Further evidence of the mounting costs of UK visa policy

Short on time? Here are the highlights:

  • An association of UK business schools reports that non-EU enrolment in business programmes was down 8.6% in 2014/15
  • The direct economic impact of this enrolment decline is estimated at £133.5 million (US$189 million)
  • A similar study from Universities Scotland puts the economic loss for Scottish institutions at more than £250 million (US$355 million) over the last three years
  • This research is now added to the considerable evidence of an eroding market share for British providers, and to the continuing call for less restrictive policies for foreign students in the UK

It has been clear for some time that more restrictive visa policies are weakening foreign student enrolments in the UK. And now both the UK’s Chartered Association of Business Schools (CABS) and Universities Scotland have published new research showing how much damage the policies are inflicting in terms of lost opportunity and income for the university sector as well as the economy as a whole.

Business enrolments down

The UK’s Chartered Association of Business Schools (CABS) has released a report, UK Business Schools and International Recruitment: trends, challenges, and the case for change, showing that international student enrolments in university business courses are falling dramatically: down 8.6% in 2014/15 compared to the previous year. This is particularly alarming given the prominent demand for business studies among international students. According to CABS, a third of all foreign students in British universities are enrolled in a business administration programme.

The value of international students studying business courses in the UK is massive: CABS estimates that these students contribute £2.4 billion (US$3.4 billion) to universities and the UK economy. However, these expenditures can only be on the decline given that the number of non-EU students in British business schools fell from 65,825 in 2013/14 to 60,190 in 2014/15.

non-eu-first-year-students-studying-business-in-the-uk
Non-EU first year students studying business in the UK. Source: CABS

The impact of the 2014/15 decline reaches beyond business schools given that the income generated in business programmes helps to sustain other areas within universities that may run at a loss, especially in recent years as domestic enrolments have also been falling. CABS notes that the 8.6% fall translates to a “£133.5 million loss (US$189 million) to university finances and their local economies.”

Especially lucrative to British universities are post-graduate business programmes such as MBAs, which can cost up to £60,000 (US$85,000) for foreign students – yet non-EU enrolments to these programmes are also falling: they are now 4.2% lower than in 2010. The impact of such a drop-off is illustrated when one considers that more than half (52%) of full-time postgraduate-taught students at UK business schools in 2013 came from other countries.

The role visa and work restrictions are playing in reducing international student numbers in UK business schools is highlighted by the fact that UK business schools remain world renowned; for example, 15 of them are ranked in the world’s top 100 by the FT Global MBA rankings. This suggests that it is not the quality of British business education that is in question for prospective students; rather, it is the difficulty of getting a visa to study, and/or the limited prospects of working after graduating, that is causing international students to consider other destinations.

The CABS report therefore urges government to consider the destructive impact of current immigration policies on the British economy. “In 2014/15 we experienced the sharpest decline of international students starting degree programmes in UK business schools,” says CABS Chair Professor Simon Collinson. “This report shows how this is damaging, not just for business schools and the universities that rely on their income, but in terms of the jobs and communities beyond our universities that are supported by the income from international students. Although our business schools remain competitive and our universities are amongst the best in world, international students are choosing other countries for their education because our immigration regulations make this country difficult, or unattractive, to enter.”

Universities UK Chief Executive Nicola Dandridge, meanwhile, makes the point that falling international student numbers in the UK are in contrast to the gains made by other countries such as the US, Canada, and Australia. “Despite growing demand for quality higher education across the world, international recruitment figures in the UK over the last few years have not done justice to the world-class reputation of the UK’s universities and business schools. At the same time, competitor countries have seen rises in international student numbers.”

Representatives from university and business bodies including the Confederation of British Industry (CBI), Universities UK, and the UK India Business Council have all endorsed the CABS report and its findings.

“Educating the world’s top talent is a growth opportunity for the UK that we must capitalise on,” adds Neil Carberry, director of employment, skills, and public services at CBI. “It is also in our national interest to encourage the brightest and best to stay and work here where they have skills that are not readily available within the domestic labour market. We must ensure we harness the strengths of international students, including by developing a robust visa system which is not a barrier to studying at our great business schools.”

