– in the Senedd at 6:11 pm on 26 October 2022.
That brings us, therefore, to the short debate.
If Members who are leaving the Chamber can do so quietly, then I'll ask Tom Giffard to present his short debate. Tom Giffard.
Thank you very much, Llywydd.
I've given four minutes of my time away, to Peter Fox, Mike Hedges, James Evans and Laura Jones for this debate.
First of all, I want to place on record my thanks to all at the British Heart Foundation, in particular Gemma Roberts, for highlighting this important campaign and for their work in helping me to bring this debate to the Senedd today.
Research, development and innovation are absolutely essential to any thriving economy. Research has the ability to support our economic recovery from the COVID-19 pandemic. There are huge opportunities to bring money and talent into Wales. But, right now, Wales is missing these opportunities, and we're missing these opportunities because our universities are underfunded. The role research plays in our economy should not be underestimated. Recipients of research funding purchase goods and services in order to undertake their research. That in itself generates activity in their supply chains and across the whole Welsh economy. Research boosts output and productivity in an economy with new technologies, medicines and processes. And, as new methods and technologies are discovered, there are knowledge spillovers into the public, private and third sectors. This boosts productivity and economic growth and could, ultimately, help drive a new economic recovery. But if Wales is ever to reap the benefits of research, our universities need to achieve external investment and win competitive funding bids, and, to do this, our universities need infrastructure, and it's the duty of the Welsh Government to fund that infrastructure.
Wales is simply not achieving its potential in medical research. We have world-class universities, but they're not being properly funded by the Welsh Government. According to the Office for National Statistics, out of the three devolved nations of the UK, and each of the nine regions of England, Wales has proportionally the lowest expenditure on research and development. We are the lowest performing of the 12 UK nations and regions. Wales has only 2 per cent of the R&D spend in the UK. We make up nearly 5 per cent of the population, so shouldn't we have 5 per cent of the research spend? Wales only wins 3 per cent of competitive funding, but, again, we make up 5 per cent of the population of the UK, so we should be winning at least 5 per cent of competitive funding. But, because of low levels of investment in Welsh universities, we're not attracting our population share of funding. Low investment is inhibiting economic success and the contribution of research to our economic recovery.
But this is not a new problem. In 2018, the Welsh Government itself commissioned a review of the research environment. That was called the Reid review, and it found that low levels of infrastructure funding in Welsh universities had been a source of, and I quote,
'structural weakness...for...two decades'.
It has been four years now since that review was published and still there has been no increase in funding from the Welsh Government to bring it in line with the rest of the United Kingdom. How can our universities compete when we continue to invest less in them than Scotland or England?
We're all competing for the same funding streams, but Wales is at a significant disadvantage—a disadvantage caused by a real-terms disinvestment in our universities. Research in Wales has historically relied on European Union funding, but even with EU funding Wales was still at a disadvantage compared to other UK nations because of Welsh Government's low levels of investment in infrastructure.
In that 2018 Reid review, commissioned by the Welsh Government, it pointed out that EU funding streams at that time should be replaced with the Welsh Government funding ones instead. This would support success in UK-wide funding competitions and attract high levels of business investment. But this recommendation has still not been implemented.
The Higher Education Funding Council for Wales administers infrastructure funding to universities on behalf of the Welsh Government. Their budget for 2022-23 was £81.7 million. Pro rata, if Welsh universities were supported to compete with England, funding in Wales would be around £100 million. That's a shortfall of £18 million in funding for crucial infrastructure. That shortfall means that Welsh universities do not have the vital infrastructure they need and are simply unable to compete with other universities across the UK for funding. That dramatically reduces the number of grants coming into Wales and limits the potential benefits to the Welsh economy from research and development.
Medical research is a prime example of that. Medical research not only saves lives in the future but it fuels our economy now, and the people of Wales agree: British Heart Foundation Cymru recently reported that an astounding 82 per cent of people in Wales believe that it is important for Wales to be doing medical research. As well as providing a host of benefits to patients, medical research, including charity-funded medical research, is absolutely vital to our economy. Modelling commissioned by the BHF suggests that charity-funded medical research plays a vital role in Wales's economy and also has the potential to drive economic growth.
