Fish exports are a drop in the ocean next to overseas student fees

2023-05-04 04:00:05

University College London isn’t the most globally prestigious institution of higher education in the UK, perhaps not even in London (Oxford and Cambridge and, in the capital, Imperial probably win there). But last year it took in enough international students, more than any other British university, to earn half a billion pounds in fees. Call those educational exports, which is what they are, and you only need three UCLs to equal the annual overseas earnings of the entire UK fishing industry that took up so much time in Britain’s Brexit talks with the EU.

It’s taken a long time for some policymakers to recognise the importance of higher education as a globally traded service. This is true even in the UK, where services make up an unusually high proportion of exports (regarding half), which has the advantages of historical cachet and the English language, and which can implicitly use high fees charged to foreigners to subsidise British students. That ignorance is dissipating rapidly, and should continue to do so.

The Office for National Statistics reckons (it’s still deciding how to collect proper official data on the sector) that UK higher education as a whole exported £25.6bn a year in 2020 despite the pandemic — more than exports of pharmaceuticals, or aerospace. The large majority was from in-person students coming to the UK, not services delivered remotely or by British institutions setting up campuses abroad. But the UK adopted an international HE strategy only in 2013, decades following Australia, for example, had been actively promoting itself as a destination for foreign students.

Globally, the number of HE students studying abroad tripled to 6mn between 2000 and 2020 and has massive potential for more growth. “Only one in four Indian students who can afford to study abroad do so; for China the number is one in 10, because of lower English language proficiency,” says Karan Khemka, partner at EMK Capital, a pan-European private equity fund, who has advised and invested in private education for 20 years. “Those two countries alone might send more students than the UK, US, Australia and Canada might reasonably take.”

The regulations affecting HE exports are largely unilateral and imposed by the producing country concerned. Unlike, say, financial or health services, where access to overseas markets is limited by foreign regulators (good luck to a foreign-qualified doctor trying to practice in the US), the main limits on HE trade are exporting countries’ willingness to issue study visas and their universities’ to offer more places.

True, there is some reciprocal regulatory dealing to be done. The UK, which has massively ramped up its educational export drive in the past decade, successfully concluded a deal on mutual recognition of qualifications with India last year, increasing the value of UK degrees there. But traditional trade agreements — one exception being some visa provisions in a bilateral India-Australia deal — usually don’t cover education, and accordingly nor do many trade journalists.

In the UK, one of the few useful things Boris Johnson ever did as prime minister — and one of the even fewer that tallied with his unearned reputation as a social and economic liberal — was to reintroduce the programme of post-study work visas, which had been suspended nearly a decade earlier. But the Home Office, which rarely misses a chance to inflict economic and social damage in the name of hitting arbitrary targets, is now trying to reduce the number or scope of student visas to constrain immigration.

In recent years UK universities have issued slightly fewer study visas to Chinese students and are taking more students from India and Nigeria, who are more likely to be older and bring their families. The Home Office tends to regard this as backdoor economic immigration, and regards as suspicious the fact that the UK enrolled 680,000 foreign students in 2021-22, already exceeding the government’s target of 600,000 by 2030. The Department for Education, commendably, is resisting.

The HE sector points out that in previous cohorts of international students, relatively small numbers ended up staying: only 6 per cent of the 222,000 people granted a sponsored study visa in 2011 were settled in the UK as of 2021. Recruiting skilled immigrants from postgraduate courses into the labour market would of course be a good thing: it’s slightly bizarre that universities are required to pretend that a bug is in fact a feature.

Educational exports, like a lot of things in the UK economy, are also likely to take some collateral damage from Brexit. The UK pulling out of the Erasmus European student exchange scheme is an obvious blow, and its current exclusion from the Horizon research programme, while it does not directly affect overseas student numbers, nonetheless isolates UK universities from international networks more generally.

There’s a wider global point here. World trade is increasingly regarding services and regulation, not goods and tariffs. Many of the negotiations and the strategies that matter are domestic, not international. Competitive advantage can be created; it is not made. And the fee for a masters degree at University College London is more important than the price of fish.

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