Wales ditches Diamond and robs students to pay universities

And the headline? It’s resolved to rob students to pay universities.

Maintenance support available for eligible part-time and full-time undergraduate students from Wales will increase by just 1.6 per cent next year, for both new and continuing students. Current CPI is 2.3 per cent.

But the maximum chargeable undergraduate tuition fee is to rise to £9,535 – the same 3.1 per cent increase allowed by the Westminster government for England.

Minister for Further and Higher Education Vikki Howells frames the former as an inflationary increase – using the the Consumer Price Index (CPI) for the first time.

The Welsh Government told us that:

The Welsh Government has moved away from using a measure of RPIX for increasing student support rates in Wales. CPI is a fairer, more accurate and consistent measure of inflation that reflects the real cost of living for students. CPI better reflects everyday costs like food, transport, and clothing—essentials for student life. CPI is an internationally recognised measure and as such is becoming the preferred measure of inflation used by government departments and international organisations like the Office for National Statistics (ONS) and the European Central Bank.

Even if we imagine that that’s fine, WG has used an OBR projection from March that CPI would be down as low as 1.6 per cent by Q1 2026, rather than the projection the OBR gave at the Budget – which was 2.5 per cent.

But much more importantly, the move towards anchoring undergraduate support in terms of inflation rather than in relation to the minimum wage is the real shift.

That made sense when Wales’ Diamond review recommended it, and it makes more sense now that the Low Pay Commission is charged with taking into account the real costs that people face when it recommends the rate.

To illustrate the difference, here’s a comparison between what students from Wales ought to have been expecting on their (non-means tested) loan, and what they’ll instead get (away from home, outside London):

• NMW as of April 2025 £12.21
• Notional hours 37.5
• Notional study weeks 30
• Total £13,736

• Current WG loan (Away, not London) £12,150
• Applied inflation rate 1.6%
• Total £12,344
• Shortfall £1,392

In the statement, Howells boasts about Wales retaining the “the most generous student living costs support for full-time undergraduates in the UK” – but the sleights of hand over inflation and anchoring remain, and the principles enshrined in the Diamond review are now in the dustbin – not least because Wales will now bake in any compound impacts of the inflation guess being too low over time, as we’ve seen in England.

Put another way, Welsh Government is saying something akin to:

…the increase in the minimum wage is not sustainable if we have to replicate it in loaned living costs support for students…

…which would be a rather more difficult press release to issue.

As usual, all the other grants and allowances will also be increased by WG’s chosen rate of inflation – so 1.6 per cent for 2025–26, including the maximum support for postgraduate masters and postgraduate doctoral study. Participation in those is on a fairly consistent decline in Wales (as in England) and at some point someone is going to (or at least ought to) notice that access to the professions in particular – at least those that require a PG qualification – is bound to be taking a hit.

Meanwhile fees are going up by the same rate as England – which in Westminster itself was sold as inflationary, albeit a different measure (in fact, projection) of inflation taken by the OBR at a different time. This is, of course, the second rise in as many years… which doesn’t exactly scream “forward planning”.

But Howells frames all of that by avoiding discussion of an “inflationary” increase in fees – but in doing so heaps even more pressure on on the question of whether providers can, legally, impose the increase on continuing students.

I’ve covered CMA guidance on this before – but even if an inflationary increase is in the student contract, not only is using an inflation projection harder to justify than a real measure of it, it’s even harder still when said projection has changed since WG’s own look at inflation from March (when OBR said 2.3 per cent for 2026 Q1 rather than 3.1 per cent), and when it’s also a different measure of inflation entirely to that being used for maintenance!

How on earth a provider might justify imposing a fee increase on continuing students that is anchored to an old projection of inflation that the government says is not fit for purpose is beyond me. Presumably, some providers in Wales will just plough on and hope that students don’t complain or issue a legal challenge – but that will give Medr plenty to think about given its legal duty (similar to that of OfS’) to regulate compliance with Consumer Protection Law.

This was all a bit of a mess earlier this year in Wales – but by way of an example, one university whose Ts and Cs I’m looking at now says:

Fees for full time undergraduate UK students may be increased in subsequent years of study by an inflation-linked increase determined by Welsh Government. We will confirm any such increases with you on a yearly basis and as soon as possible following confirmation by Welsh Government.

The problem there is that WG doesn’t mention inflation at all over the fee increase, and the Westminster government used a different rate and calculation method (RPI and an OBR projection) to that which said university imposes on everyone else – in this case 3 per cent without any particular justification.

We don’t, as ever, get a clear and upfront sense of why all of the above is happening – as we’ve covered on the site before, WG (along with the administrations in NI and Scotland) are allowed to take the overall long-run subsidy in the loan system in England, divide it on a per head (of population) basis for England, and chunk it back up on a per head (of population) basis for Wales.

Not being able to see the size of the envelope that Howells had to play with – and the choices made either within it (via the loan terms that WG can change) or to (or not to) top it up with WG budget remains a fundamental problem with the devolution settlement, that stems from DfE itself never making these announcements at the Budget.

That said, when we asked WG, we did get this:

Student loan advances (for fee and maintenance loans) are defined as Annually Managed Expenditure (‘AME’) and AME funding is made available by HM Treasury (HMT), separate to Welsh Government’s Department Expenditure Limit (DEL) calculated by the Barnett Formula. HM Treasury imposes rules on student loan AME expenditure and so the Welsh Government is constrained in what is possible within the funding available.

An increase by the National Living Wage (NLW) this year would almost certainly exceed the loan outlay permitted by HM Treasury’s Statement of Funding Policy. We have therefore decided to increase the support package by the CPI measure of inflation, instead of NLW.

Maybe it’s the case that, for example, not retaining a 30 year term (England now has 40 years) would have eased things – but if nothing else, the byzantine nature of all of this and the complexities of Wales trying to do something different with the SLC have apparently conspired with English austerity to make Wales’ long-term policy promises on maintenance unsustainable.

As well as all that, the partial write-off of student debt of up to £1,500 when a student begins repaying their loans is being retained (for the above reasons we don’t get a proper sense of how expensive that debt reduction tweak is, nor its distributional impacts) and there’s an additional £20 million for Medr to support further and higher education in Wales – which, in the wash, is almost certainly a real terms cut. The draft Welsh budget will emerge in full on Tuesday.