Research by the Fraser of Allander Institute at the University of Strathclyde estimated that charity funding makes up 35 percent of all third sector and public funding of medical research in Wales, with active research funding of £21 million in 2018. The institute found that, in 2019, medical research funding by charities in Wales supported £86 million-worth of output and £55 million gross value added.
The institute, commissioned by the British Heart Foundation, also found that every £1 million spent on medical research by charities likely has significantly larger benefits for the economy than the average investment in Wales, making investment in research excellent value for money. Each £1 million spent on medical research funding in Wales by charities supports £2.3 million in output and £1.47 million GVA. Those figures mean that the multipliers of medical research funding in Wales by charities are likely to be comparable to some sectors with the highest GVA multipliers in Wales, making investment in attracting charity-funded medical research to Wales excellent value for money.
Increases in Government and third sector funded research can also increase private sector funding. Increasing investment by the public sector and third sector by 1 per cent creates nearly the same increase in private sector expenditure within a year. To put it another way, anything the Welsh Government puts in will likely be matched by the industry within a year.
The British Heart Foundation also reported that charity-funded medical research supports job creation in skilled sectors like education, research and development, health and social work and engineering. These salaries are, obviously, then spent in our local communities, local businesses and local economies. At the moment, charity-funded medical research supports 975 full-time-equivalent jobs in Wales, even with Wales underperforming in attracting research funding. Imagine the benefits if the Welsh Government were to invest and ensure Wales lives up to its potential in attracting that funding to Wales.
The Institute of Physics are also calling on the Welsh Government to increase quality-related research, QR, funding. Office for National Statistics data shows that QR funding in Wales has not kept pace with inflation since 2008, and the Scottish Government has managed to maintain or increase QR funding in the same time frame. To note, the failure to keep pace with inflation precedes Brexit and debates about the removal of structural funds. They also go on to say that the Welsh Government abolished bespoke funding for innovation and engagement in 2014-15 and the funding was reinstated in 2018-19 at £7.5 million, and is now £15 million per annum. But that is below the £25 million that was recommended in the Reid review commissioned by the Welsh Government.
Their concerns come in part from the findings of a CBI economics survey of physics innovators. It found Wales’s physics innovators collaborate more regularly with universities than innovators in the UK as a whole. With 54 per cent of Wales’s innovators saying improved opportunities to collaborate were a key driver of their plans to increase investment, these partnerships may be central to realising R&D and innovation goals.
Welsh Government should commit to winning at least Wales’s population share of external competitive funding—that is, 5 per cent of external competitive funding in the UK. But to do this, Welsh Government needs to increase its own investment. Welsh universities desperately need to see an uplift to funding for infrastructure provided by Welsh Government. Without the same support as the rest of the UK, Welsh universities and Welsh researchers will be unable to compete on a level playing field for UK-wide funding. We would be missing not only the benefits of medical research, but also an opportunity for economic recovery and economic growth. There is a funding inequality in research in the UK, and I believe it's the duty of the Welsh Government to address it.
Can I thank you, Tom Giffard, for bringing forward this debate and giving me some time? I think all of us in this Chamber agree with the notion that research, development and innovation are important drivers to economic growth and prosperity, and of course universities are fundamental to this. Now, there is good news. Wales has been noted as a consistently strong player within international and regional research and innovation, and recent statistics show that Wales has a higher proportion of academic publications in the most cited global publications compared with any other part of the UK. But, as my colleague mentioned in his contribution, there is more that we can do to support universities to boost their capabilities.
One thing I think we need is more focus. So, what particular areas do we lead on, and what areas do we want to grow in? This comment has been made about the Welsh Government’s innovation strategy. The general missions of the strategy, whilst laudable, are quite broad. By being more focused and specific we can make it easier for universities and indeed Wales to develop and then scale the new ideas we require. And we’ve seen examples of how well this can work. For example, the Cardiff capital region city deal invested in developing the compound semiconductor appliances industry, prioritising investment in research and development and supporting innovative business, and we’ve seen universities engaging with this investment, with the Institute for Compound Semiconductors being established at Cardiff University. We need to ensure that we don’t just invest in research and innovation, but we also need to create synergies between academia and businesses to ensure that their needs and priorities align with one another. Thank you.
