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Welsh Government’s draft budget: hard times make for hard reading

19 January 2023

IOP Wales Policy Manager Richard Duffy examines the Welsh Government’s draft budget for 2023-24, noting a few rays of sunshine in the hard rain of a dire economic situation. Will any light fall on physics?

Finance minister Rebecca Evans delivered the Welsh Government’s draft budget for 2023-24 in an economic situation one could unadventurously describe as ‘bad’; parlous public finances, invasive inflation and the legacy of pandemic spending.

The fiscal forecasts (PDF, 4.2MB) for Wales were challenging and, it transpired, accurate. The minister was unambiguous in their assessment: “perfect storm”, “one of the toughest budgets since devolution”, “hard times”.

The minister’s portent was largely carried across party lines, even when opponents were advancing their critiques. The Welsh Conservatives attacked the record of delivery but conceded the outlook is “tough”. Plaid Cymru pointed to wider systemic problems, before upping the stakes with a description of “a holy trinity” of war, energy crisis and pandemic. The sole Welsh Liberal Democrat went for the prosaic: finance minister being “the last job in the world that I would want to do”.

Before the draft was tabled, the Institute of Physics (IOP) used a submission to the Finance Committee (PDF, 297KB) to call for increases to research and teacher recruitment funding, as well as protections for key pre-16 education reforms. The commensurate allocations were indeed for hard times, but the causes we champion are the right ones and have a hardness and solidity of their own: of evidence, principle and resolve.

A welsh flag blowing against a stormy sky

Inflation and innovation

If the minister pilfered Dickens for “hard times”, then the tale for research and development (R&D) is one of two cities. Of the different tacks taken by the good ships Cardiff Bay and SW1.

Undoubtedly, Welsh R&D is disproportionately affected by the removal of EU funding streams. Structural funds were long used as ballast for Welsh innovation, but Westminster’s Shared Prosperity Fund is an inadequate replacement and uncertainty plagues the UK’s future relationship with Horizon Europe (an increasingly damaging ambiguity).

However, Cardiff has its own missteps to correct. Core research funding from the Welsh Government (via the Higher Education Funding Council for Wales (HEFCW)) has not kept pace with inflation since the 2008-09 financial crisis. The Office for National Statistics has Wales’s performance as far worse than England and Scotland’s on that measure, and the current 10.7% consumer price index rate makes the situation worse still. Another year has come and, it seems, inflation has hit research funding.

“The causes we champion are the right ones and have a hardness and solidity of their own: of evidence, principle and resolve.”

This is despite a small windfall that will arrive because of UK government commitments. To return to Horizon, UK science minister George Freeman announced significant uplifts to the 2022-23 allocation for research in England as part-compensation for the association stalemate.

Unlike the Scottish Government, the Welsh Government has declined to confirm that the Barnett consequential from that spending will also be to allocated research (and, if so, whether it will happen this year or next). Certainly, there was no sign of it in the draft budget.

Clarity on the consequential and movement on HEFCW’s future allocation are imperative amendments before the final budget in March. Adding that consequential to the projected R&D spend could mean the Welsh Government comes close to at least keeping pace with inflation. But matching inflation should be the minimum; matching the best should be the aspiration of a confident country.

Climate protesters walking with a banner at the Climate Strike March in Cardiff

Thresholds and borders

Confirmed ahead of the budget, there was also no change to the financial incentives to become a physics teacher. Like other parts of the UK, Wales has a problem with recruiting enough physics graduates into the profession. In the most recent year, just 43% of those teaching physics in secondary schools were trained in the subject. Wales has fewer physics-trained teachers than schools, with the shortage more acute for Cymraeg.

An obvious concern is the discrepancy between Wales and England for initial teacher education incentives. The financial enticement to train as a secondary physics teacher in Wales is £15,000, extended to £20,000 for ffiseg Cymraeg. A short hop across the border, and the baseline offer is soon to become £27,000, rising to £29,000 for high-calibre applicants, with another £3,000 incentive for those choosing to train in the most disadvantaged areas (a separate veterans offer is worth £40,000). The gap for further education is starker still – as much as £23,000.

Incentives are only one part of the necessary package, and more analysis is required on cross-border pulls (as the Welsh Government’s own research conceded (PDF 2.22MB)). But it is worth considering that a third of potential physics teachers in Wales have gone elsewhere to train in the last decade; and with increasing curricular divergence, returning will be difficult. It is doubly damaging if any of those departees had Cymraeg.

The cost of closing the incentive gap between trainees in Wrexham and Chester is, in the scheme of the total budget, small. And Wales is most certainly in a situation where it needs every physics specialist it can get.

A female and male physics student in the classroom smiling using scales

Hello sunshine

There were, however, some positive developments. Recognising the Chief Economist’s message about the economy and lifelong learning (PDF, 1.54MB), the Welsh Government made apprenticeships a priority with an extra £18m. More than 53% of jobs requiring physics skills do not require a degree, but an uplift in participation is needed to match demand from employers (Physics in Demand (PDF, 3.9KB)).

As promised last year, the Welsh Government also increased funding for “whole-school approaches” to emotional and mental wellbeing by £2.2m (43%). Funding is then expected to increase by another £2.2m in 2024-25. Very few budget lines received genuine increases, so the chunk for whole-school approaches is welcome sunshine in the hard rain.

Aside from the funding increase itself, it is worth reflecting on the fact that Wales has a separate budget line to explicitly recognise the value of whole-school approaches. The IOP wants such approaches to be mandatory across the UK and Ireland. The barriers affecting physics participation are as much matters of wider social inequity as they are misconceptions about the subject itself. The result is to limit potential: for young people and for Wales.

While improvements can be made to Wales’s whole-school framework – not least an emphasis on subject-specific data and inequalities – the policy aims and monies should be commended. Having a government that makes “embedding equity […] across the whole-school community” (PDF, 132KB) a national priority is the first step; the next is ensuring all settings implement the whole-school approach to equity.