Regulatory reform must prepare Welsh universities for Industry 4.0

The Welsh Government’s recent White Paper, ‘Public Good and Prosperous Wales’, proposes wide-scale reform to post-compulsory education and training in Wales and represents the next step in a process which began with Ellen Hazelkorn’s review of regulation last year.

At the heart of this White Paper is a proposal to establish a new body, the Tertiary Education and Research Commission for Wales (TERCW), which would take on all the current functions of the Higher Education Funding Council for Wales (HEFCW) as well as responsibility for planning, funding, contracting, quality, financial monitoring, and audit of further education and work-based learning.

The scope of such an authority is vast, and would cover everything from entry-level to postgraduate study. The White Paper explores what functions the proposed body would include, how it would be governed and structured, the potential ways that education and training providers would be registered with TERCW, and how research and innovation funding would sit in the new body.

There is much to welcome and celebrate about both the direction Welsh Government is moving in and the approach being taken. The White Paper proposes substantial changes to the oversight, regulation and funding of the entire post-compulsory sector, so as you would hope and expect of such a large undertaking, the proposals are high-level and open-ended and will be followed by a further technical consultation next year.

Welsh challenges

The time is right for Wales to look at how post-compulsory training is delivered. Wales is faced with rapidly changing skills needs, and a future economy that is difficult to predict. According to projections by Working Futures 2014-2024, 54% of those in employment in 2024 will be expected to hold qualifications at level 4 or above, which compares to only 28% who held qualifications at level 4 or above in 2004. Work by the CBI found that increasing numbers of businesses are looking to recruit high-skilled workers, from 58% in 2011 to 74% in 2016. The same report found that geographic areas with more graduates are also significantly more productive than those with fewer. Universities Wales would welcome a body that is able to respond to these challenges.

Similarly, we stand poised at the brink of a fourth industrial revolution. Industry 4.0 is a vision of the future which originated from Germany’s High-Tech Strategy. Initially focused on the ‘smart factory’, the definition of Industry 4.0 has since grown to encompass almost all walks of life. It describes a future where machines, devices and people are interconnected, communicating with each other and making decentralised decisions. The approach of Industry 4.0 and the automation it promises means that the pace of change when it comes to skills in Wales may be both greater and faster than currently predicted. This period of rapid change, both in Wales and globally, necessitates a post-compulsory sector agile in its response to the changing skills, research, and innovation needs of Wales.

Autonomy and freedom

While change is welcome, Universities Wales is pleased to see the Welsh Government reaffirm its commitment to some of the important cornerstones of higher education, including the central principles of institutional autonomy and academic freedom.

The White Paper proposes to establish a new statutory committee as part of TERCW, called Research and Innovation Wales, whose composition, constitution, membership, and functions would be specified on the face of the legislation. The purpose of Research and Innovation Wales would be to oversee and coordinate Welsh Government research and innovation expenditure with the aim of creating a more dynamic and responsive-to-need research, innovation and knowledge translation environment in Wales.

Another long-standing cornerstone of Welsh higher education is participation in the UK-wide dual support system for research. Universities Wales is pleased that the White Paper makes a clear commitment to this and proposes to maintain unhypothecated quality research (QR) funding. QR funding provides universities with basic research infrastructure and investment, including salary costs of permanent academic researchers, support staff, and equipment. The certainty and predictability of QR funding allows long-term planning and supports research in subjects for which limited competitive funding is available.

Partnership and collaboration

The alignment of the post-compulsory sector also presents opportunities to build upon much of the partnership and collaboration that is already taking place between universities, colleges, employers and training providers. Welsh universities are already committed to developing new and innovative ways of meeting the skills needs of Wales, such as the continuing development of degree apprenticeships.

But these kinds of innovative approaches that span higher education, further education and work-based learning can raise questions about how the different regulatory bodies and statutory requirements will interface with each other. It is possible that the initial proposals contained in the White Paper could be developed over the period of the consultation and beyond to enable the post-compulsory sector to become increasingly agile in responding to these challenges.

The White Paper is quite rightly high-level and open-ended, and even taking into account the maturity of the sectors involved in the post-compulsory education and training sector, it is difficult to predict exactly how the different systems and providers will operate in the next three to four years. Higher education in Wales is still in a process of implementing the regulatory framework introduced in the Higher Education (Wales) Act 2015, and the question arises of how the proposals of this White Paper fit with the regulatory framework introduced by that Act. And that is before we have even started considering the further implications of Brexit…

Welsh universities will have strong views in some areas on the way forward but the open approach of the Welsh Government, the recognition of the important pillars of Welsh higher education, research and innovation, and the opportunities the White Paper presents to meet Wales’ skills needs through potentially innovative skills delivery in partnership across the post-compulsory sector, make this a positive first step towards a new approach.