How Tory immigration populism is costing us £3.4 billion

Changes to the student visa system will cost the economy billions during a period of sluggish growth, and will affect all regions of the country.

Foreign students (foreigners generally): Not welcome in Cameron’s Britain

Awale Olad is a public affairs officer at the Migrants’ Rights Network

Today’s figures of 0.2 per cent GDP growth show the UK’s climb out of recession to be uncertain and sluggish. It seems the Home Office could not have timed worse the release of a damning new report from the home affairs committee on the consequences of the changes to student visas. It’s official: these changes are set to cost the economy £3.4 billion; a disconcerting revelation for the embattled George Osborne who also has to monitor the euro-crisis and the fiscal turmoil in Greece.

The over-arching message from today’s report is that the government needs to seriously consider the growing challenges of the UK’s economy and the impact of restricting foreign students on income generated by research and innovation in higher education – issues which it thinks have not yet been properly considered.

The UK’s economy is bolstered by the funding stream of overseas students, an industry “worth up to £40 billion” and provides a direct contribution of “up to £12.5 billion” annually to revenue. There is no denying the government faces some considerable challenges in reforming the current immigration system and trying to balance an economy in freefall.

But major restrictions on foreign student visas announced earlier this year have created real panic across the education sector about loss of income. Today’s report suggests economic contributions by foreign students will be cut drastically, producing widespread reductions in net income across the Treasury’s coffers.

These concerns are not new, but has the government taken them seriously yet? Back in March at a meeting of the All-Party Parliamentary Group on Migration (APPGM), a group of MPs and experts warned that reforms of such magnitude will have a negative impact on higher education institutions and on wider economic growth.

Following the meeting, APPGM chair Jack Dromey MP, asked the home secretary whether the economic impacts of restricting international students would be considered – and received the response that the government had no intention of doing so.

It seems the dismissal of these concerns has now come back to haunt the government. In particular, the regional economic impacts of restrictions on international students look to be significant and could endanger government efforts to rebalance regional economies.

Unlike other core British industries such as manufacturing, IT and financial services – which tend to concentrate economic growth within particular regions – income from international students contributes to all the regions and devolved countries of the UK.

Many further and higher education institutions provide wider employment opportunities, generate income for local industries and the private housing sector, and offer a wider boost to local economic dynamism within their region. Education providers in the UK argue they are able to consolidate their role as hubs of innovation and economic regeneration by drawing upon international talent and revenue.

As such, regional economies are likely to be hit the hardest by restrictions on international students which are viewed as short-sighted and counter-productive. The Scottish home affairs committee sees these changes as potentially deterring “genuine, high-calibre” students from applying to study in Scotland.

The failure to ask the government’s own immigration gurus, the Migration Advisory Committee, to assess what damage will be dealt to the economy as a result of curbing overseas students displays a disregard of what immigration experts have to say on the issue.

If it had done so, these issues and potential solutions could have been provided earlier in a cost-effective way, giving the government political ownership on the matter and better planning for impacts on national and regional economic growth.

Sadly, however, this looks to have been a missed opportunity.

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  • Penny

    What absolute rubbish this report appears to be. The only loss is to private people who charge more at every opportunity. If there aren’t the foreign students, who are so rich they can afford to pay very high prices, then it means that prices, including rents will have to come down to the price that the poorly paid britain can afford. Now think about that & see what a brilliant idea it is to reduce their numbers.
    Also why should our universities be full of foreigners – I never wanted them when I was at college and found them to be a complete pain in the backside, they took up so much time with asking for explanations as they couldn’t understand anything. Keep them out now and forever.

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  • Kevin leonard

    All because the knee jerk reaction to the popular vote saying Immigration was a priority for most voters. It was unfortunate that none of the politico’s asked which kind of immigration. Many would say it is not so much the overseas students and workers from the middle to far east they are concerned about but more so the influx of migrants from the new EU countries because they know there is nothing any government is able to do to reduce them let alone stop them.

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  • Leon Wolfson

    I’ve seen two university’s projected figures, developed in-house by their own economics department professors (and lawyers), for the effects on their own revenues. They’re firm enough that both universities are acting on them as effective budget cuts.

    I cannot, of course, share the precise figures. But they’re not good.

  • john

    not surprised at all. And it’s not like people are upset that we are losing advantage in one of the few industries where we still punch above our weight. If numbers do drop, we can expect that some Northern post-industrial towns will again become ghost towns. god knows what is going to happen to the real estate markeets and entertainment industry if there are no rich foreign students to pay for it… This is shortsightedpolicy that will have a massive influence on the whole of the UK.

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  • Leon Wolfson

    “Entertainment” in many fields is already screwed, john, to the point where you’re wasting your breath on much of that.

  • John

    True, but having spent my student days in York and knowing how much the Uni contributed to the local economy, it is hard to imagine what would have been left of the town if you were to cut the numbers of the international students. Not just them, but their parents visiting, etc. As far as I’m concerned that alone was 25% of tourism.

  • Richard

    “it means that prices, including rents will have to come down to the price that the poorly paid britain can afford.”

    Dream on Penny in your LA La Land of deep economic ignorance.

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  • Suzie

    “it means that prices, including rents will have to come down to the price that the poorly paid britain can afford”

    Is that a joke? Or have you completely missed the news that university tuition fees for British students will now be up to £9,000? The universities have to make up somehow for the loss of revenue caused by reduced numbers of high-fee paying international students, amongst other cuts, and who is paying for it? The British students.

    Also, on a side note to your ridiculously prejudiced comment about international students ‘not understanding anything’; many of my ESL friends speak and understand English at a much higher level than plenty of native speakers. Stop being so narrow-minded and pigeon-holing all ‘foreigners’ as some sort of plague upon British society.

  • Leon Wolfson

    Suzie – Yup. I’ve just had my contact hours at one university cut by 20% (which WILL mean more “self-study” weeks, on top of the existing ones which never existed when *I* went to University), and they’re getting the permanent staff to spend 70% rather than 60% of their time teaching (as opposed to research and business-related activity).

    It’s slashing the future, but they genuinely have no choice with the budget cuts.

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