We certainly do not expect you to enter the political fray in any way.

Thank you. But even in terms of your assessment of whether this is going to be a good thing or a bad thing, a good impact or a bad impact, some of that inevitably in the end becomes a matter of your politics on it, so we will be as careful as we can be on that. In terms of the impact of Brexit on higher education, clearly, the significance here is about the contribution that higher education can make to Wales. So, we fund provision; we don't fund providers, technically, although obviously there's not much provision without providers. So, we are interested in the sustainability of higher education providers, but fundamentally the issue is: what does the HE system in Wales do for Wales, and what impact might Brexit have on the capacity of the system to continue to deliver for Wales? So, we know that universities make annually about £5 billion of impact; 50,000 jobs. Of course, in Wales, all of that economic impact is really very significant, and uncertainty about the relationships and the arrangements with Europe is one of the most significant issues confronting university management at the moment. That has an impact in a number of ways. We can identify at the moment the extent to which the HE sector in Wales is exposed to sources of income that are located from the EU, so EU students, structural funds, and EU research funding, and so on, from the EU. We can identify some of that, but, actually, what happens in the future is much harder to be clear about. We are beginning to see some impact in terms of applications from EU students and I'll ask Bethan to share some details on that in a moment. We're also beginning to pick up, only anecdotally, some signs that there are increasing difficulties in the UK sector, and the Welsh sector as part of that, in playing in some of the EU collaborative research activities. And that, I think, just reflects the extent to which EU partners consider that British partners might be a stable partner as we go through this transition period. We don't have data on that—that's anecdotal—but there are signs that some of those relationships are beginning to become a little bit more difficult. In terms of the financial impact of that, clearly, if it is accepted that the UK is a net contributor to the EU then, presumably, some of the money—we're almost immediately straight into politics if you're not careful—but some of the money will be available back to the UK, and the extent to which Wales benefits or not from that returned money is a function of the political relationship between the Welsh Government and Her Majesty's Government. It's not necessarily the case that Wales will always lose out in that relationship, but that will become a matter of politics. There's a broader dimension, which is about the economic impact of Brexit on the UK economy and how much tax revenue there is and all of that. I think it's very hard for us to be definitive about how that's going to play out. I think that depends on the deal and how it all unfolds over the next several years. But we can certainly anticipate some turbulence and exactly how that plays for institutions remains to be seen. We can touch later on on the extent to which they are sighted on this and preparing for it. So, in terms of recruitment, Bethan.

This is based on the UCAS applications and the report that was published at the end of June, 30 June. The European Union-domiciled applicants to Wales have decreased by 8 per cent, which contrasts with a 2 per cent increase for English institutions, and non-EU—so international students, not from Europe—have also decreased by 9 per cent to Welsh institutions, again contrasting with a 7 per cent increase in England. So, those are the signs of changes.

Okay. Could I then just ask you what you see as the main pressures on the Welsh higher education sector at the moment?


Thank you. But even in terms of your assessment of whether this is going to be a good thing or a bad thing, a good impact or a bad impact, some of that inevitably in the end becomes a matter of your politics on it, so we will be as careful as we can be on that. In terms of the impact of Brexit on higher education, clearly, the significance here is about the contribution that higher education can make to Wales. So, we fund provision; we don't fund providers, technically, although obviously there's not much provision without providers. So, we are interested in the sustainability of higher education providers, but fundamentally the issue is: what does the HE system in Wales do for Wales, and what impact might Brexit have on the capacity of the system to continue to deliver for Wales? So, we know that universities make annually about £5 billion of impact; 50,000 jobs. Of course, in Wales, all of that economic impact is really very significant, and uncertainty about the relationships and the arrangements with Europe is one of the most significant issues confronting university management at the moment. That has an impact in a number of ways. We can identify at the moment the extent to which the HE sector in Wales is exposed to sources of income that are located from the EU, so EU students, structural funds, and EU research funding, and so on, from the EU. We can identify some of that, but, actually, what happens in the future is much harder to be clear about. We are beginning to see some impact in terms of applications from EU students and I'll ask Bethan to share some details on that in a moment. We're also beginning to pick up, only anecdotally, some signs that there are increasing difficulties in the UK sector, and the Welsh sector as part of that, in playing in some of the EU collaborative research activities. And that, I think, just reflects the extent to which EU partners consider that British partners might be a stable partner as we go through this transition period. We don't have data on that—that's anecdotal—but there are signs that some of those relationships are beginning to become a little bit more difficult. In terms of the financial impact of that, clearly, if it is accepted that the UK is a net contributor to the EU then, presumably, some of the money—we're almost immediately straight into politics if you're not careful—but some of the money will be available back to the UK, and the extent to which Wales benefits or not from that returned money is a function of the political relationship between the Welsh Government and Her Majesty's Government. It's not necessarily the case that Wales will always lose out in that relationship, but that will become a matter of politics. There's a broader dimension, which is about the economic impact of Brexit on the UK economy and how much tax revenue there is and all of that. I think it's very hard for us to be definitive about how that's going to play out. I think that depends on the deal and how it all unfolds over the next several years. But we can certainly anticipate some turbulence and exactly how that plays for institutions remains to be seen. We can touch later on on the extent to which they are sighted on this and preparing for it. So, in terms of recruitment, Bethan.

This is based on the UCAS applications and the report that was published at the end of June, 30 June. The European Union-domiciled applicants to Wales have decreased by 8 per cent, which contrasts with a 2 per cent increase for English institutions, and non-EU—so international students, not from Europe—have also decreased by 9 per cent to Welsh institutions, again contrasting with a 7 per cent increase in England. So, those are the signs of changes.

Okay. Could I then just ask you what you see as the main pressures on the Welsh higher education sector at the moment?

The funding position would be the main pressure. The recommendations made by Sir Ian Diamond in his review of higher education funding and student finance are in the process of being implemented, and the changes to the student finance arrangements will take effect from this September. However, the recommendations for re-establishing funding at Welsh institutions are expected to take quite a bit longer. That funding, when it returns to institutions, is intended to re-establish funding for higher cost provision, both full time and part time; reinstate funding for innovation; and maintain, at the very least, the research funding in real terms. Universities, in the meantime, are trying to minimise the cost reductions that they're making in order to maintain the infrastructure, so that when the funding comes they can get the best value out of it. We have announced our funding allocations for 2018-19. For the research and teaching grant, though, we are still funding at a lower level—£12.5 million less—then the starting point for the Diamond report, the 2015-16 starting report. But we expect to be able to start introducing funding from 2019-20 to make a start on implementing Diamond. And it's probably important to note that the Diamond recommendations predated Brexit, therefore the challenges introduced by Brexit are in addition to those that the Diamond report was addressing. The other pressures relate to student recruitment. I mentioned the EU and international students. There is also the start of a reduction, both in Welsh-domiciled and English-domiciled applications to Wales. Enrolments are obviously the key important number, which we'll see later. And the other pressures include pay and pension costs, not least the issues around the universities superannuation scheme pension fund, where there's potentially a significant increase in cost. Increased student expectations for modern facilities and infrastructure bring a requirement for capital expenditure and borrowing, which bring their own pressures. And finally, the uncertainty about potential consequences that could arise from the review in England of fees and funding—the Augar review.


This is based on the UCAS applications and the report that was published at the end of June, 30 June. The European Union-domiciled applicants to Wales have decreased by 8 per cent, which contrasts with a 2 per cent increase for English institutions, and non-EU—so international students, not from Europe—have also decreased by 9 per cent to Welsh institutions, again contrasting with a 7 per cent increase in England. So, those are the signs of changes.

Okay. Could I then just ask you what you see as the main pressures on the Welsh higher education sector at the moment?

The funding position would be the main pressure. The recommendations made by Sir Ian Diamond in his review of higher education funding and student finance are in the process of being implemented, and the changes to the student finance arrangements will take effect from this September. However, the recommendations for re-establishing funding at Welsh institutions are expected to take quite a bit longer. That funding, when it returns to institutions, is intended to re-establish funding for higher cost provision, both full time and part time; reinstate funding for innovation; and maintain, at the very least, the research funding in real terms. Universities, in the meantime, are trying to minimise the cost reductions that they're making in order to maintain the infrastructure, so that when the funding comes they can get the best value out of it. We have announced our funding allocations for 2018-19. For the research and teaching grant, though, we are still funding at a lower level—£12.5 million less—then the starting point for the Diamond report, the 2015-16 starting report. But we expect to be able to start introducing funding from 2019-20 to make a start on implementing Diamond. And it's probably important to note that the Diamond recommendations predated Brexit, therefore the challenges introduced by Brexit are in addition to those that the Diamond report was addressing. The other pressures relate to student recruitment. I mentioned the EU and international students. There is also the start of a reduction, both in Welsh-domiciled and English-domiciled applications to Wales. Enrolments are obviously the key important number, which we'll see later. And the other pressures include pay and pension costs, not least the issues around the universities superannuation scheme pension fund, where there's potentially a significant increase in cost. Increased student expectations for modern facilities and infrastructure bring a requirement for capital expenditure and borrowing, which bring their own pressures. And finally, the uncertainty about potential consequences that could arise from the review in England of fees and funding—the Augar review.

