Rebalancing the Economy: Trade and Investment - Business, Innovation and Skills Committee Contents


Written evidence from Navitas

1.  Executive Summary

1.1  Rebalancing THE economy through trade and investment requires coordinated Government action across and between key Ministries eg BIS and the Home Office.

1.2  The Education Services Export Industry is second only to Finance in its positive economic impact to the UK.

1.3  It is very much in the interests of the sustainability of the UK's Education Services Export Industry that the UK remains a top priority destination for legitimate non-EU students; however it is imperative that policy be based on empirically sound data derived from comprehensive consultation and analysis.

1.4   The Education Services Export Industry in the UK is a complex and dynamic industry comprised of public and private providers. Regulation is welcomed by all bona fide providers; however any regulatory regime implemented should be encouraging of export revenue and equitable across both the public and private sectors.

1.5  Ireland and the USA have recently come out strongly in support of the economic and cultural importance of the Education Services Export Services industry. The Australian Government has also recently recognised the negative impact on GDP of recent visa tightening measures. (See http://www.abc.net.au/lateline/content/2010/s3068304.htm.)

1.6  The UK is sending mixed messages to the world. Government words are signalling that the UK is keen to enhance its global engagement, build trade links particularly in China and India and, welcomes international students; however, Government action is signalling to the world that the UK is not really open for business and does not want export value and trade links that international students bring to the UK.

1.7  International student mobility is a very successful activity for the UK and contributes to the success of HE sector. It should be considered as an export success and not as an immigration problem.

1.8  International students/graduates play a key role as diplomatic/trade/cultural assets for the UK - "soft power" as it is known.

2.  NAVITAS LIMITED - AN INTRODUCTION

2.1  Navitas Limited (http://www.navitas.com/corporate.html) is a diversified global education provider and has been active in the Education Services Export Industry since 1994. Navitas offers an extensive range of educational services for students and professionals including university programmes, language training, work-force education and student recruitment. Navitas Limited is a public listed company on the Australian Securities Exchange (ASX) and is known as a world leader in the development and provision of educational services and learning solutions. Navitas Limited had a market capitalisation of approximately AUD$1.4 billion as at June 2010. Navitas consists of five operating divisions: University Programmes (the largest Division with operations in Australia, the UK, the USA, Canada, Singapore, Sri Lanka and Indonesia); English; Work-force; Recruitment; SAE Group, all of which report to the corporate headquarters located in Perth, Western Australia.

2.2  Navitas is known for its focus on the provision of quality education and training and therefore all Navitas Group members comply with accreditation and licensing requirements imposed by government and government endorsed organisations including in the UK, the British Accreditation Council (BAC) and, the UK Border Agency (UKBA) to provide education and training services in their respective operating environments/countries.

2.3  Navitas established its University Programmes Division in the UK in 2000 and its Recruitment Division in 2007. Navitas' UK operation is self funding and is not a recipient of any form of Government funding.

2.4  Navitas' University Programmes Division UK's Colleges are located on university campuses in Aberdeen (Robert Gordon University opening in October 2011), Cambridge (Anglia Ruskin University), Edinburgh (Edinburgh Napier University opening in June 2011), Hertfordshire (University of Hertfordshire), Plymouth (University of Plymouth), Portsmouth (University of Portsmouth), Swansea (Swansea University) and West London (Brunel University), locations which enable students to experience the UK city, climate, culture and lifestyle of their choice. Navitas' partner universities are internationally renowned for their teaching and research.

3.   FACTUAL INFORMATION

3.1  Private Colleges like the Navitas Colleges in the UK, via their legally enforceable (UK Law) Recognition and Articulation Agreements, provide significant third stream revenue to their respective Host Universities via the direct royalty paid per head each semester (three semesters in one calendar year) as well as "pipeline" income as students move through the articulation process and pay the full cost recovery University fees directly to the Host University for the remainder (usually a minimum of two academic years) of their degree programme. In the period from September 2000 to December 2010 Navitas UK:

  1. has paid direct royalties to six Host Universities totalling GBP£13,241,295.00;
  2. facilitated access to university education for c16,400 international fee paying students who would otherwise have been denied access to a UK University degree; and
  3. facilitated Host Universities' access to cGBP£220 million in pipeline income i.e. that income derived from students progressing through the articulation agreement from a Navitas College to their respective Host University in order to complete their degree studies.

Indeed in the current financial year (2010-11) alone our Host Universities will receive over GBP£6 million in royalties and cGBP£27 million in pipeline revenue. Any reduction in international student numbers as a result of the current focus of Government on reducing net migration through restrictions on international students will not only have a severe financial impact on a HE sector already under threat from funding cuts but result in job losses that in the case of Navitas as an example, could result in a reduction in the size of the UK operation by at least half.

3.2  The Education Services Export Industry is a major contributor to the UK economy; current moves to reduce international student numbers threaten the ongoing viability of this major export industry.

