Welsh higher education institutions will suffer a real-terms cut in funding next year before the extra £56 million allocated by the Welsh Assembly this week makes a difference. The draft budget for the Higher Education Funding Council for Wales will rise by £7 million next year from a baseline of £375 million. This is a rise of 1.8 per cent. In 2005-06 there will be an extra £19.7 million, or a 5.1 per cent rise, and in 2007-08 an extra £29 million rise, or 7.3 per cent. The funding boost does not include financial compensation promised by the Assembly to institutions who defer top-up fees until at least 2007.