In terms of European Union students and enrolment, is Wales forecast to do less well than England and, if so, why might that be?


Okay. Could I then just ask you what you see as the main pressures on the Welsh higher education sector at the moment?

The funding position would be the main pressure. The recommendations made by Sir Ian Diamond in his review of higher education funding and student finance are in the process of being implemented, and the changes to the student finance arrangements will take effect from this September. However, the recommendations for re-establishing funding at Welsh institutions are expected to take quite a bit longer. That funding, when it returns to institutions, is intended to re-establish funding for higher cost provision, both full time and part time; reinstate funding for innovation; and maintain, at the very least, the research funding in real terms. Universities, in the meantime, are trying to minimise the cost reductions that they're making in order to maintain the infrastructure, so that when the funding comes they can get the best value out of it. We have announced our funding allocations for 2018-19. For the research and teaching grant, though, we are still funding at a lower level—£12.5 million less—then the starting point for the Diamond report, the 2015-16 starting report. But we expect to be able to start introducing funding from 2019-20 to make a start on implementing Diamond. And it's probably important to note that the Diamond recommendations predated Brexit, therefore the challenges introduced by Brexit are in addition to those that the Diamond report was addressing. The other pressures relate to student recruitment. I mentioned the EU and international students. There is also the start of a reduction, both in Welsh-domiciled and English-domiciled applications to Wales. Enrolments are obviously the key important number, which we'll see later. And the other pressures include pay and pension costs, not least the issues around the universities superannuation scheme pension fund, where there's potentially a significant increase in cost. Increased student expectations for modern facilities and infrastructure bring a requirement for capital expenditure and borrowing, which bring their own pressures. And finally, the uncertainty about potential consequences that could arise from the review in England of fees and funding—the Augar review.

In terms of European Union students and enrolment, is Wales forecast to do less well than England and, if so, why might that be?

They are not forecasting it. It's very difficult until the enrolments are made, and it's also very hard to see—the data that we see is the UCAS data. Institutions also recruit directly, so until we see the actual recruitment—. I think the arrangements that have changed from 2018-19 also impact on EU students. So, now, they have to find the full fee, whereas previously they were getting the grant in the same way as Welsh students. So, I'm speculating that that might be having an impact as well on EU students' appetite to come.


The funding position would be the main pressure. The recommendations made by Sir Ian Diamond in his review of higher education funding and student finance are in the process of being implemented, and the changes to the student finance arrangements will take effect from this September. However, the recommendations for re-establishing funding at Welsh institutions are expected to take quite a bit longer. That funding, when it returns to institutions, is intended to re-establish funding for higher cost provision, both full time and part time; reinstate funding for innovation; and maintain, at the very least, the research funding in real terms. Universities, in the meantime, are trying to minimise the cost reductions that they're making in order to maintain the infrastructure, so that when the funding comes they can get the best value out of it. We have announced our funding allocations for 2018-19. For the research and teaching grant, though, we are still funding at a lower level—£12.5 million less—then the starting point for the Diamond report, the 2015-16 starting report. But we expect to be able to start introducing funding from 2019-20 to make a start on implementing Diamond. And it's probably important to note that the Diamond recommendations predated Brexit, therefore the challenges introduced by Brexit are in addition to those that the Diamond report was addressing. The other pressures relate to student recruitment. I mentioned the EU and international students. There is also the start of a reduction, both in Welsh-domiciled and English-domiciled applications to Wales. Enrolments are obviously the key important number, which we'll see later. And the other pressures include pay and pension costs, not least the issues around the universities superannuation scheme pension fund, where there's potentially a significant increase in cost. Increased student expectations for modern facilities and infrastructure bring a requirement for capital expenditure and borrowing, which bring their own pressures. And finally, the uncertainty about potential consequences that could arise from the review in England of fees and funding—the Augar review.

In terms of European Union students and enrolment, is Wales forecast to do less well than England and, if so, why might that be?

They are not forecasting it. It's very difficult until the enrolments are made, and it's also very hard to see—the data that we see is the UCAS data. Institutions also recruit directly, so until we see the actual recruitment—. I think the arrangements that have changed from 2018-19 also impact on EU students. So, now, they have to find the full fee, whereas previously they were getting the grant in the same way as Welsh students. So, I'm speculating that that might be having an impact as well on EU students' appetite to come.


In terms of European Union students and enrolment, is Wales forecast to do less well than England and, if so, why might that be?

They are not forecasting it. It's very difficult until the enrolments are made, and it's also very hard to see—the data that we see is the UCAS data. Institutions also recruit directly, so until we see the actual recruitment—. I think the arrangements that have changed from 2018-19 also impact on EU students. So, now, they have to find the full fee, whereas previously they were getting the grant in the same way as Welsh students. So, I'm speculating that that might be having an impact as well on EU students' appetite to come.

Well, that's straight into what I was going to ask, really, about what you think the factors are that led to this 8 per cent or 9 per cent drop in EU students applying to study in Wales, where we see a 2 per cent increase in England. Is that it, or are there other things that you've taken into account? What's your assessment of the reasons behind this?


They are not forecasting it. It's very difficult until the enrolments are made, and it's also very hard to see—the data that we see is the UCAS data. Institutions also recruit directly, so until we see the actual recruitment—. I think the arrangements that have changed from 2018-19 also impact on EU students. So, now, they have to find the full fee, whereas previously they were getting the grant in the same way as Welsh students. So, I'm speculating that that might be having an impact as well on EU students' appetite to come.

Well, that's straight into what I was going to ask, really, about what you think the factors are that led to this 8 per cent or 9 per cent drop in EU students applying to study in Wales, where we see a 2 per cent increase in England. Is that it, or are there other things that you've taken into account? What's your assessment of the reasons behind this?

It's very difficult to be definitive about the reasons, but I think there are probably two. The one that Bethan has already indicated, which is the change in student support arrangements for EU students, will have an effect of perturbation. That's probably relatively temporary—let's hope it is—as that settles down because, actually, the deal for EU students coming into Wales is no worse than that coming into England. Ours would be better because the fee level is slightly lower, but we do struggle in Wales in terms of the Anglocentric nature of the media and so on. So, getting the messages out is a challenge. The other dimension is that when you're in a highly competitive recruitment market, you have to do what you can to look attractive. Part of that is about being able to invest in facilities, and particularly buildings and kit, and the relative levels of investment between Wales and England over quite a long period of time now probably have an impact on that. Certainly, anecdotally I know, from my own family, that a lot of the choices have been made in terms of the state of repair of campuses and so on. There's something rational about that, isn't there? If you've got a system that is relatively better invested, then you're likely to have a better student experience because the resources are likely to be better. So, that's not irrational. We saw a sort of similar but opposite effect when the £9,000 fee maximum limit came in, and some institutions, mostly in England—there was one in Wales—chose to pitch their fee levels really quite low, relative to that £9,000, and caught a cold in the student recruitment market because fee levels denote quality in the student mind. So, the price sensitivities work quite differently. So, again, if you've got a relatively better invested part of the system, then that might well be one of the reasons why it looks more attractive.


Well, that's straight into what I was going to ask, really, about what you think the factors are that led to this 8 per cent or 9 per cent drop in EU students applying to study in Wales, where we see a 2 per cent increase in England. Is that it, or are there other things that you've taken into account? What's your assessment of the reasons behind this?

It's very difficult to be definitive about the reasons, but I think there are probably two. The one that Bethan has already indicated, which is the change in student support arrangements for EU students, will have an effect of perturbation. That's probably relatively temporary—let's hope it is—as that settles down because, actually, the deal for EU students coming into Wales is no worse than that coming into England. Ours would be better because the fee level is slightly lower, but we do struggle in Wales in terms of the Anglocentric nature of the media and so on. So, getting the messages out is a challenge. The other dimension is that when you're in a highly competitive recruitment market, you have to do what you can to look attractive. Part of that is about being able to invest in facilities, and particularly buildings and kit, and the relative levels of investment between Wales and England over quite a long period of time now probably have an impact on that. Certainly, anecdotally I know, from my own family, that a lot of the choices have been made in terms of the state of repair of campuses and so on. There's something rational about that, isn't there? If you've got a system that is relatively better invested, then you're likely to have a better student experience because the resources are likely to be better. So, that's not irrational. We saw a sort of similar but opposite effect when the £9,000 fee maximum limit came in, and some institutions, mostly in England—there was one in Wales—chose to pitch their fee levels really quite low, relative to that £9,000, and caught a cold in the student recruitment market because fee levels denote quality in the student mind. So, the price sensitivities work quite differently. So, again, if you've got a relatively better invested part of the system, then that might well be one of the reasons why it looks more attractive.

