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Study estimates that UK immigration policy has cost billions in lost exports

Short on time? Here are the highlights:

  • An analysis of the economic impacts of UK immigration policy puts the value of lost education exports at between £8.2 and £9 billion for the five years between 2013 and 2017
  • The study notes that the actual economic loss is even greater, once indirect impacts, tourism spending by the students’ family and friends, and tax effects are factored in

It is well known that international students generate substantial economic benefits not just for education institutions, but also for local and national economies. For example, the value of international students in Australia is now estimated at more than AUS$30 billion (up by 22% over 2017), while in Canada, it’s more than CDN$18 billion with growth of 42% between 2015 and 2017 alone. This growth is directly related to increases in the number of international students studying in Australia and Canada over the past few years.

In the UK, meanwhile, the export revenue generated by foreign enrolments has been limited by a flattening of growth in non-EU enrolments amid a policy environment that has restricted post-study work rights for international students. British policies widely seen to be unwelcoming to international students have now been in place since 2012.

A new Universities UK study looks at what kind of economic impact an increase in international students over the period 2013–2017 would likely have had on the British economy. Its calculations show that the £22 billion that new international students were estimated by London Economics consultancy to have injected into the British economy in 2015/16 could have been much higher.

The study calculates lost export earnings – as well as lost opportunities for job creation in the UK – according to an analysis of two scenarios:

  • Scenario #1: Non-EU student growth in the UK for the period 2013–2017 continues at the rate observed between 2008–2012, prior to immigration rule changes.
  • Scenario #2: Non-EU student growth during the 2013–2017 timespan mirrors the growth seen in Australia in this period. (The Australian comparison was used because Australia offers a striking contrast to the UK in terms of its immigration policies affecting international students. In Australia as well as several other countries, immigration policies are a pillar of student recruitment strategies.)

According to the first scenario, the analysis estimates that the UK lost £1.5 billion in 2015 and £3 billion in 2017 alone. The cumulative estimated loss across the five years totals £8.2 billion. This scenario assumes that there are 103,000 fewer non-EU students in the UK in 2016/17 than there would have been if the average growth rate between 2008 and 2012 had continued.

According to the second scenario (in which growth mirrors Australian growth over the same period), the estimated cumulative loss over the years 2013–2017 is even greater: over £9 billion, with a £1.3 billion loss in 2015 and £4.5 billion shortfall in 2017. This scenario assumes that there are 153,000 fewer non-EU students studying in the UK in 2016/17 than there would have been if the growth rate across the five years had matched that of Australia.

A broader impact

The Universities UK analysis factored in only tuition fees and the living costs paid by international students in its calculations of loss. But these inputs are not the only contributions international students make to the economy. Other benefits include job creation, tax revenue, and the money spent by family and friends when they come to visit students in the UK. Using data incorporating these inputs collected by Oxford Economics for the year 2014/15, scenario #1 estimates a total loss of £3.4 billion in that year on top of the money lost in tuition fees and living expenses paid by international students. Under scenario #2 (in which growth in international student numbers matches the growth Australia achieved), the additional loss amounts to £3.1 billion.

To make it even more concrete, Universities UK notes that “Under scenario 1, the lost tax revenue alone, £460 million, would have paid the wages of 15,000 additional nurses or 12,000 additional police officers.”

Stem the tide

The Universities UK analysis offers a stark reminder of how much is being lost as a result of current immigration policy: tens of thousands of students, billions of dollars, thousands of jobs, not to mention talent, cross-border research ties, and market share lost to other destinations such as Australia and Canada.

The report concludes:

“Universities UK believes that to ensure this loss does not compound into future years a cross-governmental International Education Strategy is required … [that] must include policy related to student migration which is on a par with other competitor nations. We do not believe that the recommendations recently made by the Migration Advisory Committee go far enough in relation to the post-study work rights of international students.”

The Migration Advisory Committee’s recommendations disappointed many in the UK’s international education sector by dismissing the idea of removing international students from net migration targets. It made only modest recommendations regarding any extension of work rights for these students.

Earlier this year, Universities UK advanced the idea of introducing a Global Graduate Talent post-study visa that would see international graduates sponsored by their institutions for a period of two years. The association repeated a call for the creation of such a visa in the report summarising the analysis, saying that it could “ensure the UK remains competitive … and does not continue to lose the levels of export value and economic benefit highlighted in this briefing.”

Commenting on the analysis of lost potential export earnings due to depressed international student enrolments, Alistair Jarvis, chief executive of Universities UK, said,

“The UK could and should be doing much better than this. To keep up with competitors, the UK government needs to promptly develop a reshaped immigration system that recognises the value of international students as temporary visitors and tells the world that they are welcome here. This should include improved post-study work opportunities.”

For additional background, please see:

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