The Higher Education Policy Institute and Kaplan International have released yet another publication which uses econometric analysis to understand the impact of global events, particularly Brexit, on UK higher education.
It has already received wide coverage in the media, such as in Business Insider, Public Finance, The Huffington Post, The Guardian, and Times Higher Education, predominantly focusing on Theresa May’s proposed crackdown on student immigration potentially costing the UK economy £2bn each year.
The determinants of international demand for UK higher education is authored by London Economics’ Gavan Conlon, Rohit Ladher & Maike Halterbeck, and argues that ‘hard facts’ show if Government makes any further restrictions on our international students, the entire economy – not just the HE sector – will suffer.
The authors suggest that ‘external factors including the exchange rate, fee levels charged by competitor countries, energy prices, overseas economic growth and policy interventions within a country’ have ‘relatively immediate effect on the demand for UK higher education’ and that these could sometimes have longer-term impacts.
The report reveals some shocking predictions, highlighting how, for example, ‘a 10% depreciation of sterling would increase UK enrolment by 2.1% in the same period and a further 2.0% in the following year.’ At the same time, it also looked at how ‘removing EU student support and fee harmonisation would result in a £40 million decline in higher education institution finances.’
It then makes a distressing conclusion about the findings of the research, provided below [p.11]:
…the analysis presented [in the report] assumes that there are no immigration caps, nor any differential treatment of higher education institutions in relation to the ability to secure student visas (and post-study work visas). As such, the positive impact of the depreciation assumes that the resulting additional 20,000 students are permitted to study in the United Kingdom. If this is not the case, then the £227 million potential gain that might be achieved by UK higher education institutions may not be realised or only realised in part – thus representing the potential loss associated with restricting international student numbers.
The £227 million per annum potential loss identified only captures the tuition fee income in students’ first year of study. This increases to £463 million per annum if we consider the fee income accrued over the total duration of study. If we further include the economic output associated with students’ non- tuition fee expenditure over the course of their studies (£604 million), the total potential loss to the UK economy stands at £1.067 billion per annum.
…If we also consider [the] indirect and induced effects on the wider UK economy associated with this source of export income, the estimate of potential loss increases to around £2 billion per annum.
Of course, however, we know that different UK institutions have different levels of dependency on non-UK students.
