The Deputy minister for skills and tertiary education on a skills audit and reducing the number of young NEETs.
Cefin Campbell is overseeing a review of higher education in Wales(Image: Plaid Cymru)
University mergers in Wales are to be considered part of an extensive, independent review of the nation’s troubled higher education sector that will look at all options for the under-pressure sector.
Universities need “meaningful change” if the severe financial challenges they face are to be resolved, Deputy Minister for Skills and Tertiary Education Cefin Campbell has told BusinessLive Wales.
The minister also said tackling the growing number of young people not in education, employment or training – known as NEETs – is a priority, while the new Plaid Cymru administration in Cardiff Bay could be open to setting a specific target to reduce their numbers.
The financial challenges facing the Welsh university sector have resulted in well over 1,000 job losses at higher education institutions across Wales over the past year.
Mr Campbell said: “It has to be meaningful change, as the definition of insanity is that you keep on doing the same old thing expecting different results.”
He said developing skills and trying to retain young people in Wales were all being considered with the aim of increasing productivity and contributing to a higher-skilled workforce in Wales.
He said the first major audit of the skills requirements of Welsh employers for 14 years, which is currently under way, will help better align support with the needs of businesses seeking to expand.
UK Government visa restrictions on family members of international postgraduate students, together with shorter post-study visas for graduates, have led to falling numbers of higher fee paying international students. This has pushed many universities into financial difficulty.
The market for international students is global, while Chinese universities are improving in international rankings and attracting more domestic students who might previously have taken up places at UK universities.
According to the latest published figures from the Higher Education Statistics Agency (HESA), the number of international students at Welsh universities fell by around 7,000 in the 2024–25 academic year compared with the previous year.
The biggest decline in overseas non-EU students was at the University of South Wales, where numbers fell by just over 2,000.
While smaller institutions such as Bangor University, Aberystwyth University and the University of Wales Trinity Saint David remain solvent, the latest HESA data show they each have little more than 30 days’ net liquidity.
On the challenges facing the sector, Mr Campbell said: “We recognise that our universities are facing serious financial pressures, and that is why we are committed to ensuring the system is financially sustainable moving forward, and that more of the overall value of public investment benefits Wales.
!That is why I have announced – and it was in our manifesto – that we will be conducting a review of higher education funding. It is a priority.”
On the size of the review panel, he added: My inclination is to have a smaller number rather than a larger group, because I think it’s easier to concentrate efforts with a smaller group focusing on really granular detail and coming up with some really far-reaching and radical proposals.”
But how radical could the panel’s conclusions be? Could they recommend mergers and universities focusing on building particular areas of expertise? Also, while there could be VAT implications, could new vehicles be set up to provide back-office functions across institutions?
Mr Campbell said: “Nothing is off the table, and our terms of reference will ask the panel to look at all kinds of options, including some of the ones that you’ve referenced, so that they have a wide scope to look at all the potential options available to making our university sector more sustainable.”
He was asked whether Welsh university management teams and their respective boards should shoulder an element of responsibility for their challenging trading positions, having pursued the overseas student market and, in some cases, taken on increasing levels of debt to expand campuses.
He replied: “So, you play what’s in front of you, and there were opportunities for universities to tap into that international market, and they did that very successfully until it basically changed overnight… and they couldn’t foresee that. “So there’s no criticism of them. Like any business case, it is a matter of how you spread your investments, and some have suffered more than others.
“My priority now is thinking ahead to where we take our universities because they are so important, not only as seats of learning, but also because of their work in research and innovation. They are anchor institutions in their regions and employ thousands of people.
“When you think of Aberystwyth, Bangor and Trinity Saint David universities, and the number of people they employ in rural areas, they are so important. So, we have to help them to become more resilient moving forward. There is no doubt that there have been a number of factors at play as to why our universities are under pressure. One of them is the change in visa regulations.
“Some of our universities in Wales, but across the UK as well, put a lot of their eggs into that basket, and now those changes have put their business plans under pressure.
“So this will be looked at in the round and it will be part of the panel’s work. Unless things change with an Andy Burnham UK Government on visa policy, we will have to play the cards that we have. The international student option might not be one that is a reasonable consideration in the future.”
He said he will be looking for the review panel to conclude its work relatively quickly. He explained “”I don’t want this to be a long process because we want to start implementing some of the recommendations as soon as we can. Some individual universities in Wales are teetering on the brink. They need support as soon as they can get it rather than waiting for a medium-term plan of action.”
If the panel recommends mergers, they would require buy-in from the universities themselves. Attempting to force any mergers could end up in a legal quagmire, and one only has to recall how the previous Welsh Government of Rhodri Morgan failed in trying to force Cardiff Metropolitan University to merge with what were then Newport and Glamorgan universities.
However, Mr Campbell said: “It has to be meaningful change, as the definition of insanity is that you keep on doing the same old thing expecting different results.
“It needs to be part of a wider picture as well, in terms of how universities can play their role in increasing productivity in Wales and contributing to a higher-skilled workforce in order to grow the economy.”