Thanks to Tom Giffard for giving me a minute in this debate. Successful regions and countries in the world use their universities as economic drivers—Cambridge, Bristol and Warwickshire, amongst others in England, and California, Denmark and Germany, which are economically successful, benefit from their universities, such as Stanford, Heidelberg and Aarhus. We have outstanding universities in Wales. We need to use them more effectively. The development of science parks by universities and the development of university schools of entrepreneurship have helped developed economies throughout the world.
A major growth area in the world economy is life sciences. This has got to be a priority. It’s meant to be a priority of the Welsh Government, but it really does have to play a more important part. Universities can play a key role in developing further the Welsh life sciences industry. And unlike other parts of the UK, the activity investment isn’t concentrated in just one wealthy area or region. The growth of the life sciences sector in Wales spans the length and breadth of the country, from harvesting jellyfish collagen in the west to a foundation for cutting-edge infantile prosthetics in the north. If this can work, we need to make it work.
I’d like to thank Tom Giffard for giving me a minute of his time two minutes before this debate was about to start. [Laughter.] Research funding is vital to solving some of the major problems we do have in the world, and, as colleagues in this Chamber sat through the recent Tertiary Education and Research (Wales) Bill, it was evident through evidence taking that there was a focus from the Higher Education Funding Council for Wales and others that the setting up of the new commission might not focus enough of its time and resource on research. So, I'd like to ask the Minister a direct question that he might want to answer. I'd like to know what discussions you have had with HEFCW and Welsh Government officials around the setting up of the new commission, and what focus and funding they're going to put in place for medical research, because that is going to be vital if we're going to solve some of the problems that we have in the world today.
I'd like to thank my colleague Tom Giffard for allowing me a minute during this short debate today. There needs to be a sharp focus on investing in Wales's universities to stimulate the Welsh economy, and improving research and development. The new campaign and report on funding Wales's future by British Heart Foundation Cymru highlights how properly funding our brilliant universities will improve medical research and drive economic growth, two big wins and reasons to invest. As Tom Giffard said earlier, Wales makes up about 5 per cent of the UK population, however has just 2 per cent of R&D spend in the UK. We have seen the importance of research and development and innovation during the pandemic. We need to invest in research that can advance us significantly medically and in many other ways, and I'd hope, like James, that the new commission for tertiary education and research will look to address this going forward.
Welsh Government needs to support our universities so that they can become more competitive, so they can be better placed to win those external bids and future funding bids. Welsh Government's funding on quality-related research is far too low at a time when they should be investing in Wales's future. We all know that QR funding from Welsh Government pays for things that grants don't—staff infrastructure and utility bills, which I'm sure are a particular concern to them right now. And, of course, R&D directly impacts growth. So, thank you, Tom, for letting us highlight this today.
I call on the Minister for Education and the Welsh Language to reply to the debate.
Thank you, Deputy Presiding Officer. Universities are a crucial element of our economy, producing over £5 million of outputs every year. They are anchor institutions in their local areas, providing opportunities for jobs and supply chains, and diverse populations of students and staff. Their contribution is also felt across Wales and beyond through their innovative work on innovation, research and skills development.
The Welsh Government takes pride in its investment and support to our universities. We have increased HEFCW's budgets by some 82 per cent, enabling them to reintroduce innovation and engagement funding and to increase the funding level provided on quality-related research. The HEFCW funding for the academic year 2022-23 is almost £103 million. The outcomes of the research excellence framework of 2021 show the great impact that Welsh universities are having. It was judged that 83 per cent of the research work presented was world leading, or was excellent on an international stage. This research foundation encourages the spread of information, technological innovation and inward investment.
As Members will know, research in universities is funded by a mix of funding from businesses, charities, community organisations, as well as the Welsh Government, the UK Government and the European Union. I will return to the matter of European funding in due course. In this challenging financial time, it is crucial that the research and innovation sector in Wales collaborates on shared priorities, and concentrates on tackling the major challenges that we face as a nation. We have invested £2 million this year in the Welsh innovation network, which was established in order to facilitate co-operation and partnership between universities in Wales and beyond, with a broad variety of public sector, private sector and third sector involvement.
