Leading Article: We all gain from foreign students

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Britain is a magnet for overseas students. They flock to our shores because British universities offer high-quality courses in English, a reasonable level of student support and degrees that carry global cachet. Our share of the overseas student market has fallen but is second only to the USA.

The big question is whether we will continue to attract overseas students, given the competition from countries such as Australia (cheaper) and Germany, which doesn't charge overseas students tuition fees. Today's report by Bahram Bekhradnia from the Higher Education Policy Institute, "The Economic Costs and Benefits of International Students", says we need to think very hard about whether to charge lower fees to overseas students.

That is because students from abroad bring more financial benefit than they take. Bekhradnia calculates that overseas students inject £3.74bn into the economy in tuition fees and spending. That makes them a bigger export industry than, for example, alcoholic drinks, textiles, clothing, publishing and even our world-beating cultural and media industries.

Moreover, this injection into the economy has a multiplier effect: money paid in fees goes largely to fund salaries of university staff, and that money is ploughed back into the economy. Also, students often stay on after graduation to work in Britain, providing a further boost.

Such a significant industry needs nurturing, the report suggests. Can the UK maintain its share of overseas students as other countries begin to use English as the language of instruction and market themselves more aggressively? Bekhradnia clearly believes that British universities might begin to struggle. But they can't be expected to subsidise overseas students from money they receive from the Higher Education Funding Council.

So the answer would be an explicit subsidy from taxation. A government that tried to persuade the public that this was in their interests would be brave indeed. But we hope the new Chancellor of the Exchequer will read the report and ponder its message. Who knows: if the public becomes more economically literate with the introduction of lessons in financial management, the British might be persuaded that it is in their interests to charge foreigners lower fees.