That latter factor would affect the whole of the cohort, not just the international recruitment, of course.


Well, that's straight into what I was going to ask, really, about what you think the factors are that led to this 8 per cent or 9 per cent drop in EU students applying to study in Wales, where we see a 2 per cent increase in England. Is that it, or are there other things that you've taken into account? What's your assessment of the reasons behind this?

It's very difficult to be definitive about the reasons, but I think there are probably two. The one that Bethan has already indicated, which is the change in student support arrangements for EU students, will have an effect of perturbation. That's probably relatively temporary—let's hope it is—as that settles down because, actually, the deal for EU students coming into Wales is no worse than that coming into England. Ours would be better because the fee level is slightly lower, but we do struggle in Wales in terms of the Anglocentric nature of the media and so on. So, getting the messages out is a challenge. The other dimension is that when you're in a highly competitive recruitment market, you have to do what you can to look attractive. Part of that is about being able to invest in facilities, and particularly buildings and kit, and the relative levels of investment between Wales and England over quite a long period of time now probably have an impact on that. Certainly, anecdotally I know, from my own family, that a lot of the choices have been made in terms of the state of repair of campuses and so on. There's something rational about that, isn't there? If you've got a system that is relatively better invested, then you're likely to have a better student experience because the resources are likely to be better. So, that's not irrational. We saw a sort of similar but opposite effect when the £9,000 fee maximum limit came in, and some institutions, mostly in England—there was one in Wales—chose to pitch their fee levels really quite low, relative to that £9,000, and caught a cold in the student recruitment market because fee levels denote quality in the student mind. So, the price sensitivities work quite differently. So, again, if you've got a relatively better invested part of the system, then that might well be one of the reasons why it looks more attractive.

That latter factor would affect the whole of the cohort, not just the international recruitment, of course.

Indeed. Yes, indeed. The implementation of the Diamond recommendations is crucial to that because that's re-balancing where the policy of investment goes.


It's very difficult to be definitive about the reasons, but I think there are probably two. The one that Bethan has already indicated, which is the change in student support arrangements for EU students, will have an effect of perturbation. That's probably relatively temporary—let's hope it is—as that settles down because, actually, the deal for EU students coming into Wales is no worse than that coming into England. Ours would be better because the fee level is slightly lower, but we do struggle in Wales in terms of the Anglocentric nature of the media and so on. So, getting the messages out is a challenge. The other dimension is that when you're in a highly competitive recruitment market, you have to do what you can to look attractive. Part of that is about being able to invest in facilities, and particularly buildings and kit, and the relative levels of investment between Wales and England over quite a long period of time now probably have an impact on that. Certainly, anecdotally I know, from my own family, that a lot of the choices have been made in terms of the state of repair of campuses and so on. There's something rational about that, isn't there? If you've got a system that is relatively better invested, then you're likely to have a better student experience because the resources are likely to be better. So, that's not irrational. We saw a sort of similar but opposite effect when the £9,000 fee maximum limit came in, and some institutions, mostly in England—there was one in Wales—chose to pitch their fee levels really quite low, relative to that £9,000, and caught a cold in the student recruitment market because fee levels denote quality in the student mind. So, the price sensitivities work quite differently. So, again, if you've got a relatively better invested part of the system, then that might well be one of the reasons why it looks more attractive.

That latter factor would affect the whole of the cohort, not just the international recruitment, of course.

Indeed. Yes, indeed. The implementation of the Diamond recommendations is crucial to that because that's re-balancing where the policy of investment goes.


That latter factor would affect the whole of the cohort, not just the international recruitment, of course.

Indeed. Yes, indeed. The implementation of the Diamond recommendations is crucial to that because that's re-balancing where the policy of investment goes.

If I heard you correctly earlier, you said that the applications from non-EU students were also down by 8 per cent or 9 per cent. So, forgive me a certain scepticism about the explanation of the fall in the EU students being that they did get the fee grant and now they do not. If that's the explanation, why are we seeing the same fall in non-EU applications?


Indeed. Yes, indeed. The implementation of the Diamond recommendations is crucial to that because that's re-balancing where the policy of investment goes.

If I heard you correctly earlier, you said that the applications from non-EU students were also down by 8 per cent or 9 per cent. So, forgive me a certain scepticism about the explanation of the fall in the EU students being that they did get the fee grant and now they do not. If that's the explanation, why are we seeing the same fall in non-EU applications?

Well, I think the Welsh domiciled are also now having to face the prospect of finding a loan for the whole of the fee. So, that would potentially account for that. There's also a demographic dimension here with the downturn in the 18-year-old school-leaver profile, and that actually is happening in Wales at a slightly later point than in England.


If I heard you correctly earlier, you said that the applications from non-EU students were also down by 8 per cent or 9 per cent. So, forgive me a certain scepticism about the explanation of the fall in the EU students being that they did get the fee grant and now they do not. If that's the explanation, why are we seeing the same fall in non-EU applications?

Well, I think the Welsh domiciled are also now having to face the prospect of finding a loan for the whole of the fee. So, that would potentially account for that. There's also a demographic dimension here with the downturn in the 18-year-old school-leaver profile, and that actually is happening in Wales at a slightly later point than in England.

But this is non-EU students, and I think you said, Bethan, an 8 per cent or 9 per cent fall in them as well.


If I heard you correctly earlier, you said that the applications from non-EU students were also down by 8 per cent or 9 per cent. So, forgive me a certain scepticism about the explanation of the fall in the EU students being that they did get the fee grant and now they do not. If that's the explanation, why are we seeing the same fall in non-EU applications?

Well, I think the Welsh domiciled are also now having to face the prospect of finding a loan for the whole of the fee. So, that would potentially account for that. There's also a demographic dimension here with the downturn in the 18-year-old school-leaver profile, and that actually is happening in Wales at a slightly later point than in England.

But this is non-EU students, and I think you said, Bethan, an 8 per cent or 9 per cent fall in them as well.

International non-EU. I beg your pardon. I misunderstood.


Well, I think the Welsh domiciled are also now having to face the prospect of finding a loan for the whole of the fee. So, that would potentially account for that. There's also a demographic dimension here with the downturn in the 18-year-old school-leaver profile, and that actually is happening in Wales at a slightly later point than in England.

But this is non-EU students, and I think you said, Bethan, an 8 per cent or 9 per cent fall in them as well.

International non-EU. I beg your pardon. I misunderstood.

There's also a mix effect. I gave a number that was for all English institutions that there will be differential impacts on.


But this is non-EU students, and I think you said, Bethan, an 8 per cent or 9 per cent fall in them as well.

International non-EU. I beg your pardon. I misunderstood.

There's also a mix effect. I gave a number that was for all English institutions that there will be differential impacts on.


International non-EU. I beg your pardon. I misunderstood.

There's also a mix effect. I gave a number that was for all English institutions that there will be differential impacts on.

Well, I contrasted the Welsh position with the English position where they were seeing growth. If you look, then—and we don't have the detailed information, but, again, what UCAS publish is some analysis by tariff. They analyse by type of institution—in other words, the grades that you need to get into institutions—and there is a trend for growth being in the higher tariff institutions. So, there's a mix effect in there as well, and I think there's undoubtedly an element of perception of how welcome overseas and international students are, and that's something that we know the sector are working on with Government.


There's also a mix effect. I gave a number that was for all English institutions that there will be differential impacts on.

Well, I contrasted the Welsh position with the English position where they were seeing growth. If you look, then—and we don't have the detailed information, but, again, what UCAS publish is some analysis by tariff. They analyse by type of institution—in other words, the grades that you need to get into institutions—and there is a trend for growth being in the higher tariff institutions. So, there's a mix effect in there as well, and I think there's undoubtedly an element of perception of how welcome overseas and international students are, and that's something that we know the sector are working on with Government.

Why would that affect Wales more than England? Do you think there's been perhaps too great a negativity about Brexit in the sector?


Well, I contrasted the Welsh position with the English position where they were seeing growth. If you look, then—and we don't have the detailed information, but, again, what UCAS publish is some analysis by tariff. They analyse by type of institution—in other words, the grades that you need to get into institutions—and there is a trend for growth being in the higher tariff institutions. So, there's a mix effect in there as well, and I think there's undoubtedly an element of perception of how welcome overseas and international students are, and that's something that we know the sector are working on with Government.

Why would that affect Wales more than England? Do you think there's been perhaps too great a negativity about Brexit in the sector?

I think it's the mix of institutions that we have. So, we only have sector information published at the moment. When we look at the mix of institutions that we have, we will probably see a differential impact between Cardiff University and others.


Well, I contrasted the Welsh position with the English position where they were seeing growth. If you look, then—and we don't have the detailed information, but, again, what UCAS publish is some analysis by tariff. They analyse by type of institution—in other words, the grades that you need to get into institutions—and there is a trend for growth being in the higher tariff institutions. So, there's a mix effect in there as well, and I think there's undoubtedly an element of perception of how welcome overseas and international students are, and that's something that we know the sector are working on with Government.

