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How might changes in student visa provision affect UK immigration levels?

Net migration to the UK has reached record highs. International students are included in the immigration statistics and the government has implied it may seek to limit their future numbers. More research is needed to design effective policies on student visas and post-study work rights.

In the year to June 2022, the number of people who immigrated to the UK exceeded the number of people who emigrated to other parts of the world by 504,000 – that was the country’s net migration for the period. The figure is far higher than the previous record of 330,00 (Office for National Statistics, ONS, 2022).

The single biggest factor behind the rise in net migration was the new visas open to Ukrainians and British National (Overseas) passport holders from Hong Kong. These two routes represented almost half (45%) of the increase in visas granted between 2019 and the year ending June 2022 (The Migration Observatory, 2022).

But it is the increase in the number of people coming to the UK on student visas that is a possible target for government crackdown. Prime minister Rishi Sunak has indicated that to limit student migration, barriers to students being able to bring family members to the UK with them may be introduced and admissions to ‘low-quality’ degree courses could be reduced.

There is a long-standing lack of research on this issue, which needs to be reversed to understand what’s happening and to guide effective policy.

How have trends in student migration changed?

The number of study visas issued to non-European Union (EU) citizens – both main applicants and their dependants – over the last 15 years is at record-high levels. The rise in the number of dependants is particularly striking, now representing 17% of all visas. Previously, this figure was under 5% (see Figure 1).

Figure 1: Number of non-EU study visas issued, 2006-2022

Source: UK Government

The rise in student visas issued has been faster than anticipated. Indeed, the government hit its 2030 target for the number of international students set out in its International Education Strategy a decade early.

It is likely that much of the recent and rapid increase has resulted from the introduction of the graduate visa, which was launched in July 2021. This grants graduates of UK institutions and their dependants at least two years of unrestricted work rights in the UK.

A post-study work visa existed in some form from 2004, but this route was closed to most graduates in 2012. In 2011, just over 40,000 such visas were granted. In contrast, in the year to September 2022, there were over 70,000 graduate visas approved, and this number is likely to increase.

What is driving student migration?

Presiding over record high migration, the government – looking to reverse this trend – is now reported to be planning a clampdown on student visas. The details remain unspecified, but it has been suggested that the response may include barriers to families accompanying students and cutting places on ‘low-quality’ degree courses.

But for those in higher education and their supporters, any such plans have been derided as ‘mindless’. In their view, the growth in numbers is a cause for celebration as a rare example of a part of the UK economy that can be regarded as world-class. The expansion is also a major source of export earnings, an important source of funding for educating domestic students and research, and a contribution to the levelling-up agenda given that universities are spread throughout the UK.

While all these claims are true, there are still some causes for concern about the way in which student numbers have increased in recent years.

An arbitrary cap on the number of international students – motivated by a desire to limit the headline net migration figures – is a bad idea. Understanding what lies behind those numbers will result in better decision-making.

If student numbers are rising, then net migration will temporarily increase (while these students are studying), but the long-run effect will be much smaller. When the country previously had a post-study work route, only about 20% of international students stayed in the UK long-term (Migration Advisory Committee, MAC, 2018).

So, for example, if there were to be 500,000 visas issued a year, this would contribute about 100,000 per annum to net migration. This isn’t insignificant, but is much lower than the current headline figures.

One reason that international students are attracted to the UK is the world-class education they can find in many institutions. But it is important to realise that universities are not just selling an education, they are also selling an increased opportunity to work in the UK (OECD, 2022).

This was the case to a limited extent prior to the introduction of the graduate visa, when graduates had to find an employer willing to sponsor a work permit to stay in the country. But the balance needs to be right.

With the graduate visa, it is plausible that there will be a demand for UK degrees just because they come with work rights, even if the qualifications themselves are worthless.

To understand this, note that a student can work 20 hours a week during term time and full-time in vacations (approximately 70% of each study year). They can then work full-time post-study for at least two years.

