd like to talk a bit about a replacement for European Union funds. Siân Gwenllian.

Thank you very much. If I could turn specifically to research, we know, of course, that both the Diamond and Reid reviews called for QR funding to be maintained in real terms, but the allocation is exactly the same for 2019-20 as it has been for the past nine years. Have you carried out any kind of assessment of the impact of this level of research funding on universities and, indeed, on the Welsh economy?


Thank you. We've got some questions now on funding for research and innovation, and also we'd like to talk a bit about a replacement for European Union funds. Siân Gwenllian.

Thank you very much. If I could turn specifically to research, we know, of course, that both the Diamond and Reid reviews called for QR funding to be maintained in real terms, but the allocation is exactly the same for 2019-20 as it has been for the past nine years. Have you carried out any kind of assessment of the impact of this level of research funding on universities and, indeed, on the Welsh economy?

I'm sorry; I missed the beginning of that because I couldn't hear this headset.


Thank you. We've got some questions now on funding for research and innovation, and also we'd like to talk a bit about a replacement for European Union funds. Siân Gwenllian.

Thank you very much. If I could turn specifically to research, we know, of course, that both the Diamond and Reid reviews called for QR funding to be maintained in real terms, but the allocation is exactly the same for 2019-20 as it has been for the past nine years. Have you carried out any kind of assessment of the impact of this level of research funding on universities and, indeed, on the Welsh economy?

I'm sorry; I missed the beginning of that because I couldn't hear this headset.

Siân, could you repeat the question? Sorry. We had a bit of a problem with translation at the beginning.


Thank you very much. If I could turn specifically to research, we know, of course, that both the Diamond and Reid reviews called for QR funding to be maintained in real terms, but the allocation is exactly the same for 2019-20 as it has been for the past nine years. Have you carried out any kind of assessment of the impact of this level of research funding on universities and, indeed, on the Welsh economy?

I'm sorry; I missed the beginning of that because I couldn't hear this headset.

Siân, could you repeat the question? Sorry. We had a bit of a problem with translation at the beginning.

Yes, no problem. I was talking about the Diamond and Reid reviews at the beginning of my question and the fact that they had recommended that QR funding should be maintained in real terms. But, of course, the sum hasn't actually increased over a period of nine years.


I'm sorry; I missed the beginning of that because I couldn't hear this headset.

Siân, could you repeat the question? Sorry. We had a bit of a problem with translation at the beginning.

Yes, no problem. I was talking about the Diamond and Reid reviews at the beginning of my question and the fact that they had recommended that QR funding should be maintained in real terms. But, of course, the sum hasn't actually increased over a period of nine years.

Okay. The reason the sum hasn't increased is because we haven't had enough money to be able to increase it and still meet the obligations we have to other bits of the HE system. We would dearly love to increase it. Both Ian Diamond and Graeme Reid were very clear about the importance of being able to invest in our QR research funding, for a number of reasons. The capacity of the sector to be able to respond to funding opportunities elsewhere in the UK and across the rest of the world is itself determined by the size and the strength of the research base, which is sustained by QR funding. If they go for UK-based competitive research funding, that is typically constructed on the absolute assumption that QR will be part of that mix. So, they tend to fund to 80 per cent of the actual cost of the research, with the expectation that QR will plug the gap. And we know that, although the Welsh research base is extraordinarily productive, and really is punching above its weight in many ways—and I mentioned earlier the impact of the research base in the last research excellence framework—we know that, actually, it could do so much more, if it just had more scale. So, we fully endorse the reports from both Ian Diamond and Graeme Reid that QR is important, and it's important also to be able to allow institutions to invest in research areas that emerge over time. It's almost impossible for a body like us, far less the Government, to know where these emerging strengths are going to come from, and QR provides the flexibility for institutions, which is absolutely fundamental to keeping the research base dynamic.


Siân, could you repeat the question? Sorry. We had a bit of a problem with translation at the beginning.

Yes, no problem. I was talking about the Diamond and Reid reviews at the beginning of my question and the fact that they had recommended that QR funding should be maintained in real terms. But, of course, the sum hasn't actually increased over a period of nine years.

Okay. The reason the sum hasn't increased is because we haven't had enough money to be able to increase it and still meet the obligations we have to other bits of the HE system. We would dearly love to increase it. Both Ian Diamond and Graeme Reid were very clear about the importance of being able to invest in our QR research funding, for a number of reasons. The capacity of the sector to be able to respond to funding opportunities elsewhere in the UK and across the rest of the world is itself determined by the size and the strength of the research base, which is sustained by QR funding. If they go for UK-based competitive research funding, that is typically constructed on the absolute assumption that QR will be part of that mix. So, they tend to fund to 80 per cent of the actual cost of the research, with the expectation that QR will plug the gap. And we know that, although the Welsh research base is extraordinarily productive, and really is punching above its weight in many ways—and I mentioned earlier the impact of the research base in the last research excellence framework—we know that, actually, it could do so much more, if it just had more scale. So, we fully endorse the reports from both Ian Diamond and Graeme Reid that QR is important, and it's important also to be able to allow institutions to invest in research areas that emerge over time. It's almost impossible for a body like us, far less the Government, to know where these emerging strengths are going to come from, and QR provides the flexibility for institutions, which is absolutely fundamental to keeping the research base dynamic.

Therefore, you do have concerns that this isn't increasing—you have that concern of a lack of increase in the level of investment. But has any particular assessment been made of the impact of not increasing that funding?