Why would that affect Wales more than England? Do you think there's been perhaps too great a negativity about Brexit in the sector?

I think it's the mix of institutions that we have. So, we only have sector information published at the moment. When we look at the mix of institutions that we have, we will probably see a differential impact between Cardiff University and others.

Okay, Mark? Sorry, David, did you want to add anything?


Why would that affect Wales more than England? Do you think there's been perhaps too great a negativity about Brexit in the sector?

I think it's the mix of institutions that we have. So, we only have sector information published at the moment. When we look at the mix of institutions that we have, we will probably see a differential impact between Cardiff University and others.

Okay, Mark? Sorry, David, did you want to add anything?

I was just going to say that we would expect to see quite differential performance in the English sector, so the overall numbers are being brought up by substantial increased performance with some of that sector, and it's a question of how many of that type of institution you have in Wales.


I think it's the mix of institutions that we have. So, we only have sector information published at the moment. When we look at the mix of institutions that we have, we will probably see a differential impact between Cardiff University and others.

Okay, Mark? Sorry, David, did you want to add anything?

I was just going to say that we would expect to see quite differential performance in the English sector, so the overall numbers are being brought up by substantial increased performance with some of that sector, and it's a question of how many of that type of institution you have in Wales.

So, performance is increasing amongst the English universities, but not amongst the Welsh, you think.


Okay, Mark? Sorry, David, did you want to add anything?

I was just going to say that we would expect to see quite differential performance in the English sector, so the overall numbers are being brought up by substantial increased performance with some of that sector, and it's a question of how many of that type of institution you have in Wales.

So, performance is increasing amongst the English universities, but not amongst the Welsh, you think.

I think performance is increasing, but increasing substantially with some of the English sector, not all of it. So, you get an average for the sector that is increased performance, but actually the stronger players within that sector, with the stronger international profiles, are bringing that up, and we have fewer in Wales that have that sort of presence.


I was just going to say that we would expect to see quite differential performance in the English sector, so the overall numbers are being brought up by substantial increased performance with some of that sector, and it's a question of how many of that type of institution you have in Wales.

So, performance is increasing amongst the English universities, but not amongst the Welsh, you think.

I think performance is increasing, but increasing substantially with some of the English sector, not all of it. So, you get an average for the sector that is increased performance, but actually the stronger players within that sector, with the stronger international profiles, are bringing that up, and we have fewer in Wales that have that sort of presence.


So, performance is increasing amongst the English universities, but not amongst the Welsh, you think.

I think performance is increasing, but increasing substantially with some of the English sector, not all of it. So, you get an average for the sector that is increased performance, but actually the stronger players within that sector, with the stronger international profiles, are bringing that up, and we have fewer in Wales that have that sort of presence.

Would it be fair to say, then, that the universities over the border in England are better at selling themselves internationally than our Welsh institutions? Or is it just this fact that we've got fewer very high tariff universities versus the English market?


I think performance is increasing, but increasing substantially with some of the English sector, not all of it. So, you get an average for the sector that is increased performance, but actually the stronger players within that sector, with the stronger international profiles, are bringing that up, and we have fewer in Wales that have that sort of presence.

Would it be fair to say, then, that the universities over the border in England are better at selling themselves internationally than our Welsh institutions? Or is it just this fact that we've got fewer very high tariff universities versus the English market?

I suspect, and this is speculation—I suspect that it's a bit of both. I think some of it is to do with the mix of different types of institution. I would then come back to the point I was making about the Anglocentric nature of the UK media. If you're looking overseas, I think Wales has to work harder to penetrate the consciousness.


Would it be fair to say, then, that the universities over the border in England are better at selling themselves internationally than our Welsh institutions? Or is it just this fact that we've got fewer very high tariff universities versus the English market?

I suspect, and this is speculation—I suspect that it's a bit of both. I think some of it is to do with the mix of different types of institution. I would then come back to the point I was making about the Anglocentric nature of the UK media. If you're looking overseas, I think Wales has to work harder to penetrate the consciousness.

But, forgive me, don't international students just look at the UK as a whole? How are we comparing to Scotland, for example, or Northern Ireland, in terms of their universities? Do you have a comparative figure for Scottish universities?


Would it be fair to say, then, that the universities over the border in England are better at selling themselves internationally than our Welsh institutions? Or is it just this fact that we've got fewer very high tariff universities versus the English market?

I suspect, and this is speculation—I suspect that it's a bit of both. I think some of it is to do with the mix of different types of institution. I would then come back to the point I was making about the Anglocentric nature of the UK media. If you're looking overseas, I think Wales has to work harder to penetrate the consciousness.

But, forgive me, don't international students just look at the UK as a whole? How are we comparing to Scotland, for example, or Northern Ireland, in terms of their universities? Do you have a comparative figure for Scottish universities?

I haven't got that one with me for now, but there will be one in the data.


I suspect, and this is speculation—I suspect that it's a bit of both. I think some of it is to do with the mix of different types of institution. I would then come back to the point I was making about the Anglocentric nature of the UK media. If you're looking overseas, I think Wales has to work harder to penetrate the consciousness.

But, forgive me, don't international students just look at the UK as a whole? How are we comparing to Scotland, for example, or Northern Ireland, in terms of their universities? Do you have a comparative figure for Scottish universities?

I haven't got that one with me for now, but there will be one in the data.


But, forgive me, don't international students just look at the UK as a whole? How are we comparing to Scotland, for example, or Northern Ireland, in terms of their universities? Do you have a comparative figure for Scottish universities?

I haven't got that one with me for now, but there will be one in the data.

Again, it's a combination of being part of the UK but differentiating, and the ability to differentiate the strengths of Wales, so attracting those students to Wales specifically, on top of the UK draw.


I haven't got that one with me for now, but there will be one in the data.

Again, it's a combination of being part of the UK but differentiating, and the ability to differentiate the strengths of Wales, so attracting those students to Wales specifically, on top of the UK draw.

So, in terms of the efforts that have been made, there's a programme now that is being run by the sector in Wales—it's 'Study in Wales'. It's relatively recent; you could argue that we could have got there earlier. But that is a determined collective effort to present Wales as a good place to study, with particular messages about what distinguishes studying in Wales from studying more broadly in the UK. In a sense, that is responding to the need to increase the presence of Wales in an international market. So, that sort of initiative I think is very good, very welcome. It will take a while to actually have an impact, but I think that's exactly the sort of work the sector need to be doing more of.


Again, it's a combination of being part of the UK but differentiating, and the ability to differentiate the strengths of Wales, so attracting those students to Wales specifically, on top of the UK draw.

So, in terms of the efforts that have been made, there's a programme now that is being run by the sector in Wales—it's 'Study in Wales'. It's relatively recent; you could argue that we could have got there earlier. But that is a determined collective effort to present Wales as a good place to study, with particular messages about what distinguishes studying in Wales from studying more broadly in the UK. In a sense, that is responding to the need to increase the presence of Wales in an international market. So, that sort of initiative I think is very good, very welcome. It will take a while to actually have an impact, but I think that's exactly the sort of work the sector need to be doing more of.

What are those messages on why prospective students should study in Wales?


Again, it's a combination of being part of the UK but differentiating, and the ability to differentiate the strengths of Wales, so attracting those students to Wales specifically, on top of the UK draw.

So, in terms of the efforts that have been made, there's a programme now that is being run by the sector in Wales—it's 'Study in Wales'. It's relatively recent; you could argue that we could have got there earlier. But that is a determined collective effort to present Wales as a good place to study, with particular messages about what distinguishes studying in Wales from studying more broadly in the UK. In a sense, that is responding to the need to increase the presence of Wales in an international market. So, that sort of initiative I think is very good, very welcome. It will take a while to actually have an impact, but I think that's exactly the sort of work the sector need to be doing more of.

What are those messages on why prospective students should study in Wales?

One of them in particular is relative safety. We know that one of the considerations, particularly for parents of overseas students, is are they going to go to a safe environment, and we know that the perception of international students who study in Wales is that this is a comfortable and safe place to be. That's partly a function of the size of our larger cities—quite a lot smaller than many of the cities in England. So, that's a key message. Being part of a UK system is also an important message there as well. So, we've got a UK-quality system, a UK degree, and the strength of that brand is available in Wales, but it's available in a way that is safer and more supportive, I think is the messaging that's coming through.


So, in terms of the efforts that have been made, there's a programme now that is being run by the sector in Wales—it's 'Study in Wales'. It's relatively recent; you could argue that we could have got there earlier. But that is a determined collective effort to present Wales as a good place to study, with particular messages about what distinguishes studying in Wales from studying more broadly in the UK. In a sense, that is responding to the need to increase the presence of Wales in an international market. So, that sort of initiative I think is very good, very welcome. It will take a while to actually have an impact, but I think that's exactly the sort of work the sector need to be doing more of.

