The Welsh Assembly could soon be examining plans to slash the number of universities in the principality from 13 to just three or four, the sectors' leaders believe.
The Higher Education Funding Council for Wales is finalising proposals for rationalisation after being told by the Welsh Office earlier this year to "identify the scope for institutional mergers at higher education level and make proposals to the National Assembly by the end of September 1999".
The Welsh Office's annual public expenditure guidance to the Higher Education Funding Council for Wales at the beginning of this year said that it should "put pressure on the sector to increase the number of beneficial partnerships between institutions", and come up with plans for mergers.
It says: "The secretary of state is concerned that the HE sector in Wales comprises a set of institutions which are small by comparison with many other leading United Kingdom institutions. This can present problems when institutions have to compete for external sources of funds; have to provide facilities to attract students; and incur overheads in governance."
The unwritten official view is that, in terms of the number of students it teaches and the cash it attracts for teaching and research, Wales should need fewer than half-a-dozen institutions.
Numerically Wales's 13 higher education institutions equal more than 10 per cent of the UK total; yet with just 93,000 of the UK's 1.8 million students, they teach just over 5 per cent of the UK total. (There are 1.49 million students in England.) They also receive just over 5 per cent of the UK's total higher education funding, with Pounds 251 million from the funding council in 1999-2000, compared with England's Pounds 3,840 million, and Pounds 4,803 million in the UK.
Wales's money is spread thinly. In Northern Ireland, just two universities, Queen's Belfast and Ulster, share public funds of Pounds 113.4 million - an average of Pounds 56.7 million each. Wales has to share its Pounds 250 million funding council money between 13 universities. While Wales's largest university, Cardiff, has a funding council income of Pounds 56 million, its two nearest rivals in terms of size are the University of Wales, Swansea, and the University of Glamorgan, both with just Pounds 32 million. Four Welsh universities have a HEFCW income of less than Pounds 10 million.
In terms of research funding alone, the picture is more dramatic. Wales receives just 4.3 per cent of the UK's funding council research income. Its 12 research-active institutions have to share Pounds 45 million of funding council research cash - an average of Pounds 3.7 million each, compared with almost Pounds 10 million per institution in England, which gets Pounds 855 million research cash.
Wales also lags seriously behind in winning research funding from the research councils. Apart from agricultural research, they spend just 2 per cent of their UK grants there.
Len Arthur, the Welsh executive member of lecturers' union Natfhe, said: "It's time to put up or shut up. There have been mutterings about the situation here for years. If you compare Wales to England, we should only have about three or four universities."
The Welsh funding council would not discuss its report. But an urgent meeting has been called between the council and the Heads of Higher Education Institutions, Wales, to discuss a strategy.
The sector will have some breathing space. The National Assembly for Wales's post-16 education and training committee, deeply engaged with the 16-19 agenda, has already said it will not look at higher education until spring 2000. Then, the committee said, it will "focus in particular on how higher education bodies can work together for the benefit of Wales".
Cynog Dafis, chair of the committee, said there was a need for greater coordination. Speaking as education spokesman for Plaid Cymru, he said: "One scenario would be major mergers - as long as campuses are not lost - but another would be for Welsh higher education to get its act together and start thinking of itself not as four or five merged institutions but as a single entity. Our competitiveness and the sharing of resources are issues we cannot afford not to address."
Some committee members defended the status quo. "At the moment, I'd be concerned about mergers for mergers' sake," said Christine Chapman, Labour assembly member for Cynon Valley in South Wales and a member of the assembly's post-16 committee. "We have got a number of very specialised colleges which provide some very good courses. We are a diverse country and there is no justification for widespread mergers at present. As the assembly develops we will be keeping the situation under review but our main priority is maintaining quality and widening access."