Consider the case of a high value, high productivity service industry, which exports a large proportion of its output, and where the UK has a natural comparative advantage, based on its use of English, its historic links to major markets, and London’s role as a global city.
Consider the fact that, unlike financial services, this industry doesn’t threaten to crash the rest of the economy.
Should the government a) encourage and promote this industry, and help it market its products abroad? Or b) try to reduce demand by imposing numerous extra layers of bureaucracy and regulation, and then, when that’s not enough, falsely accuse tens of thousands of its customers of systemic fraud?
If your answer was b) you’re probably Theresa May.
The consensus that foreign students coming to UK universities is good for the UK extends from Leavers to Remainers, Labour voters to Conservatives, and indeed the vast majority of the Cabinet.
So it’s hardly surprising that the government’s independent Migration Advisory Committee, in its report today on the impact of international students, concluded that international students benefit the wider economy and the public finances, with the average non-EEA student making a net fiscal contribution of more than £5,000 a year, compared to the average resident.
Moreover, contrary to some claims that domestic students lose out, they found that “the evidence suggests that the benefits of international students outweigh any negative impacts on the educational experience of domestic students”.
And they dismissed claims that international students had adverse impact on the wider communities in which they live.
Nevertheless, for the last eight years the government has pursued a policy of deliberately trying to reduce the number of international students coming to the UK; by tightening visa requirements, increasing fees, imposing new bureaucracy on universities, and, perhaps most egregiously, by expelling thousands of students falsely accused, on the flimsiest possible evidence, of cheating in English language tests.
The result has been that student numbers have flatlined, at a time when the market has been growing strongly, as the UK has lost ground to its main competitors like Australia and even, despite Trump, the US. And, as the MAC notes, Brexit poses new threats.
So what does this mean for policy?
There is some disappointment today in the university sector that the MAC does not call for students to be “excluded from the migration statistics”, as many have argued. But the MAC are correct that this would be largely symbolic, extremely messy in practical terms, and would not magically solve the problem.
As the MAC report strongly implies, the real issue is not the inclusion of students in the “tens of thousands” target, but the target itself.
It is economically illiterate, politically self-defeating, and better suited to a centrally planned economy and labour market than the supposedly liberal UK. The sooner it is abandoned the better – but it has never been met, and it does not in itself stop foreign students coming here. Far more damaging are the policies described above.
A good first step would be, as I proposed in 2013, to reintroduce the Post-Study Work Visa, abolished by Theresa May on the basis of the most flimsy and unconvincing evidence.
This would allow foreign graduates to stay on for a limited period after completing their studies to work. It would be a win-win: it both makes UK universities more attractive (most of our main competitors already have such schemes) and would mean the UK economy and labour market would benefit from obviously desirable immigrants: young, skilled, English-speaking workers who, by definition, were already to some extent integrated into UK society.
The MAC make some proposals to extend the ability of students to stay on – this should be the minimum the government does.
Looking beyond students, next week the MAC produces an even more important report, which will analyse the overall impact of immigration, especially EU migration, on the UK economy, and make recommendations for a post-Brexit immigration policy – including, let’s hope, a more explicit and direct call to abandon the net migration target.
The Cabinet is split on not just one but two dimensions here: Theresa May and her allies continue to press for restrictionist policies, regardless of the economic damage, while others, including the new Home Secretary, favour a more liberal approach.
Meanwhile, separately, some Ministers want to maintain an element of “European preference” in the post-Brexit system, while others want a system that treats Europeans and others in broadly similar fashion.
The MAC’s analysis will set the stage for these debates; as with students, let us hope that after eight years of unpleasant and damaging nativism, politicians have the courage to turn good analysis into sound policy.
Jonathan Portes is a senior fellow at The UK in a Changing Europe research group and professor of economics and public policy at King’s College London
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