Would a cut to international student numbers really be a “hammer blow” to the economy?

Since home secretary Suella Braverman cranked up her anti-immigration rhetoric at Conservative Party conference, the sector has gone into overdrive to argue that any reduction in the volumes of international students would be damaging.

Jim is an Associate Editor at Wonkhe

Some are careful to discuss the benefits of diversity or scientific discovery – but all seem principally to be about economic benefit.

Today’s run at batting off changes to the points-based system from Universities UK argues that “any” policy change would be a “hammer blow” to the economy.

It warns that “any” U-turn on their commitments to grow international student numbers could result in “billions of pounds in lost revenue, wreck their growth plans, and damage local economies in their own constituencies”.

Remixing this London Economics report for HEPI and UUKi on the costs and benefits of international higher education students to the UK economy, it says that every part of the UK is financially better off – on average by £390 per person – because of international students.

And it even then calculates the implications for individual MPs and constituencies – and says that by limiting the number of international students in the UK, there would be a £20.2 million for Suella Braverman’s constituency of Fareham, and a £16 million for Prime Minister Liz Truss’ constituency of South West Norfolk.

The problem is that as well as that income fuelling local businesses and propping up research and undergraduate provision for home domiciled students, a huge chunk of that income is rent for housing – and that could have costs that aren’t quantified in a straightforward economic analysis.

If universities are contributing to an overheating of the private rental market for students and civic locals, and the increased income is mostly ending up on the balance sheets of both local and global pension funds, we might end up a little less proud of the “local” economic benefit.

One of the things that I keep coming across repeatedly in my conversations with SUs is stories of international students – usually enrolled onto a PGT course and often with dependents – arriving with nowhere to live and finding nowhere to live. Stories like this.

We don’t yet know whether underpinning aggregate numbers explain the stories, and my natural instinct in response to the Braverman balloon floats on dependents and overall numbers is to oppose with every bone in my body.

But given it’s becoming clear that nobody – not universities, local authorities, the home office or DLUHC bothered to estimate the geo-housing implications of the graduate route changes, I could just as easily argue the opposite.

In other words, I can make the case that the idea that the sector is begging for Braverman to back off, as city after city runs out of places to live, is pretty abhorrent.

Put another way – how many more families with dependents have to arrive into the UK with nowhere to live, lied to by their agents about housing costs and availability, forced to live many miles away as a result, before the expansion stops?

The moral and economic case isn’t just about international students and their families. If you were trying to heat up the rental housing market, plunge your locals into poverty and price out your home domiciled students too,, you would do a few things:

  • You’d ramp up interest rates, plunging homeowners into rental accommodation and slowing new build PBSA.
  • You’d convert swathes of existing stock into airbnb.
  • You’d have regulation that pretty much gave a free pass to landlords to pass on increased costs to tenants during and between tenancies.
  • And fundamentally, you’d grow demand much faster than supply.

Imagine your campus capacity could bear another 1,000 PGTs but there was no increase in bedspaces anywhere reasonably near. How many universities would recruit the full 1,000? What would cause them to recruit fewer? How many are even conscious – at governing body level – of the respective supply and demand numbers?

Numbers matter. In Q3&4 2020 and Q1&2 2021, some 267,807 visas were issued for students and dependents. A year later, that figure was 473,243 – or 549,350 if you include graduate route issuances. No, reduction in EU doesn’t go near covering the increase.

In 2020/21, HESA said that 1,083k students lived away from home. So the first question nationally is how many bedspaces were empty in 20/21, plus how many more bedspaces came on stream in 21/22. I know that figure isn’t 300k.

And I doubt that the numbers have fallen for 2022 Q3 issuances, which we’ll get figures on from the home office in a month or so.

Unless I’m missing something, it looks from here like the policy to relax immigration rules and/or fund higher education via international student fees could well be overheating the student rental market specifically and therefore the private rental market generally.

The compound impacts of visa issuance (UG later years, graduate route stays) take a while to feed through, and some of the impacts on the rental market are delayed by PBSA advance-energy purchase, HMO landlords signing (often all inclusive bills) contracts (too) early this time last year, and off-balance sheet PFI deals that will crank rent up by inflation next September.

Nothing gets better for next September, and the factors indicate that every university town and city needs to think about not just any bedspace demand and supply mismatch, but price range mismatch within those headlines too.

Am I missing something? Has someone else done better guesses – either locally or nationally – of the relationship between bedspace demand and supply for UK HE as expansion ramps up? Because if not the sector could be (in part) causing crises by recruiting.

4 responses to “Would a cut to international student numbers really be a “hammer blow” to the economy?

  1. Thought provoking as always. Thanks Jim.

    For what it’s worth not every city is completely out of spaces in student accommodation full stop (ie: PBSA). Some do have capacity even after the rise in international numbers. But what I think it IS fair to say is that every city (certainly that I know of) has run out of accommodation for *families* (ie: housing stock that accepts kids) – and I think there is certainly an argument that Universities should be making that expressly clear on their marketing materials and to their agents (hopefully they already are).

  2. UUK are soiling themselves that their golden goose is about to be slaughtered, and the VC lifestyles will by necessity become somewhat cramped. Looking beyond the University sector the MoD has finally realised the 1000 talents scheme has been recruiting former military pilots on nice fat salaries to teach our ‘competitors’ military our methods so they can work out how to defeat us. Even Biden has apparently started to realise (more likely the US security services have told his handlers) just how bad Chinese state infiltration of US Academia and Academic ‘research’ has become through the Confucius Institutes.

    Those of us who warned of such over-reliance on Chinese money being dangerous were usually dismissed as being simply racist, however growing awareness of the CCP’s ‘long-game’ strategy is now showing our caution was not racist, but there are none so blind as those that will not see.

  3. It’s a version of the monarchy is good for the economy because it generates tourism. If visitors are picked up from the airport in a bus made in the U.K., if they stay in rented accommodation owned by nationals, if they drink alcohol in bars that is not imported then … yes … there is some economic benefit. But just no country not already prosperous has grown affluent through tourism. The chief beneficiaries of international fees are universities, pure & simple.

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