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My Lords, it is a pleasure to move this Motion. I declare my interests as professor of government at the University of Hull and chair of the Higher Education Commission, a body that draws together academics, parliamentarians and figures in business and education. The commission has just concluded a study of this very topic and will be publishing its report in September.
The export of higher education refers to transactions between UK residents and non-residents. In economic terms, it covers the income from overseas students studying in the UK as well as the income from students studying at overseas campuses and centres established by UK institutions of higher education. The economic benefit to the nation is enormous. However, the benefit extends beyond the economic to the educational and the political, and I shall address each in turn. As an export, higher education is a success story, but there are challenges. On the surface we may look in a strong position, but that position is under threat. I wish to identify the problems and what steps may be taken to protect our world status.
Higher education contributes massively to the British economy. It is not just the fees paid by students who come to the UK to study but also the money spent while here. There are different models for estimating the contribution to the UK economy. The recent analysis by the Higher Education Policy Institute and Kaplan International Pathways estimates that the net impact of a cohort of first-year international students over the period of their study is in excess of £20 billion. Given various omissions such as tax and national insurance contributions, the report concedes that this figure is likely an underestimate. In terms of transnational education, TNE—that is, the delivery of programmes in a country outside the UK—there has been a notable increase in the student intake. According to DfE figures, the revenue brought into the UK in 2015 from TNE was £1.7 billion, a substantial sum although a fraction of the income achieved from overseas students in the UK. Our universities need overseas students and so do the towns and cities in which universities are based. Income contributes to local employment. Spending by overseas students may make the difference between success and failure of commercial areas adjacent to university campuses.
Whichever model one takes, it is apparent that higher education is a major exporter, benefiting the UK economy significantly. This is recognised by the Government, who are keen to see the value of international higher education reach £30 billion by 2020. However, as we shall see, they are pursuing policies that militate against achieving that goal rather than facilitating it.
The value of overseas students studying in the UK is not just economic. Overseas students bring a range of experience and perspectives that can add value to courses. That is a good in itself, but their presence is essential to making some courses viable. That is especially the case at postgraduate level. According to HESA data, in 2016-17 more than 40% of postgraduate research students were from overseas. The majority of all postgraduate research students in physical science STEM subjects are non-UK citizens. There is a marked dependence in some of our leading research universities on overseas postgraduate students.
The benefit is also political. Studying in the UK builds up a body of good will towards the United Kingdom. The export of higher education is arguably the biggest contributor to UK soft power around the globe. The Committee on Soft Power and the UK’s Influence, in its report Persuasion and Power in the Modern World, observed that students,
“gain exposure to ‘UK norms and cultural values’”,
and are overwhelmingly,
“‘positively orientated’ towards the UK”.
Graduates of UK universities are to be found around the globe, occupying leading positions in business and government. They constitute a valuable and, indeed, unmatched resource for the United Kingdom. However, there are problems. One should not be misled by the increase in enrolment in recent years. We are already losing out to our competitors—they are outstripping us in the recruitment market—and the situation is likely to get worse in future years. It depends how you crunch the numbers, but it is possible that Australia has already overtaken the United Kingdom as the number two destination, after the United States, for overseas students. There are clear indicators that we are beginning to lose out to the USA, Australia and Canada, which are aggressively recruiting overseas students.
Between 2011-12 and 2015-16, enrolments in the UK increased, but only by 0.8%. In the same period, global mobility grew by 16.6%. An increase in enrolment by Chinese students has masked a fall in students coming from other nations, not least India. Since 2006-07, there has been a 45% fall in enrolment by Indian students. Dependence on Chinese students is not sustainable, given that the 18 to 22 year-old population in China is set to decline over the next decade. Chinese universities are also developing and may attract students to study at home. In short, unless action is taken, we are going to see our competitors further outstrip us and we are going to jeopardise the benefits that derive from the export of higher education. That is a threat to the economy, our HE system, and our global influence.
