Thursday, 28 February 2013

Immigration is down. So are exports.

[This article originally appeared in City AM on Friday 1 March]

Wednesday's GDP figures confirmed that the UK economy shrank in the last quarter of 2012 – in large part because of the weakness of exports. So the government’s strategy of generating growth by rebalancing the economy towards investment (which is also weak) and exports is far from on track. But the government is at least making progress towards its objective of reducing immigration to the “tens of thousands,” with Wednesday’s figures showing net migration is down to the lowest level in four years. It was duly trumpeted as a policy success.

But could these two facts be related? Well, yes. The reduction in migration largely reflects a fall in the number of foreign students. And how do foreign students show up in the national accounts? As UK exports, of course. The Department for Business estimated that in 2008-09, education exports were worth roughly £15bn. And that’s not just tuition fees, nor does it just benefit the education sector. If an Indian student buys a Marks and Spencer’s ready meal in Sheffield, that’s a UK export to India: real money, generating jobs and growth, and improving the trade balance.

The government points to the fact that the reduction has come in the further education sector – where the number of visas issued fell by 62 per cent – not in those coming to universities here. So we are still getting the “brightest and the best”. But when it comes to exports, this makes no sense. We don’t apply this sort of quality threshold in any other sector. And no evidence suggests levels of fraudulent abuse high enough to warrant a 62 per cent drop. So it appears that many genuine students have been turned away.
Moreover, while it is true that the number of foreign students coming to universities is broadly flat, the number extending their visas (to go on to more advanced study, for example) fell by 10,000. So we have fewer foreign students at our universities, at a time when the global market is growing. Should we regard this as a policy success, as the government appears to? As Sir Andre Geim, the Russian-born Nobel prizewinner and professor of Physics at Manchester University put it, the identification of graphene would “probably not have happened if I had been unable to employ great non-EU PhD and post-doctoral students”.
It is simply not credible for the Prime Minister to claim that the UK is “open for business”, and for his chancellor to say that he is prepared to take the “difficult decisions” to boost growth, while at the same time making the primary objective of immigration policy the reduction of net migration. Immigration, like trade, can help boost productivity and growth over the medium to long term in a number of ways. It should therefore be central to our growth strategy. That will require a change of attitude and mindset on the part of government and policymakers. If we want to be serious about growth, we need to be positive about migration.


  1. If the Indian student is serving at the till or stacking the shelves or their tier 4 dependent spousei is working, then spending their earnings is not an import.

    As far as I am aware there have been no changes to the Immigration Rules that affect PhD students. Maybe you should look for more plausible reasons for this small fall like rapidly rising fees and falling subsidies.

    Again I ask, how would you change the Immigration Rules?

  2. "Again"? The earlier blog said quite clearly: "restore PSWR". Try reading it properly. But UUK has lots more detailed stuff about the damage done by recent changes, so I suggest you ask them for more detail.

    1. You mean your 9th Jan blog (and not yesterday's).

      The end of the tier 1 post study work route does not stop students coming here. It was a work visa not a study visa.

      As University UK say, it was particularly useful for students that needed to work in the UK after graduating to pay their fees. Again this group could hardly be considered an 'export'.

      Overseas students can still work in the UK after graduating under tier 2, but that has the disadvantage that they must get a graduate level job (and not unskilled work). As recent UK graduates, their tier 2 visas do not count towards the cap and there is no need to pass any resident labour market test (i.e. they can displace a settled UK worker).

      You know all this already, don't you?

    2. The existence of PSWR was a significant factor in attracting foreign students, particularly since our main competitors have similar schemes. So of course its abolition is likely to reduce student numbers. But you knew that already, didn't you?

      As I said before, if you want to try to make a coherent argument, rather than fairly random assertions in this little-read corner, why don't you actually write something yourself? Barriers to entry in blog writing are low.

    3. It is sad that these non profit making charities feel they need to compete internationally by offering unconditional work visas to attract students.

      Fortunately, the replacement of the PSWR does not appear to have had a big effect as HE numbers are up. FE numbers have fallen a lot but they could not use the PSWR anyway.

      What everyone has been saying turns out to true despite your apparent doubts. Most Foreign HE students come here to study and getting some preferential work visa is not important.

    4. No idea what the relevance/meaning of the first sentence is. On the second, wrong:
      Let's conclude this conversation, please: don't want to clog up my blog with long bilateral exchanges. If you write a blog yourself, happy to link to it, or you can email me.

    5. I'll stop "clogging up" your blog, but your link confirms what I said rather than proving it "wrong":
      "The overall number of non-EU students enrolled on courses in universities in 2011/12 was up by 1.5% compared to the previous year."

      It does suggest that, within the overall small increases, one group decreased by a very small amount, but "Universities UK is NOT arguing that numbers are falling off a cliff", because, let's face it, they are not, and all the previous scaremongering has made them look very silly.

  3. actually there is substantial evidence following the introduction of interview-less processing, that people entering under the tier 4 route were abusing it and upon interview many would be refused due to lack of evidence they could support themselves or lack of language skills


    UK is re-introducing interviews [partly] which is actually merely going back to quality thresholds that used to be in place. It is perfectly reasonable to expect students to be able to demonstrate adequate language skills and the ability to maintain themsselves, and this is not a new requirement.

    As for whether the falls in applications and extensions reflect tightening of the system [interviewing is being rolled out again] or higher fees, or a weak economy thereby attacting fewer students whose real intention is to work [whether legally or not], or falls in research funding in some areas [due to budget cuts], you are right that it is likely to be a mixture.

    But remember it is the institutions which set the fees and which make themselves more or less attractive and which choose to find [or not] the non-EU post grads, not the govt. The govt only affects applications directly when it closes down bogus colleges or restricts those who fail to do the paperwork properly like London Met. The govt does not restrict the numbers of applications in any other way, these are based on how many people the education institutions choose to sponsor

    So if applications are down it is either due to a less competitive education sector or govt action on bogus colleges.

    So you are right the falls may not be entirely the result of govt successful policy and may well reflect weakness in the [overt and covet] economy also; but that's not a reason to accept immigrants [whether students or others] who cant maintain themselves or whose language abilities are less than they claim on paper. Economic policy objectives clearly do not and should not trump all other policy objectives

  4. ps you may have missed the Home Secretary's speech mid-Dec 2012 which states
    "In future, all PhD students who have completed their studies will be allowed to stay here for longer to find skilled work or set up as an entrepreneur within the rules. From April, all such students will be allowed to stay in Britain for twelve months after they have completed their PhD before having to find a job or start a business."

  5. There is a lots Benefits--
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