It appears that some magic money trees have been spotted in the back garden of Cardiff University’s Wales Governance Centre.

Its Director Richard Wyn Jones has taken to Nation Cymru to argue that “there is a way out” of the crisis currently enveloping Welsh universities.

The claim centres on this table:

That is supposed to be showing us the money spent on “supporting the current generation of students from Wales” – so excluding the circa £200 million per year provided directly to Welsh universities through Medr.

Wyn Jones notes that those from poorer backgrounds in Wales are less likely to go to university than students from the same backgrounds from England – while not mentioning that Wales beats both Scotland and Northern Ireland.

But the main claim is that the table shows more than £500m of Welsh government “expenditure” on higher education on students studying in England that could be spent in “more imaginative and strategic ways” to maintain a “genuinely excellent higher education system”.

It gets remixed in blogs like this:

One might suggest this is a really misguided use of Welsh Gov resources. At a time when our universities are really struggling, offering a financial incentive for Welsh students to choose Welsh unis over English ones seems like a no-brainer.

It all seems to be based on the Dyfodol i’r Iaith (“A Future for the Language”) campaign group proposal aimed at a policy that “puts Wales first”.

Their concern is that the current system facilitates an “increasingly excessive exodus” of young academic people from Wales – a brain drain that “weakens the business bases of Welsh Universities”, undermines the aims and objectives of the Coleg Cymraeg Cenedlaethol (which creates Welsh medium study opportunities in tertiary education) and weakens efforts to create a more strong and economically progressive Wales:

It’s about time policy is adopted which puts Wales first. It should also support students’ ability to consider higher education beyond the country but with less financial support than if they studied in Wales. This is what Scotland and Northern Ireland have done.

And now, former Education Minister Leighton Andrews (now Professor of Practice in Public Service Leadership and Innovation at Cardiff University) has weighed in.

He calls for a review of higher education funding and governance to be staged after the 2026 Senedd elections – Andrews was around when the Browne review pulled the same sort of “cross-party, bad news after the election” stunt, and seems to admire the principle.

His review would be aimed at increasing youth participation rates while developing sustainable funding mechanisms, the protection of strategic subjects, the strengthening of governance and accountability, improving lifelong learning, and exploring post-Brexit regulatory flexibility for a more directive sectoral approach.

And he quotes Wyn Jones and those figures in that table, adding:

I’m a bit less shouty about this than Richard. But I believe that we need a cross-party review of HE finance in Wales, including student support.

Checking the facts

So what is going on in the chart? There’s a handy new fact-checking blog on the Welsh Government to assist. In 2023/24, the Welsh government paid £1.17 billion in loans (which are repaid) and grants (which are not repaid) for Welsh students (studying both inside and outside Wales).

Of that, £911m was loaned to students to support their tuition fees and maintenance. The remaining £264m was spent on grants, including maintenance grants to help with living costs, Disabled Students’ Allowance grants and other targeted grants.

The £500m figure for students studying outside of Wales is based on a particular extract from Student Loan Company data and includes expenditure of loans and grants.

The problem is that funding for student loans is provided by the Treasury (one of its annually managed expenditure programmes, or AME) and can’t be reallocated or spent by Welsh Government for any other purpose.

AME programmes are demand-led – like welfare, tax credits or public sector pensions – and are so hard to predict or control that the Treasury takes on the risks rather than holding departments to budgets.

And in the nations, the deal is that where the given programme is devolved, as long as the scheme’s outlay and/or Ts and Cs are broadly comparable, the Treasury takes that on too.

That all ends up being included in the Welsh budget and accounts – but its unpredictability is managed by Westminster.

So could that money be spent in other ways? And could the money that Welsh government spends be spent in other ways?

Dyfodol i’r Iaith is right that students from Northern Ireland in Northern Ireland are charged £4,750 – but NI has an emigration issue that is largely about capacity. Scotland’s scheme also obviously keeps large numbers of Scottish students in Scotland – but I doubt that Wales’ universities would be thrilled with NI or Scotland’s unit of resource.

Free fees in Scotland costs a billion pounds a year, and in Wales it would cost half that, and Welsh universities would get 20 per cent less money.