Of course, HEFCW is a key partner in investing in universities, and we will continue to work with them to see how we can develop strategically the way in which research funding is allocated in order to gain grants from other sources. I welcome the practical approach of the sector and its willingness to collaborate in order to be more competitive on a UK-wide basis. Through collaboration, we will ensure the best value from research funding from HEFCW to support innovation and research. In future, university funding will come under the new commission on tertiary and higher education. In response to James Evans, the commission will be expected to play a key role in the research system, working closely with the UK research councils. It will continue with the work of the Higher Education Funding Council for Wales on increasing the amount of research funding from the UK that comes to Wales.
Of course, it's not only through research and innovation that universities have an economic impact. They are anchor institutions and significant employers. In 2019-20, one in 20 jobs in Wales was associated with university activity. Over 21,700 jobs were provided by Welsh universities, with a further 19,600 jobs created in other industries through the knock-on effect of higher education. I am proud that universities in Wales are paying the living wage, and I would encourage more in terms of local and regional procurement. This year's growth in the number of undergraduates will have an immediate economic effect in local communities, and thanks to our progressive student finance reforms, the number of postgraduates continues to increase, translating into future researchers and innovators in the years to come, which will bring its own economic effect.
Skills levels are clearly correlated to economic growth, and we are investing in our universities to deliver part-time education, more postgraduate activity, degree apprenticeships, all alongside their core offer. We have invested in a microcredentials pilot, the expansion of medical places through the new north Wales medical school, and continued investment in higher cost subjects, such as science, technology, engineering and mathematics courses. We're ensuring that Wales is seen as an inviting study destination for international students and researchers, and also that our international partnerships are able to continue and grow. Our Taith and Global Wales initiatives are good examples of our work in this area.
I said I would return to the issue of European funding. I'm sure that everyone here is concerned about the loss of the European research and development funding. By refusing to replace these funds, the UK Government is leaving a funding gap, undermining competitiveness during a time of immense change. I am absolutely clear that we must see funding levels at least equivalent to those we received historically return to Wales. To secure greater investment and return us to at least historic levels of funding, the direct support and co-operation of the UK Government and its departments and agencies, particularly the Department for Business, Energy and Industrial Strategy and UK Research and Innovation, are needed to work in partnership on decisions impacting on Wales. The UK Government must improve relationships with the EU to bring about the UK's full participation in Horizon Europe, as agreed under the trade and co-operation agreement. Association with the programme is in all four nations' best interests, and I made this point very much over the last two days in my visits to Brussels. It is our firm view that dialogue and negotiation is the sole route to a positive outcome that would prevent material harm to the Welsh economy. As a recent Russell group report said,
'Failure to secure association to Horizon, Euratom and Copernicus will significantly limit the UK’s attractiveness as a destination for talent and investment.'
If the UK Government can't deliver what was agreed in the trade and co-operation agreement, then we must build a close, long-term relationship with Horizon Europe as a third country. This is vital to our economy. Maybe the Member can talk to his colleagues in Westminster about some of these issues.
Another area in which European funding was important is innovation, so crucial to our economic development. Under UK Government arrangements, the Welsh budget is losing over £1.1 billion of replacement EU funding. We know that schemes such as SMART expertise have been highly impactful in supporting effective collaboration between research and industry. These recognise the shared effort between parties, resulting in shared rewards, in particular the generation of intellectual property, exploited to create economic and social impact for all partners.
This Government is of the view, Dirprwy Lywydd, that universities are a core part of the Welsh economic and educational infrastructure, and we have invested accordingly, supporting research and innovation, skills development and knowledge dissemination. We've worked with the sector to deliver the real living wage, encouraged innovation and procurement and enhanced community engagement through civic mission activity. Investment in our universities is investment in people, in researchers, in support staff, in technicians, in lecturers. It's investment in our economy, in one in 20 jobs across Wales; it's investment in our students and their futures, in the skills for Wales in the twenty-first century.
I'll conclude, Dirprwy Lywydd, by restating part of my vision for higher education being one of distinctive institutions working in partnership. It is by working together that they can make the most out of the substantial investment they receive, and by working together, they will continue to make a significant contribution to economic growth.
Thank you, Minister. And that brings today's proceedings to a close, and I hope that everyone has an opportunity to take a break during our recess.