This means that enrolling on a one-year programme gives the opportunity to earn at least £50,000 in the UK. Compare that to tuition fees of £13,000 and about £3,000 in visa fees/charges. As a result, this can be an attractive proposition for some international students.

If work rights are a major driver of increased student numbers, we would expect to see faster growth in students from lower-income countries because even the UK minimum wage is a good salary compared with what they might earn back home. For students with dependants, this could even mean a potential doubling of earnings as dependants can also work. That is exactly what we see.

Why might student migration be desirable?

So, universities are not just selling education but also, in part, work permits. This is something we don’t do in other sectors. For example, suppose we were concerned that very few international tourists take holidays in Blackpool. If we made an offer to ‘stay for a year but get the right to work for two years’, it is likely that this would increase the number of hotel bookings. This would also be fantastic for levelling up and the local economy. But this idea probably sounds a bit crazy, while a similar scheme for universities is common sense for many.

There are two reasons for this. First, the money from the international students pays for the education of domestic students and, more importantly, research. Universities are of strategic importance to the economy in a way that Blackpool guesthouses, with all due respect, are not.

But this is a very indirect way of funding research. It is possible that most of the ‘extra’ students (that is, those wanting to get a work permit) go to less research-intensive institutions. Indeed, when the post-study work visa was in place, the proportion of student visas for Russell Group universities was lower.

An alternative policy would be for the government to sell work permits directly and then use the proceeds to fund the research deemed most important. But it is likely that many of those who strongly oppose high visa fees are strongly in favour of international students – even if universities are effectively selling work permits for much higher sums than the government has ever charged for visas.

Another common argument for the graduate visa is that graduates are highly skilled, which is exactly the type of talented people we are looking to attract to the UK through other work visas.

What are some of the issues related to student migration?

Many graduates are talented but there is evidence that there is a proportion who are not. There are already some stories of exploitation of international students and of students switching to work visas to take up jobs in low-paid social care.

Figure 2 presents data from the Longitudinal Education Outcomes statistics on the lower-quartile earnings of Master’s graduates from the EU and non-EU countries relative to UK graduates, five years after graduation.

Figure 2: Pay gap of EU and non-EU students compared with UK students

Source: Department for Education (Longitudinal Education Outcomes)

EU graduates have always earned around 10% more than UK graduates. Comparably, non-EU graduates have earned around 10% less, and the gap was 20% when there was a post-study work visa prior to 2012.

The level of these earnings for non-EU graduates is low: £21,200 in 2019 for the 2014 cohort, which is not much above the minimum wage. It is also below the lower quartile for non-EU students with undergraduate degrees, even though the qualification is meant to be more advanced. This pattern is not seen for EU and UK students.

This issue of poor economic performance of many supposedly highly qualified international students is not unique to the UK. Similar trends have also been identified in Australia, for example (International Education Association of Australia, 2019).

Some of this evidence has been available for a long time. I was chair of the MAC when it produced a report in 2018 on international students. While generally very supportive of international students, the committee was concerned that many, supposedly highly skilled graduates went on to have very low earnings.

There are more general points here about immigration policy. Business groups (including those related to higher education) lobby for more liberal immigration policies that would benefit their sectors. But they can often use arguments and questionable research (Higher Education Policy Institute, HEPI, 2021) to make the case that this change will benefit the economy/society as a whole. More worryingly, there are examples of denigrating scepticism as mindless or rooted in prejudice.

There is nothing wrong with lobbying. It is important to hear what business thinks and the problems they face. But what is best for business is not always best for the country more broadly. As a result, it is wise to consider all claims with a critical eye.

One reason that this is important is that public confidence in the immigration system is undermined when there is a gap between rhetoric and reality – for example, the view that all graduates are very talented. Business often portrays itself as the victim of public scepticism about the benefits of immigration but perhaps it has sometimes been the architect of it.

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Author: Alan Manning
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