What are those messages on why prospective students should study in Wales?

One of them in particular is relative safety. We know that one of the considerations, particularly for parents of overseas students, is are they going to go to a safe environment, and we know that the perception of international students who study in Wales is that this is a comfortable and safe place to be. That's partly a function of the size of our larger cities—quite a lot smaller than many of the cities in England. So, that's a key message. Being part of a UK system is also an important message there as well. So, we've got a UK-quality system, a UK degree, and the strength of that brand is available in Wales, but it's available in a way that is safer and more supportive, I think is the messaging that's coming through.

Okay. We'd better move on, I think, hadn't we? Darren, then.


What are those messages on why prospective students should study in Wales?

One of them in particular is relative safety. We know that one of the considerations, particularly for parents of overseas students, is are they going to go to a safe environment, and we know that the perception of international students who study in Wales is that this is a comfortable and safe place to be. That's partly a function of the size of our larger cities—quite a lot smaller than many of the cities in England. So, that's a key message. Being part of a UK system is also an important message there as well. So, we've got a UK-quality system, a UK degree, and the strength of that brand is available in Wales, but it's available in a way that is safer and more supportive, I think is the messaging that's coming through.

Okay. We'd better move on, I think, hadn't we? Darren, then.

I just wonder to what extent you have been able to plan in your financial forecasts for the next few years ahead for the potential impacts of Brexit. What have you built in, if anything?


One of them in particular is relative safety. We know that one of the considerations, particularly for parents of overseas students, is are they going to go to a safe environment, and we know that the perception of international students who study in Wales is that this is a comfortable and safe place to be. That's partly a function of the size of our larger cities—quite a lot smaller than many of the cities in England. So, that's a key message. Being part of a UK system is also an important message there as well. So, we've got a UK-quality system, a UK degree, and the strength of that brand is available in Wales, but it's available in a way that is safer and more supportive, I think is the messaging that's coming through.

Okay. We'd better move on, I think, hadn't we? Darren, then.

I just wonder to what extent you have been able to plan in your financial forecasts for the next few years ahead for the potential impacts of Brexit. What have you built in, if anything?

In terms of our funding, we receive our funding annually, but the sector provides us with financial forecasts, and we use those for monitoring sustainability. So, the last full forecasts that we had were in July 2017. We are due to receive a full forecast at the end of this month, and we obviously have updated information from institutions.


Okay. We'd better move on, I think, hadn't we? Darren, then.

I just wonder to what extent you have been able to plan in your financial forecasts for the next few years ahead for the potential impacts of Brexit. What have you built in, if anything?

In terms of our funding, we receive our funding annually, but the sector provides us with financial forecasts, and we use those for monitoring sustainability. So, the last full forecasts that we had were in July 2017. We are due to receive a full forecast at the end of this month, and we obviously have updated information from institutions.

And they're three-year forecasts that come through to you, aren't they?


I just wonder to what extent you have been able to plan in your financial forecasts for the next few years ahead for the potential impacts of Brexit. What have you built in, if anything?

In terms of our funding, we receive our funding annually, but the sector provides us with financial forecasts, and we use those for monitoring sustainability. So, the last full forecasts that we had were in July 2017. We are due to receive a full forecast at the end of this month, and we obviously have updated information from institutions.

And they're three-year forecasts that come through to you, aren't they?

They are four plus the current year. So, we've got numbers to 2019-20 at the moment, and expect to go to 2020-21.


In terms of our funding, we receive our funding annually, but the sector provides us with financial forecasts, and we use those for monitoring sustainability. So, the last full forecasts that we had were in July 2017. We are due to receive a full forecast at the end of this month, and we obviously have updated information from institutions.

And they're three-year forecasts that come through to you, aren't they?

They are four plus the current year. So, we've got numbers to 2019-20 at the moment, and expect to go to 2020-21.

And what are the universities expecting? What do they anticipate?


And they're three-year forecasts that come through to you, aren't they?

They are four plus the current year. So, we've got numbers to 2019-20 at the moment, and expect to go to 2020-21.

And what are the universities expecting? What do they anticipate?

Well, for 2017-18, which is the year we're about to end now, they were expecting £38 million income from European students, and approximately £91 million from the various European programme funding sources, and that's about 8 per cent of the total income—£1.5 billion—of the sector. The forecasts are assuming that that continues, albeit that institutions have various scenarios that they have for all sorts of scenarios that we can all speculate on, and, as I mentioned earlier, the balancing act of maintaining infrastructure and resources and staff in the short term is where we are at the moment, or where the sector is at the moment. And there are also signs that the banks and lending institutions are becoming a bit more risk-averse in providing borrowing to institutions, and of more differentiation between individual institutions being made than has possibly been the case in the past. The sector made an operating deficit, again looking at all Welsh institutions collectively last year, 2016-17, of £17 million. That's before other gains and losses. And we're expecting a similar collective level of deficit for this financial year, if not slightly higher. Now, these are managed deficits and we are not currently seeing critical short-term cash availability issues in the sector. However, the increase in funding from Diamond is a key part of enabling the sector to return to longer-term financial sustainability. Short-term challenges can be met if there's a reasonable prospect of future funding. You can manage in the short-term, but there comes a point when the big cost reductions and infrastructure reductions have to be made. And, again, having mentioned the pressures on pay, pensions and other challenges, it is difficult to gauge whether, if those factors come into play as well, some of these cost reductions may have to be made before funding comes in to replace—either Diamond funding or the European replacement funding.


They are four plus the current year. So, we've got numbers to 2019-20 at the moment, and expect to go to 2020-21.

And what are the universities expecting? What do they anticipate?

Well, for 2017-18, which is the year we're about to end now, they were expecting £38 million income from European students, and approximately £91 million from the various European programme funding sources, and that's about 8 per cent of the total income—£1.5 billion—of the sector. The forecasts are assuming that that continues, albeit that institutions have various scenarios that they have for all sorts of scenarios that we can all speculate on, and, as I mentioned earlier, the balancing act of maintaining infrastructure and resources and staff in the short term is where we are at the moment, or where the sector is at the moment. And there are also signs that the banks and lending institutions are becoming a bit more risk-averse in providing borrowing to institutions, and of more differentiation between individual institutions being made than has possibly been the case in the past. The sector made an operating deficit, again looking at all Welsh institutions collectively last year, 2016-17, of £17 million. That's before other gains and losses. And we're expecting a similar collective level of deficit for this financial year, if not slightly higher. Now, these are managed deficits and we are not currently seeing critical short-term cash availability issues in the sector. However, the increase in funding from Diamond is a key part of enabling the sector to return to longer-term financial sustainability. Short-term challenges can be met if there's a reasonable prospect of future funding. You can manage in the short-term, but there comes a point when the big cost reductions and infrastructure reductions have to be made. And, again, having mentioned the pressures on pay, pensions and other challenges, it is difficult to gauge whether, if those factors come into play as well, some of these cost reductions may have to be made before funding comes in to replace—either Diamond funding or the European replacement funding.

So, would it be fair to say that, in terms of the funding arrangements, and, in terms of the student numbers, one reason why we've got this recruitment problem is this lack of investment in the capital infrastructure that we've seen in recent years because of the financing arrangements from the Welsh Government, and the fee regime that we had previously, and the student finance regime that we had previously, not getting more cash into our Welsh universities perhaps, and that, over the next few years, there's going to have to be much more significant investment in capital if we're to raise the game and be more competitive, yes?


And what are the universities expecting? What do they anticipate?

Well, for 2017-18, which is the year we're about to end now, they were expecting £38 million income from European students, and approximately £91 million from the various European programme funding sources, and that's about 8 per cent of the total income—£1.5 billion—of the sector. The forecasts are assuming that that continues, albeit that institutions have various scenarios that they have for all sorts of scenarios that we can all speculate on, and, as I mentioned earlier, the balancing act of maintaining infrastructure and resources and staff in the short term is where we are at the moment, or where the sector is at the moment. And there are also signs that the banks and lending institutions are becoming a bit more risk-averse in providing borrowing to institutions, and of more differentiation between individual institutions being made than has possibly been the case in the past. The sector made an operating deficit, again looking at all Welsh institutions collectively last year, 2016-17, of £17 million. That's before other gains and losses. And we're expecting a similar collective level of deficit for this financial year, if not slightly higher. Now, these are managed deficits and we are not currently seeing critical short-term cash availability issues in the sector. However, the increase in funding from Diamond is a key part of enabling the sector to return to longer-term financial sustainability. Short-term challenges can be met if there's a reasonable prospect of future funding. You can manage in the short-term, but there comes a point when the big cost reductions and infrastructure reductions have to be made. And, again, having mentioned the pressures on pay, pensions and other challenges, it is difficult to gauge whether, if those factors come into play as well, some of these cost reductions may have to be made before funding comes in to replace—either Diamond funding or the European replacement funding.

