Southampton University’s website states that they offer £10K golden hellos to Southampton undergraduates staying with them to do a PhD. Do people think that this will make departments more likely to discriminate in favour of their own students because they qualify for extra funding? Do the big 5*s generally allocate studentships internally anyway?

Things may vary from subject to subject, but most people (particularly the 5*s) want to attract the best students irrespective of where they come from. A good PhD student will help push forward their supervisors research. When academics teach a high flying undergraduate they will be keen to recruit them for a PhD, but they'd be just as keen to recruit a high flyer from somewhere else. The Golden Hello scheme at Southampton appears to have been designed to help the university hang on to some of its very best students. I am not sure if this scheme is running this year.

The Golden Hello scheme at Southampton was run for one year only to cellebrate the universities 50th aniversary.

Damn - i missed that one!!

The subject of internal applicants was dealt with in another thread i believe. Its a touchy subject for sure but its only natural that there are going to be lots of internal students who want to stay in very good departments, but dont let it put you off, you're just as good as them.