Price of the immigrant crack down: UK risks billions in student funding

The UK is risking billions of pounds in funding for the higher education sector following a crack-down on foreign student numbers, according to new research.

One of the central problems stems from a change to student visas. Despite warnings from business secretary Vince Cable and university chancellors, Theresa May scrapped a scheme allowing non-EU students to work in the UK for a couple of years after their study. That visa rule, together with the UK's reputation for educational excellence, was central to why many foreign students opted to study here.

Today, the all-party group on migration found the decision to scrap the scheme could be losing the UK its foothold in the international student market. International student numbers fell for the first time in 2012/13, despite growing international demand.

As Conservative member Richard Bacon said:

"Higher education is one of our country's leading export success stories, increasing our soft power and helping the UK shape the world of the future. But the government's current approach to post-study work and student migration policy is jeopardising Britain's position in the global race for talent. We are already losing out to countries with a more sensible approach such as Australia, Canada and the United States."

Australia and the US are interesting examples, because they've been where we are now and managed to turn it around.

After September 11th, the US radically tightened up its immigration system. Overseas students consequently fell by 3.5%. Australia, which also has a very high-pitched debate over immigration, saw falling levels of enrolment after it made changes to the student immigration system. The value of its higher education exports fell by five per cent between 2010 and 2011. It is expected to take it a decade to fully recover.

The image and reputation of Britain's universities help make it the second most popular destination for foreign students

A similar five per cent drop in the UK higher education export would equate to £350 million per year.

According to the LSE, each foreign student is worth £22,870 per annum to the UK – £8,204 in tuition fees and £14,666 in non-tuition expenditure.

All in all, the UK stands to lose £2.4 billion across the education sector between 2012 and 2024 if this initial dip is indicative of things to come.

And there's little reason to expect otherwise. The drop in students gaining work post study has fallen dramatically by 88%. That was exactly what the Home Office intended. But the effect on student numbers appears profound. Between 2010 and 2013 there was a 2.8% drop in foreign students in postgraduate studies. It was particularly significant among Indian students, who fell by 32%; Pakistanis, who fell by 22%; and Saudi Arabians, who fell by 31%. For comparison, Saudi Arabian enrolment at US universities increased by over 50% during 2011/12.

This is particularly grave for so-called Stem subjects – science, technology, engineering and maths. As the Russell group of elite universities has consistently pointed out, the income of these subjects doesn't cover their cost, meaning UK and EU students are taught at a loss. International students are financially vital to their continued viability. Inevitably, they have suffered under the government crackdown. The number of new international entrants to Stem subjects fell by almost eight per cent in 2011/12.

The price of this policy will keep rising higher. Overseas students are currently worth £5 billion to the UK, but are expected to be worth £16.9 billion by 2025.

Foreign students are each worth £22,870 per annum to the UK

It is baffling to many people overseas why the UK would wish to cut off its nose to spite its face in this manner. As professor Andrew Hamilton, vice-chancellor of Oxford, said recently:

"Whenever I travel in the world, particularly in China and India, one question persists: 'Why has the UK adopted a visa system so hostile to student entry?'"

The dip in foreign student numbers came amid a great period of growth for British education. The UK was the second-most popular destination for foreign students in the world when the coalition came to power (after the US). There wasn't even any public discontent. Research by Universities UK and British Future showed just 22% of the British public wanted a reduction in student immigration numbers. Six in ten said the government should not reduce numbers even if it limits their ability to cut immigration overall.

But overseas, the coalition message has been heard loud and clear. Many feel they are not welcome here. They have been included in the immigration numbers, which suggests they are a problem which must be fixed. They have been denied the opportunity to work after they leave education, sending a steady steam of wealthy, well-educated dynamic young people to national competitors. And they have been made aware, to a level UK newsreaders probably are not, of the sometimes draconian treatment which greets those who come here.

These events are barely covered in the UK, but they are overseas. Take this story, which we broke last December, on the 50,000 students deported without due process, accused of fraud with no evidence and sent back home. Or the 2,000 students suddenly facing deportation after London Metropolitan University lost its Home Office licence.

Those students affected by these events do not have a pleasant story to tell. They are often arrested in dawn raids using several vans and quasi-militarised police before being detained for days without knowing when they'll be released. While this ugly underside of UK immigration policing is rarely covered in Britain, it is overseas.

The foreign student issue is ultimately one of Home Office impotence. The department has been legally unable to restrict EU migration, so it is forced to hammer down student numbers, which it can control. But the policy is an act of sabotage against a UK success story. Unless there is a change of heart soon, the damage could last for decades.