What, then, are the reasons for failing to keep up with our competitors? The excellent Library briefing for the debate highlights three principal issues. The first is including overseas students in the migration figures. We are told that there is no cap on the number of students who can be recruited, but they are included in the migration figures, which the Government are committed to reducing. Two justifications have been offered by the Home Office for keeping overseas students in the migration figures. One is that it is complying with the UN definition of migration. That is not a compelling argument; it is not the universal practice to adopt that definition and there is no obvious political case for doing so. Survey data show that the public recognise the difference between migrants and overseas students and are not opposed to separating them.
The second reason relates to overseas students as consumers. A few years ago, I was chairing a meeting of the All-Party Parliamentary University Group addressed by the then Immigration Minister, who argued that students should remain in the migration figures because, like others who moved to the UK, they consumed health and other public services. However, as a member of the audience immediately pointed out, the difference is that students pay to be here. Another difference is that they go home after they have graduated. Again, a few years ago I met some ambassadors from Gulf states who were keen to make the point that 100% of their young people who came to study in the UK returned home after graduating.
The second problem listed in the briefing is, arguably just as, if not more, important than including students in the migration figures, and that is in the form of post-study work visas. The 2012 changes have impacted upon recruitment, putting the UK at a notable disadvantage in the international market. The modifications since have caused as many problems as they have solved. Our competitors offer much more attractive opportunities to undertake post-study work. As the report cited in the Library briefing concludes, the changes in the visa arrangements have impacted undergraduate recruitment negatively and significantly.
Then there is the third problem: withdrawal from the European Union. This has created uncertainty as to the position of non-UK EU students who are already in the UK and those who may be contemplating applying. The Government are alert to the problem, but it is not clear how they propose to ensure that we remain attractive to EU students. The Migration Advisory Committee has been commissioned to provide an assessment of EU and international students. The Government White Paper released last week refers to reciprocal arrangements to,
“facilitate mobility for students and young people”,
but it is not clear what the position will be for students from EU member states wishing to start courses at UK universities from 2020 onwards. The Government recognise the challenges, but it is not yet apparent how they intend to meet them. The longer the uncertainty, the greater the difficulties for UK universities in attracting students from 27 nations to study in the UK.
What, then, are some of the steps that can be taken to protect and enhance the export of higher education? There is a case for working cross-departmentally to develop and implement a strategy for enhancing the export of higher education. There need to be improved post-study work options and streamlined visa processes to put us at least on a par with our competitors. We should roll out an improved tier 4 pilot, based on recruiting from target countries. The current pilot has caused significant problems, suggesting that some universities are to be trusted and others not. We should reduce the burdens placed on tier 4 sponsors. There is also a strong case for the UK to set a target for international student intake, as other countries have done, and measure progress against the target.
Essentially, a fundamental culture shift on the part of the Home Office is required. There needs to be a major enhancement of the Britain is GREAT campaign by the Department for International Trade, the British Council and the Department for Education to ensure that the message goes out that the UK not only welcomes international students, but that it values them and is prepared to match its competitors in generating an attractive environment in which to study. I have also previously suggested that more of DfID’s budget should be given over to providing educational vouchers that would enable qualified students from developing countries to study at UK universities. After graduation, the students would go home to help the development of their country. This constitutes an investment in the home country, clearly of benefit to that country, as well as of benefit to UK higher education and the UK’s global reputation. Chevening Scholarships provide a valuable example of what we can do. It would also be a plus for DfID in that there would be a clear audit trail.
It will be helpful to have confirmation from my noble friend Lord Younger that the Government are alert to the problems—the serious problems—and to hear from him what concrete plans the Government have to create a strong, attractive environment for those who wish to benefit from higher education in the United Kingdom. How exactly will the Government ensure that we match the United States, Australia and Canada in recruiting overseas students, to the benefit of the British economy, UK higher education, and the United Kingdom’s global influence? I beg to move.