Dyfodol i’r Iaith argues that the scale of Welsh emigration has reached such a critical point that policy needs to be adopted that provides “financial incentives to encourage our young people to study in Wales” and “contribute constructively and enthusiastically to their future”.

Pulling the levers

There are only really three sorts of financial differentials that could be delivered – via fees, maintenance support or on the (repayment) terms on loans.

To create a Wales/England fees differential, you’d either need to reduce fees for Welsh students in Wales or raise them for Welsh students in England. The former would hit university finances hard if not expensively topped up – and granting money to universities would come from the main part of the Welsh budget, not the Treasury-run AME part. And the latter just isn’t allowed.

That leaves you with maintenance support, and terms.

Wales abolished its (partial) tuition fee grants back in 2018 – instead it runs a partial cancellation scheme on maintenance loan balances that sees up to £1,500 taken off their loan balance when they make their first loan repayment.

You might argue that that could be restricted to those who study in Wales – or maybe to those who return, given that the Welsh Government says that only half of the students who leave to study in another country return to work in Wales. The problem is that some notional write off of debt later is unlikely to influence students’ choices on where to study.

Killing off the grant element of the maintenance package just for those leaving Wales could be an option – and that could go into funding for universities. But that would increase the amounts loaned to students, and almost certainly bust the “broadly equivalent” limits that HMT sets.

Maybe Wales could loan more out in maintenance for those who study in Wales – but it already has the most generous package (no means testing and it’s linked to the living wage) – and while it could loan less out to students who study elsewhere, that does rather destroy the principle that its maintenance arrangements are based on need.

Ironically, it does appear that not means testing the maintenance loan in Wales hasn’t done much to get the poor into HE, but it has made those already in HE more mobile. There’s a team reviewing the Diamond reforms that led to that package now.

And anyway, if Welsh Government did switch some of the maintenance funding going to Welsh students in England, given it’s AME funding, the only places it could put it would be bigger loans (and larger debts) for students in Wales, or into higher fees (and loans and debts) than in England.

Best of luck to a minister standing up to announce that.

Maybe Wales could somehow number-control its loans for fees and maintenance, capping the volume of loans it’ll hand out for those studying elsewhere. But again, I doubt there’s a politician that will want to announce what will instantly be seen as a “cap on aspiration” – and anyway, Wales’ HE participation rate is already a major concern.

England smells

That leaves you with trying to influence the choices that students make via information, advice and guidance – and in the firing line for Dyfodol i’r Iaith and Andrews is the Seren Network – which has now been renamed Academi Seren.

It was set up in 2015 following a report by Lord Paul Murphy into Oxbridge not receiving enough Welsh students, and now aims to helping Wales’ “most able learners” achieve their “full academic potential” and support their education pathway into “leading universities in the UK, and overseas”.

Plaid Cymru’s education spokesperson – Cefin Campbell MP – argued last year that the Seren scheme needs to be “turned on its head” to ensure that the brightest pupils stay:

More needs to be done to stop the haemorrhage of students out of Wales.

But nobody seems to be able to explain what a different approach would look like, other than acting as some sort of IAG mafia – talking down opportunities outside of Wales to promote the sunlit uplands of Bangor, Cardiff, Swansea or whatever.

What is then left is anything that might be done on the “broadly equivalent” thing. Nobody seems to be able to explain quite how that assessment is carried out in the bowels of the Treasury – I’ve heard one explanation that’s about total outlay (once corrected for relative size of population), and another suggesting it’s about eventual return (based partly on the annual calcs that have to made on how much of AME is expected not to be repaid, which can vary a lot based on graduate repayment modelling and the value HMT thinks that money will have many years into the future).

Welsh minister Vicki Howells has signalled that she’s asked for some clarity – and that should help with working out the options. But the idea that fiddling with different repayment rates, interest rates or loan term write-off dates for students choosing to study outside of England really does defy all the evidence on what does and doesn’t influence where to study.

The bottom line appears to be that there are no magic money trees, and no easy answers – and what answers there are appear to involve a much closer relationship with Westminster than many are prepared to admit or contemplate.