So, would it be fair to say that, in terms of the funding arrangements, and, in terms of the student numbers, one reason why we've got this recruitment problem is this lack of investment in the capital infrastructure that we've seen in recent years because of the financing arrangements from the Welsh Government, and the fee regime that we had previously, and the student finance regime that we had previously, not getting more cash into our Welsh universities perhaps, and that, over the next few years, there's going to have to be much more significant investment in capital if we're to raise the game and be more competitive, yes?


Well, for 2017-18, which is the year we're about to end now, they were expecting £38 million income from European students, and approximately £91 million from the various European programme funding sources, and that's about 8 per cent of the total income—£1.5 billion—of the sector. The forecasts are assuming that that continues, albeit that institutions have various scenarios that they have for all sorts of scenarios that we can all speculate on, and, as I mentioned earlier, the balancing act of maintaining infrastructure and resources and staff in the short term is where we are at the moment, or where the sector is at the moment. And there are also signs that the banks and lending institutions are becoming a bit more risk-averse in providing borrowing to institutions, and of more differentiation between individual institutions being made than has possibly been the case in the past. The sector made an operating deficit, again looking at all Welsh institutions collectively last year, 2016-17, of £17 million. That's before other gains and losses. And we're expecting a similar collective level of deficit for this financial year, if not slightly higher. Now, these are managed deficits and we are not currently seeing critical short-term cash availability issues in the sector. However, the increase in funding from Diamond is a key part of enabling the sector to return to longer-term financial sustainability. Short-term challenges can be met if there's a reasonable prospect of future funding. You can manage in the short-term, but there comes a point when the big cost reductions and infrastructure reductions have to be made. And, again, having mentioned the pressures on pay, pensions and other challenges, it is difficult to gauge whether, if those factors come into play as well, some of these cost reductions may have to be made before funding comes in to replace—either Diamond funding or the European replacement funding.

So, would it be fair to say that, in terms of the funding arrangements, and, in terms of the student numbers, one reason why we've got this recruitment problem is this lack of investment in the capital infrastructure that we've seen in recent years because of the financing arrangements from the Welsh Government, and the fee regime that we had previously, and the student finance regime that we had previously, not getting more cash into our Welsh universities perhaps, and that, over the next few years, there's going to have to be much more significant investment in capital if we're to raise the game and be more competitive, yes?

So, to what extent are they planning for more capital investment in those financial strategies that they've been preparing and presenting to you?


So, would it be fair to say that, in terms of the funding arrangements, and, in terms of the student numbers, one reason why we've got this recruitment problem is this lack of investment in the capital infrastructure that we've seen in recent years because of the financing arrangements from the Welsh Government, and the fee regime that we had previously, and the student finance regime that we had previously, not getting more cash into our Welsh universities perhaps, and that, over the next few years, there's going to have to be much more significant investment in capital if we're to raise the game and be more competitive, yes?

So, to what extent are they planning for more capital investment in those financial strategies that they've been preparing and presenting to you?

They are all planning for capital investment. They are in different positions in terms of capacity to borrow and the assumptions. This year, 2018-19, is the first time that we've had capital funding in our remit letter—so, we've got £10 million of capital funding, which is very welcome, with a prospect of a further £20 million. So, that we will be allocating shortly. That will make a difference, particularly to those institutions who are not finding it as easy to borrow from financial institutions. Some of our larger institutions have borrowed—Cardiff University issued a bond. However, there are internal governance processes that are putting tight restrictions and expectations of what that money will be invested in. But they all have plans to do it and they need the confidence that their forecasts and long-term future funding prospects are secure enough that they can get the confidence of borrowers then, and service the costs of those borrowers.


So, to what extent are they planning for more capital investment in those financial strategies that they've been preparing and presenting to you?

They are all planning for capital investment. They are in different positions in terms of capacity to borrow and the assumptions. This year, 2018-19, is the first time that we've had capital funding in our remit letter—so, we've got £10 million of capital funding, which is very welcome, with a prospect of a further £20 million. So, that we will be allocating shortly. That will make a difference, particularly to those institutions who are not finding it as easy to borrow from financial institutions. Some of our larger institutions have borrowed—Cardiff University issued a bond. However, there are internal governance processes that are putting tight restrictions and expectations of what that money will be invested in. But they all have plans to do it and they need the confidence that their forecasts and long-term future funding prospects are secure enough that they can get the confidence of borrowers then, and service the costs of those borrowers.

So, the Diamond dividend you've mentioned a few times. What clarity is there from the Welsh Government at the moment in terms of how much they anticipate the Diamond dividend will be, and what proportion of that is going to be released to HEIs in the future?


So, to what extent are they planning for more capital investment in those financial strategies that they've been preparing and presenting to you?

They are all planning for capital investment. They are in different positions in terms of capacity to borrow and the assumptions. This year, 2018-19, is the first time that we've had capital funding in our remit letter—so, we've got £10 million of capital funding, which is very welcome, with a prospect of a further £20 million. So, that we will be allocating shortly. That will make a difference, particularly to those institutions who are not finding it as easy to borrow from financial institutions. Some of our larger institutions have borrowed—Cardiff University issued a bond. However, there are internal governance processes that are putting tight restrictions and expectations of what that money will be invested in. But they all have plans to do it and they need the confidence that their forecasts and long-term future funding prospects are secure enough that they can get the confidence of borrowers then, and service the costs of those borrowers.

So, the Diamond dividend you've mentioned a few times. What clarity is there from the Welsh Government at the moment in terms of how much they anticipate the Diamond dividend will be, and what proportion of that is going to be released to HEIs in the future?

I was very carefully not describing it as a dividend—a re-establishing of funding that we had in the past for higher cost and innovation and maintaining research funding. The timescales are difficult, because we have an annual remit letter, and we can work with Welsh Government officials, and they can only give us a sense of when they think the funding will be released. But 2018-19 is the start of the system, and because of cohort protection—so, protecting those students who came in on a different deal to the deal from 2018-19—in the early years there is an element of double cost; there's a cost of seeing out the old system and the different cost of implementing the new system. So, at the moment, we're certainly not in a position to tell the sector with any degree of certainty what funding would be beyond what we've allocated for 2018-19, with some sense of what 2019-20 numbers we're working with because we allocate our money over an academic year—so, by definition, we've already made assumptions of four months of the 2019-20 funding, albeit that's not approved yet in the budgetary process.


They are all planning for capital investment. They are in different positions in terms of capacity to borrow and the assumptions. This year, 2018-19, is the first time that we've had capital funding in our remit letter—so, we've got £10 million of capital funding, which is very welcome, with a prospect of a further £20 million. So, that we will be allocating shortly. That will make a difference, particularly to those institutions who are not finding it as easy to borrow from financial institutions. Some of our larger institutions have borrowed—Cardiff University issued a bond. However, there are internal governance processes that are putting tight restrictions and expectations of what that money will be invested in. But they all have plans to do it and they need the confidence that their forecasts and long-term future funding prospects are secure enough that they can get the confidence of borrowers then, and service the costs of those borrowers.

So, the Diamond dividend you've mentioned a few times. What clarity is there from the Welsh Government at the moment in terms of how much they anticipate the Diamond dividend will be, and what proportion of that is going to be released to HEIs in the future?

I was very carefully not describing it as a dividend—a re-establishing of funding that we had in the past for higher cost and innovation and maintaining research funding. The timescales are difficult, because we have an annual remit letter, and we can work with Welsh Government officials, and they can only give us a sense of when they think the funding will be released. But 2018-19 is the start of the system, and because of cohort protection—so, protecting those students who came in on a different deal to the deal from 2018-19—in the early years there is an element of double cost; there's a cost of seeing out the old system and the different cost of implementing the new system. So, at the moment, we're certainly not in a position to tell the sector with any degree of certainty what funding would be beyond what we've allocated for 2018-19, with some sense of what 2019-20 numbers we're working with because we allocate our money over an academic year—so, by definition, we've already made assumptions of four months of the 2019-20 funding, albeit that's not approved yet in the budgetary process.

But you're not being given a steer at all as to what you expect the additional resource that you might have to make available to Welsh universities might be as a result of Diamond. You must have some idea.


So, the Diamond dividend you've mentioned a few times. What clarity is there from the Welsh Government at the moment in terms of how much they anticipate the Diamond dividend will be, and what proportion of that is going to be released to HEIs in the future?

I was very carefully not describing it as a dividend—a re-establishing of funding that we had in the past for higher cost and innovation and maintaining research funding. The timescales are difficult, because we have an annual remit letter, and we can work with Welsh Government officials, and they can only give us a sense of when they think the funding will be released. But 2018-19 is the start of the system, and because of cohort protection—so, protecting those students who came in on a different deal to the deal from 2018-19—in the early years there is an element of double cost; there's a cost of seeing out the old system and the different cost of implementing the new system. So, at the moment, we're certainly not in a position to tell the sector with any degree of certainty what funding would be beyond what we've allocated for 2018-19, with some sense of what 2019-20 numbers we're working with because we allocate our money over an academic year—so, by definition, we've already made assumptions of four months of the 2019-20 funding, albeit that's not approved yet in the budgetary process.

