Higher education funding chiefs in Wales admitted this week that institutions were facing another tight year as they unveiled grant allocations for 2007-08.
A total of £424 million to be distributed to institutions by the Higher Education Funding Council for Wales next year amounts to a real-terms rise of just over 1 per cent. But that is only after a £6 million cash injection from the Welsh Assembly Government in response to a funding council report that concludes that there is a "funding gap" of up to £40 million between higher education in Wales and England.
With half the £6 million going to Cardiff University to help cover full economic costing of charities-related research, most institutions have been left with an increase that barely tops inflation.
The one silver lining is that Welsh institutions will start to charge top-up fees from the next academic year, although recent figures from the Universities and Colleges Admissions Service suggest this may have had a detrimental impact on recruitment.
Phil Gummet, the HEFCW chief executive, said the allocations were more cautious than the 3.7 per cent real-terms uplift in England, partly because less was known in Wales about what the Comprehensive Spending Review would bring.
"What we want to avoid is putting out a grant that we are unsure we can sustain the following year, because to do that could be hugely disruptive to institutions," he said.
Sir Roger Williams, chair of the HEFCW, commented: "Although this settlement provides sufficient funding for a small real-terms increase for the sector as a whole, higher education in Wales will continue to have to work hard to retain its competitiveness in the UK and beyond, particularly in the light of funding settlements elsewhere in the UK."
Amanda Wilkinson, director of Higher Education Wales, said the funding council's caution over the uplift they could afford was disappointing and would mean institutions getting less for 2007-08 than they might have.