Plaid has a plan to fund Welsh universities – more student debt if its students leave Wales

The change will give every voter aged 16 and over a single vote – and according to pollsters Survation, if current trends hold, it will end Labour’s dominance and usher in a new era of coalition politics.

Its data puts Labour on 27 per cent – down 13 points from their 2021 constituency vote result – that would see Labour as the largest party, but it would significantly short of a majority and reliant on either minority rule or a coalition.

That potentially puts Plaid in a much stronger position than it was under the previous co-operation agreement which fell apart last year – and to bolster its credentials, it has already published a plan for the Welsh economy will see wealth built, retained and recycled in Welsh communities, instead of it “leaking – and in some cases flooding – out of Wales”.

On skills, it says that nearly half of businesses reported skills shortages in 2024 and 80 per cent of small firms were struggling to recruit in 2022 – impeding economic growth. Innovation, it says, is stifled by weak tech skills, especially in AI and green tech, and there are critical shortages in education, healthcare, and social care that strain public services.

Policy fragmentation, “underfunded” initiatives like the Young Person’s Guarantee, and declining participation in further and higher education exacerbate the issue. Plaid argues that lifelong learning is vital amid demographic and technological shifts, yet remains underprioritized in current strategies.

Recommendations include launching a national skills audit to guide strategic planning, enhancing cohesion across the skills system under Medr’s leadership, and integrating work-based learning into career guidance.

On research and innovation, it argues that Welsh Government’s innovation strategy is broad and aspirational but lacks measurable targets, funding commitments, and actionable steps, particularly to uplift underperforming higher education. Comparing it unfavourably to Ireland’s Impact 2023 strategy, it says that most Reid Review recommendations – like maintaining QR funding and establishing new innovation funds – are largely unimplemented.

Welsh universities, it says, face an annual £18 million QR funding shortfall, weakening their research competitiveness, while UK-wide funding structures limit Wales-specific research incentives. Proposals include devolving UKRI funds and improving coordination through Medr to support locally focused research initiatives, creating a Welsh Innovation Agency (e.g. Future Generations Lab) for unified R&D leadership, and a “more entrepreneurial state” role is advocated to compensate for private sector R&D gaps and drive innovation-led growth.

But the main action on “leakage” comes in the section on universities and students. There’s a retread of the decline in the value of the UG fee and reflections on immigration and international students – but the signature proposal is a comprehensive review of higher education funding to address structural weaknesses and maximise the retention of higher education value within Wales.

Key focus areas in that would include the configuration of the university network, reforming student finance, and ensuring the sector’s financial sustainability, with detail to come – but what it would at least involve is some robbing of rUK Peter to pay university budgets Paul.

Leakage

It notes that £589 million is spent, but 40 per cent (£237 million) benefits institutions outside Wales – a student finance system that indirectly subsidises English universities. That’s because 4 in 10 Welsh students study outside Wales – so approximately £2 of every £5 spent by Welsh Government benefits “external institutions”.

It says that 31 per cent of Welsh students studying elsewhere in the UK do not return post-graduation, impacting long-term economic growth – and that Scotland provides a contrasting model, where 85 per cent of Scottish students study domestically, supported by tuition-free higher education funded by Scottish Government.

That would cost money the Welsh government doesn’t have – so the question, then, is how to incentivise students to stay in and study in Wales on more modest budgets.

Total pound in pocket maintenance isn’t means tested in Wales – but the mix of grant and loan is. The Plaid wheeze would be to remove the base maintenance grant (£1,000) for Welsh students studying in the rest of the UK (rUK), and halve the average maintenance grant for them (switching it to loan) – that it says would free up £34 million annually to spend on Welsh universities’ teaching grants, and student “switching behaviour” (students opting to study in Wales instead) could generate an additional £11 million, getting Plaid to £45 million extra for Welsh institutions – a 24 per cent budget uplift.

Whether that switching would actually happen is a big question – it’s hard to believe that students pursuing HE outside of Wales would actually be incentivised in that way, although there’s almost certainly some cross-party benefit to be had from commissioning some research that asks the question.

Much more importantly, that switching of a good chunk of grant to HMT-funded loan would then mean extra costs for Rachel Reeves – and as we’ve noted here before, that depends on the Treasury determining that the costs of doing so are broadly in line with the English scheme.

The way that assessment is carried out remains a bit of a mystery – which has led minister for further and higher education Vicki Howells to call for some clarity publicly – but if it would push Wales over the edge (in a context where the Treasury is facing rocketing borrowing costs for the money it borrows on the bond markets to lend to students) it’s an immediate non-starter.

Plaid also says that it will explore incentives encouraging students to remain or return to Wales, such as priority subject incentives, loan write-offs or repayment holidays, and reforms to Seren Academy. They may well help – but this does all look a bit like the emigration problem being faced across the EU, as students (and/or graduates) use their freedom of movement to go to the places with the best prospects. On a much smaller UK-wide scale, that’s unlikely to be solved via the measures on offer here.