Part of Plaid’s higher education strategy will involve aiming to increase the number of Welsh students attending universities in Wales, as part of wider efforts to reduce the ‘brain drain’ and the negative impact this creates for the economy.
The minister said: “What I would like to see is more of our young people staying in Wales and enrolling in universities here because a recent graduate destination survey showed that about 50% of those who responded, who went to universities in England, stayed there.
“They stayed there to work and then obviously settled down there, and they don’t return to Wales. So, we know we are losing a lot of that young talent already.
“So if we could get them to stay in Wales and help build our economy, and make our universities more aware of our economic aims, we could align and create job pathways through further education, apprenticeships and higher education to help create meaningful employment.
We also need a scheme to attract those who are working in England at the moment, young graduates in particular, back to Wales by creating high-value jobs here.”
He is not advocating preventing Welsh students from studying at universities in England, while also recognising that English students who study in Wales often remain after graduating to work.
However, on the net brain drain out of Wales, he added: “This is a net loss that needs to be recognised. What we want to see is as much Welsh Government funding staying in Wales as possible.
“Now, we don’t want to deter any young person from studying in England. That is not the point. And there will be very good reasons why they want to go to England or anywhere else to study.
“But what I want to see is our Welsh universities becoming more competitive so that they can gain more of that domestic market than they are currently achieving.”
Plaid is calling for publicly funded UK Research and Innovation (UKRI) funding to be devolved. Welsh universities currently secure just under 2% of the billions of pounds distributed annually to UK universities.
There is an argument that they have failed to position themselves, including by bringing in expertise and research capacity, to ensure Wales receives at least a fair funding allocation in line with its share of the UK population, which is around 5%.
Mr Campbell said: “It is disappointing that Welsh universities don’t get a fair slice of that funding. There are many reasons.
“Some universities have aligned themselves to be more research-orientated, whereas others have concentrated on a broader spectrum of learning as opposed to research intensification. Universities are autonomous at the end of the day, and they decide what they think is best.
“I’ve had conversations with some universities that are currently thinking about realigning themselves to being something different from what they are now in order to try and reach out to a different kind of market.
“So all of these models will be considered by the panel. But I think we should have control over that UKRI funding, so it takes an element of UK competition out of it and creates competition within Wales that would allow universities to become more innovative and work with industry and businesses.”
Review of skills support
As well as responsibility for the review of higher education, Mr Campbell’s wide-ranging portfolio includes skills.
On the rationale for the skills audit currently under way, which is being undertaken by Learning Skills Wales, the minister said: “The previous national skills audit for Wales was 14 years ago, so there is a gap in our data with regards to our knowledge of the skills needs of Wales.
“It will identify the skills we need now and in the future to grow the Welsh economy. I am obviously working closely with Adam (Price, the Economy Minister) on this.
“It includes identifying the sectors and roles where demand is likely to be strongest in the future.
Essentially, it will help us plan a skills system that responds to employers’ needs and, more importantly, the direction we want to take the economy.”
He added: “What we will then do is convene a future skills summit, and we are looking at dates in October where we will bring representatives from business, industry, further education and higher education together.
“I am keen that those experts create the skills system of the future with Welsh Government.”
NEETs
Wales has a higher than UK average number of 16 to 24-year-olds classified as NEETs. The figure currently stands at 17%.
The minister said: “It is hugely concerning, and it is a priority for me and for this government. When you look at 17% of young people in that age group who are not in any way engaged with education, employment or training, it is frightening to think what will become of that generation.
“So it will be a priority for this government because we need to give it a strong focus in terms of prevention and early intervention. “The recent Alan Milburn report shows that one of the key factors behind why so many of these young people are NEETs is linked to Covid and the mental health issues around that.
“We need to work with stakeholders who provide welfare and mental health support to get those young people to take that first step back into training and education.”
Asked whether he would be keen on introducing a target for reducing NEET numbers in Wales, alongside the stated aim of reducing the Welsh productivity gap with the UK by half over the next decade, he said “”It may well be something we would look at, but at the moment we are trying to understand the NEETs agenda.
“We are working closely with Careers Wales because they have a key role in identifying and supporting this at-risk group of young people. But the target for us is to bring it down.”
He acknowledged that the financial cost of university meant more young people were considering earlier career pathways.
The argument had traditionally been that, over a career, graduate average earnings would outperform those of non-graduates, even accounting for tuition fee costs. However, this is now coming under increasing pressure, particularly for some non science-related degrees.
Mr Campbell said: “I’m really keen to allow young people to see what different pathways are available to them. “Let’s be honest, university isn’t for everybody. So personally, and for this government, I want to see more emphasis on vocational training and vocational opportunities.
“That goes right down to the 14 to 19 pathway model. I want schools, further education and training providers to work together far more effectively in providing a suite and range of options that are vocational and academic.
“But what is absolutely crucial for me is that there is parity of esteem between the vocational and academic routes, because we know there are different pathways into employment.
“Universities are one route, but apprenticeships are another pathway into employment. I want to make sure that young people are aware of all these different pathways and that we can support them in whatever choice they make.”
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