Thank you. But even in terms of your assessment of whether this is going to be a good thing or a bad thing, a good impact or a bad impact, some of that inevitably in the end becomes a matter of your politics on it, so we will be as careful as we can be on that. In terms of the impact of Brexit on higher education, clearly, the significance here is about the contribution that higher education can make to Wales. So, we fund provision; we don't fund providers, technically, although obviously there's not much provision without providers. So, we are interested in the sustainability of higher education providers, but fundamentally the issue is: what does the HE system in Wales do for Wales, and what impact might Brexit have on the capacity of the system to continue to deliver for Wales? So, we know that universities make annually about £5 billion of impact; 50,000 jobs. Of course, in Wales, all of that economic impact is really very significant, and uncertainty about the relationships and the arrangements with Europe is one of the most significant issues confronting university management at the moment. That has an impact in a number of ways. We can identify at the moment the extent to which the HE sector in Wales is exposed to sources of income that are located from the EU, so EU students, structural funds, and EU research funding, and so on, from the EU. We can identify some of that, but, actually, what happens in the future is much harder to be clear about. We are beginning to see some impact in terms of applications from EU students and I'll ask Bethan to share some details on that in a moment. We're also beginning to pick up, only anecdotally, some signs that there are increasing difficulties in the UK sector, and the Welsh sector as part of that, in playing in some of the EU collaborative research activities. And that, I think, just reflects the extent to which EU partners consider that British partners might be a stable partner as we go through this transition period. We don't have data on that—that's anecdotal—but there are signs that some of those relationships are beginning to become a little bit more difficult. In terms of the financial impact of that, clearly, if it is accepted that the UK is a net contributor to the EU then, presumably, some of the money—we're almost immediately straight into politics if you're not careful—but some of the money will be available back to the UK, and the extent to which Wales benefits or not from that returned money is a function of the political relationship between the Welsh Government and Her Majesty's Government. It's not necessarily the case that Wales will always lose out in that relationship, but that will become a matter of politics. There's a broader dimension, which is about the economic impact of Brexit on the UK economy and how much tax revenue there is and all of that. I think it's very hard for us to be definitive about how that's going to play out. I think that depends on the deal and how it all unfolds over the next several years. But we can certainly anticipate some turbulence and exactly how that plays for institutions remains to be seen. We can touch later on on the extent to which they are sighted on this and preparing for it. So, in terms of recruitment, Bethan.
This is based on the UCAS applications and the report that was published at the end of June, 30 June. The European Union-domiciled applicants to Wales have decreased by 8 per cent, which contrasts with a 2 per cent increase for English institutions, and non-EU—so international students, not from Europe—have also decreased by 9 per cent to Welsh institutions, again contrasting with a 7 per cent increase in England. So, those are the signs of changes.
Okay. Could I then just ask you what you see as the main pressures on the Welsh higher education sector at the moment?
The funding position would be the main pressure. The recommendations made by Sir Ian Diamond in his review of higher education funding and student finance are in the process of being implemented, and the changes to the student finance arrangements will take effect from this September. However, the recommendations for re-establishing funding at Welsh institutions are expected to take quite a bit longer. That funding, when it returns to institutions, is intended to re-establish funding for higher cost provision, both full time and part time; reinstate funding for innovation; and maintain, at the very least, the research funding in real terms. Universities, in the meantime, are trying to minimise the cost reductions that they're making in order to maintain the infrastructure, so that when the funding comes they can get the best value out of it. We have announced our funding allocations for 2018-19. For the research and teaching grant, though, we are still funding at a lower level—£12.5 million less—then the starting point for the Diamond report, the 2015-16 starting report. But we expect to be able to start introducing funding from 2019-20 to make a start on implementing Diamond. And it's probably important to note that the Diamond recommendations predated Brexit, therefore the challenges introduced by Brexit are in addition to those that the Diamond report was addressing. The other pressures relate to student recruitment. I mentioned the EU and international students. There is also the start of a reduction, both in Welsh-domiciled and English-domiciled applications to Wales. Enrolments are obviously the key important number, which we'll see later. And the other pressures include pay and pension costs, not least the issues around the universities superannuation scheme pension fund, where there's potentially a significant increase in cost. Increased student expectations for modern facilities and infrastructure bring a requirement for capital expenditure and borrowing, which bring their own pressures. And finally, the uncertainty about potential consequences that could arise from the review in England of fees and funding—the Augar review.