But you're not being given a steer at all as to what you expect the additional resource that you might have to make available to Welsh universities might be as a result of Diamond. You must have some idea.

I think it's fair to say that officials have been as helpful as they can be with us, in terms of the planning assumptions we make and indications about whether or not we are being too ambitious or not ambitious enough. So, I think they're being very helpful; as Bethan said, they're constrained by the process—they can't pre-empt a budget process. And you folks will be fully aware of that, of course. The other question I think you asked was how much of the money released by the new arrangements will come into higher education. At the moment, we are expecting all of it to come into higher education, as the product of the arrangement between the current Cabinet Secretary and the current First Minister. The extent to which any changes there cause that to come under threat is something I can't judge at the moment. But we have had in our remit letter from the Cabinet Secretary a clear indication that we can expect our resource to grow over the next few years, as the Diamond process unfolds.


I was very carefully not describing it as a dividend—a re-establishing of funding that we had in the past for higher cost and innovation and maintaining research funding. The timescales are difficult, because we have an annual remit letter, and we can work with Welsh Government officials, and they can only give us a sense of when they think the funding will be released. But 2018-19 is the start of the system, and because of cohort protection—so, protecting those students who came in on a different deal to the deal from 2018-19—in the early years there is an element of double cost; there's a cost of seeing out the old system and the different cost of implementing the new system. So, at the moment, we're certainly not in a position to tell the sector with any degree of certainty what funding would be beyond what we've allocated for 2018-19, with some sense of what 2019-20 numbers we're working with because we allocate our money over an academic year—so, by definition, we've already made assumptions of four months of the 2019-20 funding, albeit that's not approved yet in the budgetary process.

But you're not being given a steer at all as to what you expect the additional resource that you might have to make available to Welsh universities might be as a result of Diamond. You must have some idea.

I think it's fair to say that officials have been as helpful as they can be with us, in terms of the planning assumptions we make and indications about whether or not we are being too ambitious or not ambitious enough. So, I think they're being very helpful; as Bethan said, they're constrained by the process—they can't pre-empt a budget process. And you folks will be fully aware of that, of course. The other question I think you asked was how much of the money released by the new arrangements will come into higher education. At the moment, we are expecting all of it to come into higher education, as the product of the arrangement between the current Cabinet Secretary and the current First Minister. The extent to which any changes there cause that to come under threat is something I can't judge at the moment. But we have had in our remit letter from the Cabinet Secretary a clear indication that we can expect our resource to grow over the next few years, as the Diamond process unfolds.

Okay. I'm just going to bring in Llyr at this stage.


But you're not being given a steer at all as to what you expect the additional resource that you might have to make available to Welsh universities might be as a result of Diamond. You must have some idea.

I think it's fair to say that officials have been as helpful as they can be with us, in terms of the planning assumptions we make and indications about whether or not we are being too ambitious or not ambitious enough. So, I think they're being very helpful; as Bethan said, they're constrained by the process—they can't pre-empt a budget process. And you folks will be fully aware of that, of course. The other question I think you asked was how much of the money released by the new arrangements will come into higher education. At the moment, we are expecting all of it to come into higher education, as the product of the arrangement between the current Cabinet Secretary and the current First Minister. The extent to which any changes there cause that to come under threat is something I can't judge at the moment. But we have had in our remit letter from the Cabinet Secretary a clear indication that we can expect our resource to grow over the next few years, as the Diamond process unfolds.

Okay. I'm just going to bring in Llyr at this stage.

Bethan said in an earlier answer that, I think, the financial forecasting from universities forecast something pretty consistent in terms of what they're hoping to be receiving in income, for example. But we've already discussed the near 10 per cent drop, potentially, in international applications. So, does that tally, really, or are they going to be recruiting additional students from the UK market or—? What's the plan?


I think it's fair to say that officials have been as helpful as they can be with us, in terms of the planning assumptions we make and indications about whether or not we are being too ambitious or not ambitious enough. So, I think they're being very helpful; as Bethan said, they're constrained by the process—they can't pre-empt a budget process. And you folks will be fully aware of that, of course. The other question I think you asked was how much of the money released by the new arrangements will come into higher education. At the moment, we are expecting all of it to come into higher education, as the product of the arrangement between the current Cabinet Secretary and the current First Minister. The extent to which any changes there cause that to come under threat is something I can't judge at the moment. But we have had in our remit letter from the Cabinet Secretary a clear indication that we can expect our resource to grow over the next few years, as the Diamond process unfolds.

Okay. I'm just going to bring in Llyr at this stage.

Bethan said in an earlier answer that, I think, the financial forecasting from universities forecast something pretty consistent in terms of what they're hoping to be receiving in income, for example. But we've already discussed the near 10 per cent drop, potentially, in international applications. So, does that tally, really, or are they going to be recruiting additional students from the UK market or—? What's the plan?

I was reflecting on the last point when we had consistent information across the sector.


Okay. I'm just going to bring in Llyr at this stage.

Bethan said in an earlier answer that, I think, the financial forecasting from universities forecast something pretty consistent in terms of what they're hoping to be receiving in income, for example. But we've already discussed the near 10 per cent drop, potentially, in international applications. So, does that tally, really, or are they going to be recruiting additional students from the UK market or—? What's the plan?

I was reflecting on the last point when we had consistent information across the sector.

Okay. So, they may need to revisit that in the light of this.


Bethan said in an earlier answer that, I think, the financial forecasting from universities forecast something pretty consistent in terms of what they're hoping to be receiving in income, for example. But we've already discussed the near 10 per cent drop, potentially, in international applications. So, does that tally, really, or are they going to be recruiting additional students from the UK market or—? What's the plan?

I was reflecting on the last point when we had consistent information across the sector.

Okay. So, they may need to revisit that in the light of this.

I'm expecting that the forecast that we get at the end of this month will reflect the reduced applications we've seen, and an element of that will be reflected in reduced improvements as well.


I was reflecting on the last point when we had consistent information across the sector.

Okay. So, they may need to revisit that in the light of this.

I'm expecting that the forecast that we get at the end of this month will reflect the reduced applications we've seen, and an element of that will be reflected in reduced improvements as well.

Okay. So, we don't really know, then, whether—it's unlikely that they are going to expect a consistent fee income, really.


Okay. So, they may need to revisit that in the light of this.

I'm expecting that the forecast that we get at the end of this month will reflect the reduced applications we've seen, and an element of that will be reflected in reduced improvements as well.

Okay. So, we don't really know, then, whether—it's unlikely that they are going to expect a consistent fee income, really.

I think it's fair to say we would expect them to respond to what they're seeing in the UCAS process. Even if they didn't, they would all, in any case, have sensitivities for what they would do if things don't come out in the way they hope. And if they didn't have that then we would be on their case, of course, because we want them to be properly sighted.


I'm expecting that the forecast that we get at the end of this month will reflect the reduced applications we've seen, and an element of that will be reflected in reduced improvements as well.

Okay. So, we don't really know, then, whether—it's unlikely that they are going to expect a consistent fee income, really.

I think it's fair to say we would expect them to respond to what they're seeing in the UCAS process. Even if they didn't, they would all, in any case, have sensitivities for what they would do if things don't come out in the way they hope. And if they didn't have that then we would be on their case, of course, because we want them to be properly sighted.


Okay. So, we don't really know, then, whether—it's unlikely that they are going to expect a consistent fee income, really.

I think it's fair to say we would expect them to respond to what they're seeing in the UCAS process. Even if they didn't, they would all, in any case, have sensitivities for what they would do if things don't come out in the way they hope. And if they didn't have that then we would be on their case, of course, because we want them to be properly sighted.

And we have to stick to the Brexit impact. Darren.


I think it's fair to say we would expect them to respond to what they're seeing in the UCAS process. Even if they didn't, they would all, in any case, have sensitivities for what they would do if things don't come out in the way they hope. And if they didn't have that then we would be on their case, of course, because we want them to be properly sighted.

And we have to stick to the Brexit impact. Darren.

Can I just ask, in terms of the impact of Brexit, have you done any assessment of what you think might happen, or have any of the institutions made available to you any assessments of what they think is likely to happen to their individual institutions, going forward? You've mentioned scenarios earlier on, David, so what scenarios have you set out?


And we have to stick to the Brexit impact. Darren.

Can I just ask, in terms of the impact of Brexit, have you done any assessment of what you think might happen, or have any of the institutions made available to you any assessments of what they think is likely to happen to their individual institutions, going forward? You've mentioned scenarios earlier on, David, so what scenarios have you set out?

