Higher Education: Affordability and Quality

Baroness Finlay of Llandaff Excerpts

Thursday 2nd July 2026 Lords Chamber

[The Deputy Speaker (Baroness Finlay of Llandaff) (CB)]

My Lords, we are resuming at 3.35 pm. That means that the debate was adjourned for 34 minutes. We will add injury time to the end time, so the new end time is 6.01 pm. The right reverend Prelate the Bishop of Leicester has some time left. We will resume with his speech and then proceed with the speeches in order.

[The Lord Bishop of Leicester]

I thank the noble Baroness very much. I am not used to having quite such a dramatic effect when I speak—I did not realise that what I was saying was quite so inflammatory.

I will be brief. The universities of the Cathedrals Group remind us that higher education is not only an economic endeavour but a moral and social one. It is about the formation of people, the strengthening of communities and the pursuit of the common good. If we are serious about that vision then we must ensure that the structures surrounding our institutions—financial, organisational and relational—enable them to fulfil that purpose.

--- Later in debate ---

[Baroness Finlay of Llandaff (CB)]

My Lords, my noble friend Lady Deech is to be congratulated on securing this crucial debate. As a current pro-chancellor at Cardiff University and a previous chair of council at Cardiff Metropolitan, I suggest that this debate should not be framed as a choice between affordability for students and sustainability for universities. Why? Because a system unaffordable for students damages participation, and a system financially unsustainable for universities damages quality, choice, research capacity and economic growth overall.

In Wales, enrolments at Welsh higher education providers fell by 5% in 2024-25, compared with a 1% fall across the UK as a whole. Wales already faces participation challenges, particularly among learners from deprived communities and those needing more flexible routes into higher education. Wales has a more integrated tertiary education system, which creates an opportunity to plan across schools, colleges, universities, apprenticeships and lifelong learning, but high-quality provision is not cheap.

Cardiff University has not been alone in recording a recent underlying operating deficit. Almost one-third of the £33.4 million deficit in 2024-25 was through the loss of international student tuition fee income. To address this, we developed our academic futures strategy, which has embraced change across the whole university. As with other research-intensive universities, research has been cross-subsidised from other income streams, but, as my noble friend Lord Trees highlighted, that model is fragile when international recruitment falls.

To illustrate this, we cross-subsidised research by tens of millions of pounds in 2023-24, as well as receiving around 40% of UKRI funding coming to Wales in our major role in Welsh research and innovation capacity. A Universities Wales/London Economics analysis found that Welsh universities generated an estimated £10.97 billion in total economic impact in 2021-22, including teaching, research, knowledge exchange, educational exports and institutional expenditure. Every £1 of public funding for Welsh universities generated £13.10 of economic impact. Higher education is an investment, not simply expenditure.

Wales has some specific issues, with around only one in three young Welsh people engaging with higher education overall. However, they are more likely to return to higher education later in life, predicted at 55% by the age of 30. Welsh-medium provision is key to our identity but, realistically, Welsh-language teaching costs around £10 more per credit than English-medium provision. Better collaboration across the tertiary sector is hindered by competition law, increasing the risk of cold spots in provision if high-cost or low-recruiting subjects become financially unsustainable.

Artificial intelligence presents a systemic change to university operations. We have created master’s courses in AI, AI robotics, AI in business and AI digital media. These developing opportunities build on our high-profile research and innovation ecosystem around digital, cyber and AI, with a number of spin-out companies contributing to the AI growth zone for South Wales. AI skills will be essential to growth, with courses co-designed with industry to meet employer demand, particularly in prompt engineering and data ethics.

Cardiff University has established a continuous improvement hub to lead process redesign, following lean principles, and to make processes efficient, joined up and student focused, ultimately delivering cost savings in some areas. But we face huge changes. As my noble friend Lord Tarassenko raised, we must identify acceptable and unacceptable use of AI in an academic context. HEPI’s 2026 survey reports 95% of students using AI in at least one way and 94% using generative AI to help with assessed work, while 64% say that assessment has already changed significantly in response. Potentially, AI can improve learning support, feedback, accessibility, study coaching and productivity for both staff and students, but this must be balanced against the challenges around academic misconduct and a dangerous overreliance on AI.

Finally, as my noble friend Lady Freeman so rightly raised, there are concerns about the implications of the rapidly escalating use and emergence of AI, which currently has limited evidence to underpin it. We have three such concerns I would like to add to the list: first, widening inequalities as a result of access to paid-for AI platforms; secondly, AI’s ability to operate as effectively through the medium of Welsh; and, thirdly, the challenge of sustainably meeting AI’s energy needs and the difficulties of the green agenda.