Beware ‘unintended consequences’ of cuts, Welsh Assembly told

Plans to cut funding for Welsh higher education will have “unintended consequences” for both the sector and the wider economy, universities have warned.

In evidence to the Welsh Assembly Finance Committee, which is debating the country’s financial priorities, the representative group Higher Education Wales said that for every £1 million invested in them, universities contributed £5.3 million to the Welsh economy.

Yet although the Welsh Assembly Government spends 16 per cent more per head on health services than England, it spends 15 per cent less per student on higher education.

Higher Education Wales said the 2010-11 budget contained a “real-terms” cut in expenditure on universities, and it complained that institutions had been told to achieve a 5 per cent efficiency saving not demanded of other publicly funded sectors.

The group also warned that asking the Welsh funding council to divert cash from core investment towards specific projects and priorities would result in “counterproductive” effects.

“If a shift towards separate project and priority-of-funding streams occurs directly at the expense of core investment in universities, there is a risk that it may be more difficult to deliver successfully the specific projects that the sector is committed to delivering,” it said.

“The use of the term ‘strategic’ to describe some of these shared priorities is not always helpful as there is an implication that other areas of university core operations are somehow not genuinely ‘strategic’.”

The umbrella group told the committee that universities were vital to future prosperity.

Meanwhile, the Higher Education Funding Council for Wales confirmed that, on a full economic cost basis, the higher education sector faced a deficit of £46 million in 2007-08.

The coming years will see a “deteriorating operating performance and a worsening of the liquidity position”, it told the Welsh Assembly Finance Committee.

“We will continue to face the challenge of securing levels of funding for higher education in Wales that are comparable with elsewhere in the UK if the sector is to remain competitive,” the funding council said.

It added that staffing and estates budgets would be the first to suffer as the sector reined in spending.

Nevertheless, HEFCW said, universities must maintain standards. “As these pressures unfold, and the sector responds to them, we will wish to see the balance between research and teaching maintained and to see maintenance of a reasonable subject mix in the sector.”

hannah.fearn@tsleducation.com