Findings from Scotland

Universities Scotland has also released research to bolster its argument that the 2012 abandonment of a post-study work visa obtained by Scotland in 2005 – which allowed non-EU graduates to stay and work in Scotland for two years – has had a dramatic negative impact on the economy. The peak body contends that scrapping the visa has drained the Scottish economy of more than £250 million (US$355 million) over the last three years, and that 5,400 international students who otherwise would have studied in Scottish institutions did not due to the policy change. Moreover, it estimates that a decline in students coming from two key sending countries alone, India and Nigeria, has resulted in a £145.7 million (US$207 million) revenue loss for Scotland.

Universities Scotland told the Scottish Parliament’s devolution (further powers) committee that its economic impact estimates are “conservative,” adding, “Scotland will have undoubtedly experienced a bigger negative economic impact as a result of this policy change in 2012. There would have been additional indirect economic benefits as a result of a larger number of highly skilled international graduates contributing to the Scottish labour market through increased productivity, increased tax contributions, and disposable income once in employment.”

Regardless of party affiliation, Scottish members of parliament have been calling on the UK government to allow Scotland to develop a replacement scheme for the abandoned post-study work visa, which many credited for having given Scotland a competitive edge among destination countries when it was introduced in 2005. That visa was in fact taken up across the UK after 2005, but then scrapped across the board.

Universities Scotland has stated the need for a change in immigration policy succinctly:

“Scotland is losing out in the recruitment of international students to Australia, New Zealand, America and Canada because the UK has one of the least competitive policies on post-study work in the English-speaking world.

  • The UK’s current student immigration policy is to the detriment of Scotland’s universities and to Scotland’s economy as international students generate over £800 million of income every year. Around half of this economic impact is in off-campus expenditure.
  • The UK’s current student immigration policy is to the detriment of Scotland’s business and industry as there are high-skill shortages across a number of sectors that are not being met by UK and EU-domiciled people.

There is support for a change in immigration policy among university Principals, staff and students, among business leaders in Scotland and across all political parties within the Scottish Parliament.”

The political import of the question goes beyond its economic impact in Scotland. The restoration of post-study work rights in Scotland was explicitly addressed (and recommended) in a post-referendum process looking at further devolution of powers in 2014.

But so far it seems the British government is not considering allowing Scotland any variance from UK-wide visa schemes. Scotland’s The Herald newspaper reported in February that immigration minister James Brokenshire “claimed that current UK-wide visa schemes for international students amounted to an ‘excellent’ offer.”

Secretary of State for Scotland David Mundell has also appeared to have recently ruled out a distinct post-study rights option for Scotland, and this in turn prompted Scottish First Minister Nicola Sturgeon to speak out directly on the issue for the first time earlier this year.

“We are deeply disappointed, and I have to say I’m rather angry, that the Secretary of State for Scotland recently indicated, without any real consultation, that there is no intention on the part of the UK Government of reintroducing the post-study work visa for Scotland,” said the First Minister. “I believe there is a consensus in this parliament and out there in Scotland to reintroduce the post-study work visa – and I think it’s time the UK Government got on and did it.”

No changes for now

Late last year, we reported on signs that the British government might be considering a move to exclude international students from its net migration reduction targets as a result of the sustained critique of current visa policy from educators and stakeholders.

So when the British Treasury set a goal to increase non-EU enrolment by 55,000 additional students by 2020 and announced a provision allowing dependents of foreign post-graduate students would be entitled to work during their stay in the UK, there was a glimmer of hope that things might be turning around. This hope was bolstered when Jo Johnson, Minister for Universities and Science, announced the government’s commitment to increasing overall education exports from £18 billion in 2012 to £30 billion by 2020.

But so far, the British government has not linked the achievement of such ambitious targets to a more welcoming visa and work environment for international students. Efforts such as those by CABS and Universities Scotland to make clear just how much is at stake – and how much has already been lost – are clearly aimed at moving this policy discussion forward in the UK.



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