A stable and globally competitive higher education sector in Northern Ireland is fundamental to future economic prosperity. To compete successfully on the global stage, teaching must be of the highest quality, the learning environment must be flexible and supportive, and the research base must be dynamic and impactful. To ensure that, the sector's financial sustainability is crucial. However, the financial position that our higher education sector now finds itself in is eroding due to the cuts to budgets that we have seen, not least in the most recent Budget that the Executive struck. There is already a funding gap between our higher education institutions and their counterparts elsewhere in the UK to the tune of £1,000 to £2,500 a student.
The annual deficit for university research funding now sits at around £9·2 million per annum. The deficit that already existed has only been compounded further by the Budget settlement, and the higher education sector is now facing a further reduction of £16·1 million in the forthcoming financial year.
Some 38% of our higher education sector's income comes from grants, mostly provided by my Department. We cannot continue to expect our higher education sector to meet local skills needs, generate wealth and job creation and compete on a global stage for staff and students while continuing to diminish our level of investment. It is my intention to have a wider discussion about the future funding of higher education locally. Therefore, I will be launching a wider debate as to how Northern Ireland can support a financially sustainable and internationally competitive higher education sector.
Does the Minister recognise that the pincer movement on the universities of capped tuition fees and reduced funding from his Department as a result of the Budget completely undermines the great leadership that we have in our universities and their attempts to ensure the quality of education? Does he agree with me that the consequence of spending the money on welfare as opposed to things like higher education will ultimately lead to more people remaining in poverty and more students having to go to England and other places to receive the appropriate qualifications, and the competitiveness of our universities will decline as a result?
In the main, I concur with the comments that the Member has made. Our universities are in a very perilous state at present. They have had their ability to generate income restricted by the decision of the Executive to freeze tuition fees. There is cross-party support for that, but we have not seen the same level of revenue investment to meet the shortfall and to match the level of investment happening elsewhere on these islands. <BR/>We also now have a situation where that structural problem is being compounded by further Budget cuts. While the situation that the Executive find themselves in with regard to the Budget is, in part, explained by the decisions or non-decisions around welfare, there are other factors regarding a number of decisions that the Executive have taken or not taken, including addressing division in our society, which are further compounding the situation. That will have major impacts on our ability to provide the skills needed by our economy, and I am deeply worried by the path that we are currently on. Indeed, if we have a lower level of corporation tax, those pressures will be even more acute.
The Member is also quite right to identify that this will impact on individuals. We will shortly see the universities, very regrettably, having no choice but to remove a number of places. That will force some of our young people to go to Great Britain to study, and not only will they have to face higher fees, but the likelihood is that they will not return to our Northern Ireland economy. Other young people may find themselves priced out entirely from higher education and will simply not take that opportunity. Those skills will be lost to our economy as well. Indeed, the life opportunities of those young people will be severely compromised.
I thank the Minister for his answers thus far. Given the budget that the Minister is forced to work with, which will, bizarrely, result in us cutting student numbers when we are trying to grow an economy, what impact does the Minister think that will have on his widening participation strategy for higher education?
As the Member will be aware, one of the steps that we have taken is to give the universities a little bit more flexibility in how they meet the targets that we have set for them for widening participation. So, they have been able to redirect some of their investments towards protecting front-line places. They have also given an assurance that they will not seek to diminish it, indeed, they will seek to improve upon the strong track record that we have. Ultimately, the biggest threat to widening participation will be the loss of places, so if we do not have the places for people to access, we will see problems with participation. That will disproportionately affect people from the more marginalised and vulnerable groups in our society. So, again, that reinforces the importance of a solid settlement for our higher education institutions and our wider skills environment in the Budget for the 2016-17 period and beyond.
Our people and their skills are our greatest asset when attracting new employers to Northern Ireland, and I am sure that the Minister would agree. Has he made any assessment as to how those cuts in university places are being received globally in terms of attracting new employment, new skills, new bases and new opportunities for our young people?
We have to have a certain degree of care in how we say this and put it across, but, in very simple terms, yes, this is having an impact. It is one thing to say that all we need to do is rebalance the investment in higher education and focus more on STEM subjects, and that is an important thing to do in its own right. However, in a situation where we are actively disinvesting in higher education and removing places — every place is of relevance to the economy and the provision of higher-level skills and, consequently economic growth — that sends out a very worrying message to potential investors.
We will seek to attract investors by saying that we are on the brink of having a lower level of corporation tax. However, if they see question marks around our ability to invest in skills, they are going to ask even more searching questions and, potentially, look elsewhere when making investment decisions if they do not have the confidence and the certainty that we can produce for them. We have done extremely well over the past number of years, but that situation is not sustainable if we continue down the same road that we are on at present in cutting our skills budgets.