From education to employment

£60 Billion boost to UK economy: Graduate visa critically important for UK jobs and growth

Students in a lecture hall

Since the launch of the government’s International Education Strategy in 2019, growth in international student recruitment to the UK has delivered a boost of more than £60 billion to the UK’s economy, new analysis shows.

The analysis by Universities UK (UUK), drawing on London Economics data, demonstrates the extraordinary economic contribution from increased international student numbers in that time; a period which saw the launch of the Graduate visa which allows students to stay and work in the UK after completing their studies for two or three years.

The £60bn in additional economic impact over the duration of their studies sits alongside huge cultural, academic, and soft power benefits from attracting global talent into UK higher education.

  • Growth in the number of international students studying in the UK since the launch of the International Education Strategy has contributed a £60 BILLION boost to UK economy.
  • Graduate route visa is vital to the UK’s attractiveness as a study destination says Universities UK, as it calls on all political parties to commit to retaining a competitive post-study work offer.
  • Emerging data shows international student demand and enrolments are falling, with reductions at postgraduate level most significant.
  • New survey shows only a very small minority (3%) of the public realise the scale of the economic contribution made by international students, or the size of the contribution to the NHS via the Immigration Health Surcharge.

The UK government’s International Education Strategy aimed to improve the UK’s competitiveness in international recruitment and drive growth, reversing more than a decade of stagnation in international student numbers. It set the ambition to host at least 600,000 international students each year and announced that a new post-study work offer would be reintroduced. Together, these actions helped the UK regain our position as a leading destination for international students.

However, recent policy and rhetoric puts our continued success at risk. Uncertainty over the long-term commitment to the UK’s post-study work offer – most recently following the announcement that the Migration Advisory Committee would be asked to review the Graduate route – is impacting on the decision making of prospective students. Increases in visa fees and new restrictions on the ability to bring dependants have both had a negative impact on the perception of the UK as a study destination.

Enrolments down by more than 40% in Jan 2024 following immigration rule changes

Data has shown uncertainty over post-study work opportunities is an important factor in international student decision making, while a recent survey undertaken by UUK suggests that international student numbers are now declining, following a peak in 2022/23. The results, from over 70 universities, reveal a significant decline in enrolments, especially of postgraduate taught students – which were reported to be down by more than 40% in January 2024 following the immigration rules changes.

This picture is reinforced by the latest data from Enroly, a platform used by around 60 universities. It suggests that international student demand for the UK is down significantly on last year, with overall deposits down by more than a third on the same point in 2023. Meanwhile data collated by IDP also indicates close to half of applicants (45%) would likely change or consider changing their study destination if the post-study work period was shortened. A third (37%) said the Government’s intention to review the Graduate visa has meant that they are now re-considering study abroad plans or inclined to choose another destination. 

Most universities are bracing for further drops in international student numbers this autumn

Most universities are bracing for further drops in international student numbers this autumn as the government’s reforms take effect and UUK calls the outlook for September “bleak.” The British Council have also warned that UK universities face “slower growth rates and rising competition” for international students.

A significant further reduction in the number of international students would threaten a hugely significant economic contribution

A significant further reduction in the number of international students would threaten a hugely significant economic contribution. However, new survey data from Censuswide, commissioned by UUK, suggests the public are largely unaware of the scale of the positive economic contribution international students make to the UK economy. Indeed, only 3% of 2,000 adults surveyed correctly answered that the annual economic impact of one year’s intake in 2021/22 was above £10bn – and the exact figure is £41.9bn. 

International Students are a substantial net contributor to the NHS

Similarly, when asked how much international students should pay every year towards the NHS, irrespective of whether they use it, only 3% selected the highest option offered, of £700, with the average figure across respondents coming out as £346.59. The NHS surcharge is currently £776 per year.  Research from London Economics calculates that in 2021/22, the annual cost per student or dependent to the health service was £232, making international students a substantial net contributor to the NHS.

Vivienne Stern MBE, Chief Executive of Universities UK, said:

“The UK is extremely fortunate to be a popular destination for international students. The whole country benefits from their decision to spend a few formative years with us. I regret the fact the government appears to want to diminish our success in this area. Our new data shows that if they wanted to see a reduction in numbers, they have already achieved that through policy changes introduced earlier this year. If they go further, they will damage the economies of towns and cities throughout the UK, as well as many universities. Given we should be doing everything we can to promote economic growth, this seems to be getting the priorities wrong.

“Our polling shows the vast majority of the public have no idea of the scale of the economic contribution international students make.

“Beyond playing a major part in the growth which has made a £60bn economic contribution, the Graduate visa has helped to keep the UK as a top study destination in an increasingly competitive global market, supporting thousands of jobs up and down the country and bolstering the country’s reputation and soft power influence. The students who have chosen to study here because of it have helped to make our universities culturally vibrant international places of learning.

“The number of international students coming to the UK is already falling, but there is now a real danger of an over-correction. We call on all political parties in the run up to a general election to reassure prospective international students that the UK remains open, and the Graduate visa here to stay. Any further knee-jerk reforms could have serious consequences for jobs across the country, economic growth, and UK higher education institutions.”

Business benefits from being able to attract talent via the Graduate visa, and business leaders have also expressed concern about the impact of any changes to this route.

John Foster, Chief Policy and Campaigns Officer for the CBI said:

“International students make a big contribution to local economies right across the UK while they are here. When they go home, they are ambassadors for the UK around the world. Selling a British education is an export success story for the UK. That’s why business backed the International Education Strategy and the re-introduction of the Graduate Visa route.

“This analysis shows that speculation comes with a cost, with uncertainty surrounding whether the Government will change or withdraw the graduate visa already damaging UK universities’ competitiveness.”

Tina McKenzie, Policy Chair at the Federation of Small Businesses, said:

“We support the Graduate visa route as it gives small employers an opportunity to recruit skilled talent with reduced bureaucracy and without high immigration fees. It also allows employers to fill skills gaps which would otherwise stifle the growth of small and micro businesses. Our Small Business Index for Q4 2023 found that 21% of small businesses perceive appropriately skilled staff as one of the greatest barriers to their growth aspirations.

“The flexibility of the graduate visa also allows small firms to evaluate the performance of their graduate employees for two or three years before making a longer commitment to hire them permanently.”

Karoli Hindriks, CEO and Co-founder of Jobbatical said:

“A fall in international students is bad news for businesses. International students have always provided an important talent stream for businesses looking for skilled and specialist workers. The government’s bid to cut immigration figures by targeting international students is shortsighted and is not being looked at kindly by the business community. 

“Let’s not forget that foreign-born entrepreneurs are responsible for a huge amount of the UK’s GDP. Despite just 15% of the UK’s population being foreign-born, 39% of the country’s fastest-growing companies are set up by foreign-born entrepreneurs.

“The talent shortage in healthcare has been well documented but vacancies are through the roof in almost every sector, from manufacturing to AI. Businesses need a steady stream of skilled workers and domestic talent alone simply isn’t enough to fill current and future vacancies. 

“To tackle the talent shortage, the government should be spending less time making knee-jerk immigration policies and more time making sure the UK is attracting the best of global talent and entrepreneurship. Businesses need the government to encourage, not deter, young people around the world from studying at UK universities”

Related Articles