There's a Welsh Government HE Brexit working group, which is chaired by one of the Government directors, and we sit on that. And we have provided that group with early summaries of the risks and the potential impact, in terms of the exposure of the sector to EU-sourced funding. We have, as part of that working group, explored those issues that it would be really very helpful for either the Welsh Government to try to put in place or for the Welsh Government to persuade UK Government to do. And I think, in our submission, we identified a number of areas of what we would consider to be a helpful action, and that has been worked through that working group. We know that it has informed Welsh Government's position, in terms of what it does and also in terms of the conversations that they have with Her Majesty's Government. Beyond that, what we haven't done in that working group is share the work that institutions are doing individually to look at how they would respond to different scenarios. We are not able to do that here either because, inevitably, they would have varying degrees of unpalatability and they would have to be managed very, very carefully. You take cost out, which is essentially the response, you actually take people's jobs out, and all of that has to be managed carefully. So, that's not really a matter for public consideration, but we do know that the institutions are looking at a range of scenarios on what they would do. Bethan mentioned earlier on that the current deficit for the sector is a managed deficit—it's not something that has taken them by surprise. They are responding to what they see as the dip between where Diamond was reporting and where the money starts flowing. Similarly, I think we're comfortable that there is a managed approach to the scenarios that they're testing within institutions. So, they will do what they need to do to sustain themselves. The bigger issue really, in a public policy context, is the potential damage for the sector to be able to deliver for Wales in terms of research and skills development and all the other contributions.


And we have to stick to the Brexit impact. Darren.

Can I just ask, in terms of the impact of Brexit, have you done any assessment of what you think might happen, or have any of the institutions made available to you any assessments of what they think is likely to happen to their individual institutions, going forward? You've mentioned scenarios earlier on, David, so what scenarios have you set out?

There's a Welsh Government HE Brexit working group, which is chaired by one of the Government directors, and we sit on that. And we have provided that group with early summaries of the risks and the potential impact, in terms of the exposure of the sector to EU-sourced funding. We have, as part of that working group, explored those issues that it would be really very helpful for either the Welsh Government to try to put in place or for the Welsh Government to persuade UK Government to do. And I think, in our submission, we identified a number of areas of what we would consider to be a helpful action, and that has been worked through that working group. We know that it has informed Welsh Government's position, in terms of what it does and also in terms of the conversations that they have with Her Majesty's Government. Beyond that, what we haven't done in that working group is share the work that institutions are doing individually to look at how they would respond to different scenarios. We are not able to do that here either because, inevitably, they would have varying degrees of unpalatability and they would have to be managed very, very carefully. You take cost out, which is essentially the response, you actually take people's jobs out, and all of that has to be managed carefully. So, that's not really a matter for public consideration, but we do know that the institutions are looking at a range of scenarios on what they would do. Bethan mentioned earlier on that the current deficit for the sector is a managed deficit—it's not something that has taken them by surprise. They are responding to what they see as the dip between where Diamond was reporting and where the money starts flowing. Similarly, I think we're comfortable that there is a managed approach to the scenarios that they're testing within institutions. So, they will do what they need to do to sustain themselves. The bigger issue really, in a public policy context, is the potential damage for the sector to be able to deliver for Wales in terms of research and skills development and all the other contributions.

So, you're confident that they're taking a robust approach to planning for various scenarios, going forward, are you, as individual HEIs?


Can I just ask, in terms of the impact of Brexit, have you done any assessment of what you think might happen, or have any of the institutions made available to you any assessments of what they think is likely to happen to their individual institutions, going forward? You've mentioned scenarios earlier on, David, so what scenarios have you set out?

There's a Welsh Government HE Brexit working group, which is chaired by one of the Government directors, and we sit on that. And we have provided that group with early summaries of the risks and the potential impact, in terms of the exposure of the sector to EU-sourced funding. We have, as part of that working group, explored those issues that it would be really very helpful for either the Welsh Government to try to put in place or for the Welsh Government to persuade UK Government to do. And I think, in our submission, we identified a number of areas of what we would consider to be a helpful action, and that has been worked through that working group. We know that it has informed Welsh Government's position, in terms of what it does and also in terms of the conversations that they have with Her Majesty's Government. Beyond that, what we haven't done in that working group is share the work that institutions are doing individually to look at how they would respond to different scenarios. We are not able to do that here either because, inevitably, they would have varying degrees of unpalatability and they would have to be managed very, very carefully. You take cost out, which is essentially the response, you actually take people's jobs out, and all of that has to be managed carefully. So, that's not really a matter for public consideration, but we do know that the institutions are looking at a range of scenarios on what they would do. Bethan mentioned earlier on that the current deficit for the sector is a managed deficit—it's not something that has taken them by surprise. They are responding to what they see as the dip between where Diamond was reporting and where the money starts flowing. Similarly, I think we're comfortable that there is a managed approach to the scenarios that they're testing within institutions. So, they will do what they need to do to sustain themselves. The bigger issue really, in a public policy context, is the potential damage for the sector to be able to deliver for Wales in terms of research and skills development and all the other contributions.

So, you're confident that they're taking a robust approach to planning for various scenarios, going forward, are you, as individual HEIs?

Yes, and as the deal becomes more clear politically, then they will obviously have greater clarity in terms of which of these scenarios they need to work up more fully, but they are sighted on it.


There's a Welsh Government HE Brexit working group, which is chaired by one of the Government directors, and we sit on that. And we have provided that group with early summaries of the risks and the potential impact, in terms of the exposure of the sector to EU-sourced funding. We have, as part of that working group, explored those issues that it would be really very helpful for either the Welsh Government to try to put in place or for the Welsh Government to persuade UK Government to do. And I think, in our submission, we identified a number of areas of what we would consider to be a helpful action, and that has been worked through that working group. We know that it has informed Welsh Government's position, in terms of what it does and also in terms of the conversations that they have with Her Majesty's Government. Beyond that, what we haven't done in that working group is share the work that institutions are doing individually to look at how they would respond to different scenarios. We are not able to do that here either because, inevitably, they would have varying degrees of unpalatability and they would have to be managed very, very carefully. You take cost out, which is essentially the response, you actually take people's jobs out, and all of that has to be managed carefully. So, that's not really a matter for public consideration, but we do know that the institutions are looking at a range of scenarios on what they would do. Bethan mentioned earlier on that the current deficit for the sector is a managed deficit—it's not something that has taken them by surprise. They are responding to what they see as the dip between where Diamond was reporting and where the money starts flowing. Similarly, I think we're comfortable that there is a managed approach to the scenarios that they're testing within institutions. So, they will do what they need to do to sustain themselves. The bigger issue really, in a public policy context, is the potential damage for the sector to be able to deliver for Wales in terms of research and skills development and all the other contributions.

So, you're confident that they're taking a robust approach to planning for various scenarios, going forward, are you, as individual HEIs?

Yes, and as the deal becomes more clear politically, then they will obviously have greater clarity in terms of which of these scenarios they need to work up more fully, but they are sighted on it.

Okay. Can I just ask about fee and access plans, and how Brexit might impact them? To what extent do you think that they could be impacted?


So, you're confident that they're taking a robust approach to planning for various scenarios, going forward, are you, as individual HEIs?

Yes, and as the deal becomes more clear politically, then they will obviously have greater clarity in terms of which of these scenarios they need to work up more fully, but they are sighted on it.

Okay. Can I just ask about fee and access plans, and how Brexit might impact them? To what extent do you think that they could be impacted?

I think there are two dimensions to maybe touch upon there. Fee and access plans are approved annually by us. They are approved in advance of the recruitment cycle for the year that they apply to. So, we're just in the process now of finalising our consideration of fee and access plans for the 2019-20 academic year. So, there's quite a long lead time. We, as part of that process, go through similar—we look at their financial sustainability, which is based on their forecasts—data to the stuff we've just been discussing. And also, of course, the fee plans themselves make assumptions about how many students of different types, from different domains, are going to be recruited. So, clearly, if there is a continuing downward pressure on EU student recruitment, then that will reduce the amount of fee income that's going to come in, unless they can find other students, and that will reduce the amount of investment in the various activities that are identified in the fee plans. In terms of process, we have two things that we can do. If institutions are becoming aware that the basis upon which they've submitted a fee plan is fundamentally different from the reality, then they can come into us for a change to their fee plan. So, we have a change process. If it's not fundamentally different, but there are always differences between what you plan and what happens three years later—. We also monitor after the event and, if there are differences, we would then obviously require institutions to explain those differences. If they've had fewer students and less investment, we would need to understand that. Conversely, if they'd had more students, and potentially more investment, we'd want to know what they'd spent it on, and if they've done different things, we'd want to understand that as well. So, we do challenge through a monitoring process. The only other thing that's perhaps worth saying is that, in the 2019-20 fee and access plans—they're not published yet, so I can't give you the full detail—five universities have made reference to Brexit and the Brexit impact, and things they want to do through their fee and access plan to try and address some of those issues, so they're in there as well.