3.3  International (non-EU) students from degree-preparation courses are a significantly critical source of students for UK universities. Universities UK has estimated that 46% of all non-EU full fee paying students admitted to UK universities come via preparatory programmes inclusive of those via formal articulation and recognition agreements.

3.4  Current HO/UKBA initiatives related to the restriction of international student numbers could, for Navitas as an example, turn our forecast pre-tax profit in the UK of £1.7 million into a loss of £2.1 million, thus jeopardising over 230 full time and sessional academic jobs and our future plans for growth and would impact (negatively) revenue streams to our Host Universities via a reduction in the direct royalty payments and pipeline income for our Host Universities.

3.5  Regulatory regimes should also be consistent and equitable across both public and private providers; prohibiting institutions from offering NQF Level 3 may well raise legal issues such as restraint of trade.

3.6  Non-EU students make a significant contribution to UK universities to the tune of between 10 - 30% of total income; the substantial contribution via full fees ie cost recovery, ensures that the enviable breadth of courses available in the UK is protected.

3.7  Non-EU (International Students) make an extremely important economic contribution to the UK, so Government's intention to restrict an invaluable export earning industry in this way does not match the need to rebuild the economy and engage private industry to a greater extent. The Government's own data (from the Home Office's publication September 2010: The Migrant Journey) illustrates that international students are not immigrants. Of the 186,500 students granted visas in 2004, only 5,568 later gained settlement rights - ie only 3%. They have a minimal effect on net migration as there are roughly the same numbers of students leaving the UK each year as there are entering it. It is also arguable that UK-educated, highly skilled workers are migrants who will make an above-average contribution to the UK's economic future and therefore should be encouraged.

3.8  A 2007 British Council Report (britishcouncil.pdf) stated that in 2003-04, the Education and Training export sector was worth £27.7 billion. In 2010, we estimate this to be closer to £40billion and thus making it the UK's second biggest contributor to our net balance of payments, after financial services.

3.9  In addition to the full cost recovery course fees and living costs paid by non-EU students, staff employed in the Education Services Export Industry also bring significant income to their local and the national economy through their spend on accommodation, food, local taxis and buses, clothing, leisure and social activities and their use of national bus, rail and air transport systems. The spread of international students in locations across the UK means that the revenue generated via this export industry is not restricted to one geographic region of the UK.

3.10  On average, an international student can easily spend up to GBP£12,000 in each year of study. Given the diversity of locations across the UK this is an important regional economic impact. Students are also visited regularly by family and friends further adding to the economic value add element.

3.11  There will be major job losses running into the thousands, in the public and private sector as a result of a cap on international students. These job losses may well be concentrated in areas where there are large numbers of private educational establishments in university towns and cities which may have little access to the benefits of other major export industries. The Australian government has just acknowledged the negative material impact on GDP that its recent tightening of visa restrictions for international students has had. Job losses in the sector are expected to be in the thousands, including university staff.

For more details see http://www.abc.net.au/lateline/content/2010/s3068304.htm.

3.12  The negative material impact on GDP of unnecessarily tightened visa restrictions for non-EU students at a time when the UK needs thriving export industries and harbours an expectation that the private sector will pick up the shortfall in government spending will be considerable.

3.13  International students not only enrich the learning environment for domestic students and provide substantial economic support to universities, but also act as valuable ambassadors for future commercial, diplomatic and cultural ties that benefit the UK. Note the Prime Minister's recent trips to India and China in which he emphasised, "...how much we [the UK] want to welcome international students to Britain". Changes to the student visa regime give the lie to this statement.

3.14  In addition to the in-country economic value add of non-EU students to the UK, the UK also benefits from the global networks and links the education services export industry has established, particularly in key source countries such as India and China, which coincidentally happen to be foreign policy priorities. Given the particularly high levels of satisfaction experienced in the UK by non-EU students during their study programme, it makes sense that the UK should capitalise on this potential for life-long advocacy for the UK.

4.0  RECOMMENDATIONS FOR ACTION

It is suggested that the following recommendations be considered:

4.1  The Education Services Export Industry is recognised as a major contributor to the UK economy and compliance regimes should be facilitative to its growth and development.

4.2  Current measures to restrict the number of international students coming to the UK are reviewed and modified to enable bona fide participants in the Education Services Export Industry to conduct financially viable businesses.

4.3  A comprehensive economic impact study be undertaken to substantiate the value-add impact of the Education Services Export Industry to the UK's economy and thereby inform the decision making processes related to Government's dual commitments to reduce net-migration and "...boosting trade to rebalance the economy…". (Right Hon. Adrian Bailey MP, Chair of the Business Innovation and Skills Committee http://www.parliament.uk/business/committees/committees-a-z/commons-select/business-innovation-and-skills/inquiries/trade-and-investment/)

4.4  BIS and the Home Office better coordinate policy development in order to ensure that a major export industry is not damaged at a time when the UK economy needs success stories. The role of the BIS is central to supporting trade and investment in the UK by removing barriers to trade and in determining sensible approaches to this important export industry.

10 January 2011



 
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Prepared 19 July 2011