Business, Innovation and Skills Committee - Minutes of EvidenceHC 425

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Oral Evidence

Taken before the Business, Innovation and Skills Committee

on Tuesday 26 June 2012

Members present:

Mr Adrian Bailey (Chair)

Paul Blomfield

Julie Elliott

Rebecca Harris

Margot James

Ann McKechin

Mr David Ward

Nadhim Zahawi


Examination of Witnesses

Witnesses: Simon Walker, Director General, Institute of Directors, Nicola Dandridge, Chief Executive, Universities UK, and Jo Attwooll, Policy Adviser, Universities UK, gave evidence.

Q1 Chair: Good morning. Thank you for agreeing to speak to the Committee. Before we start, can I ask you to introduce yourselves for voice transcription purposes?

Simon Walker: I am Simon Walker, Director General of the Institute of Directors.

Nicola Dandridge: I am Nicola Dandridge, Chief Executive of Universities UK.

Jo Attwooll: Jo Attwooll, Policy Adviser, Universities UK.

Q2 Chair: Thank you very much. Obviously, we have a lot of questions and limited time. If somebody leads on a question and the rest of the panel have really nothing more to add to what has been said, do not feel that you have to answer every question. Brevity is the key to this. Equally, of course, if you have something to add or subtract, do not feel inhibited in saying so.

First, could you summarise, fairly briefly, what opportunities you think the overseas student market offers UK universities? Has that market changed over the last five years?

Nicola Dandridge: The international student market brings tremendous benefits to the UK, most obviously in terms of economic benefits. In June 2011, BIS estimated that it brings about £8 billion to our economy in direct and indirect cost. They estimated that it has the potential to increase to about £17 billion by 2025, all things being equal. Of course, it is not just economic benefits that international students bring, but tremendous cultural richness to our campuses, and also links that extend far beyond the international students’ experiences in the UK. They go back as ambassadors for the country and the impact that that has is immeasurable and invaluable.

In terms of the changes in the market over the last five years, we have been in a very strong position in the UK, second only to the US in the numbers of international students coming to the UK. However, over the last few years our market share has been slipping. It was 10.8% of the international student market in 2000. That has gone down to 9.9%, which I think is in part a reflection of the increased global competition for international students that we are witnessing across the piece. But our concern at the moment is the impact of the Government’s policy-both in the future and indeed now-which is leading to a reduction in projected increases that are already being observed in-

Q3 Chair: You anticipated my next question, but feel free to develop it. Go on.

Nicola Dandridge: Our concern primarily relates to the Government’s commitment to reduce net migration from the hundreds of thousands to the tens of thousands. If that were implemented, it would lead to a very significant reduction in international students coming to universities. There have been various estimates of what it might lead to, but the Migration Advisory Committee report of November 2010 estimated that the reduction in non-EU students would be in the region of about 87,600 over the next three years. The IPPR has done a very recent report, in which they estimated a much higher figure of 50,000 per annum reduction in students. Whatever the exact figure, we are talking a very significant reduction, and the conclusion of both those reports is that this is an inevitable consequence of a full implementation of the Government’s policy.

To some extent, that is looking to the future and it is a question of whether the Government implements it. They do say that they want to and that message is coming out very loudly and clearly internationally. Leaving that aside, we are also seeing the impact of the tightening up of visa rules, which is affecting universities now. We hear-albeit, somewhat anecdotally-from recruitment fairs overseas that the reputation that we are getting is that Britain is not welcoming to international students. It is difficult to quantify, not least because we do not have the data now for what is happening in 2011-2012. We will know the figures for this academic year, 2011-2012, in early 2013. So we are to some extent forced to rely on anecdote. Nonetheless, the UUK has done a survey of its members to try to anticipate their assessment of the situation in terms of international students, and our survey from earlier this year concluded that universities are reducing their projections of increases. Where they had projected an increase in international students, they are now modifying their position and reducing that in response to the Government’s policies.

We are also seeing an actual reduction in student intake from some countries, particularly from India, particularly in the postgraduate market, and for some universities that is quite marked. They are concerned about it, and particularly concerned about the impact on specific subject areas, especially STEM, where, although they are manageable this year, the reductions may affect-may affect-the viability of some subjects in the future.

Q4 Chair: Could I bring in Simon Walker at this point, because obviously we have heard a specifically university perspective of that? Could you tell me whether the business community would subscribe to that particular view?

Simon Walker: I think we very much would. We have several concerns. One is, of course, we see universities in this country as a key export success story, so many of them are members, and we are concerned about the direct impact on universities. But the indirect impact is also important. For many businesses overseas, and many Governments, connections with UK universities are in many ways among their strongest and happiest links with this country. We are very concerned about the longer-term impact on Britain’s international reputation as a global centre and as somewhere that is open for business, and those linkages.

If I could just mention a conversation two or three years ago I had with the current Malaysian Prime Minister when he was Deputy Prime Minister. He reflected on how his father had gone to university in the UK with people like Lee Kuan Yew. He talked about how he had gone to the University of Nottingham and the feeling it gave him of connection with this country, but he saw his children’s generation not going to British universities and going to Canada, New Zealand, Australia, the United States. He felt that was damaging in a very broad context to that familiarity, that sort of ease of connection and the many personal contacts that people and businesses would have. We surveyed our members and found that that is a view that is very much echoed within our membership as a whole, both from small- and medium-sized businesses to much larger ones.

Q5 Chair: Forgive me, but I do feel sometimes the business community do not speak out loudly enough on that.

Simon Walker: I think you are right about that. The business community has failed to speak out loudly enough. I was quite surprised, when we surveyed our members in advance of this meeting their view was so overwhelming-80% of them felt that this was a matter of importance to them as businesses, this access to that foreign connection. So I completely agree, I think the business community should speak up more loudly. I know other business organisations share this view to a large extent. I have not come across any of them that take the opposite view and that feel we ought to clamp down in this area.

The other point I would make, which is more a psychological one, is that remarks that are made in Westminster or around the country that go down quite well locally are often on the front pages of The Times of India, or the New Straits Times the next day because of the internet. The impact of this on perceptions of Britain is quite strong, and that has been reflected to us as well.

Q6 Chair: Yes. Having a large Indian community in my constituency I am very much aware of that. But at the end of the day politicians respond to, in effect, public opinion pressure, and indeed that is part of democracy. Do you not feel that the business community should have played a stronger part, and could still play a stronger part, in reshaping that public opinion?

Simon Walker: Yes, I think you are completely right. All the running on this issue has been by people who want to clamp down on immigration at all costs, and in this case are in danger of throwing a particularly important baby out with the bathwater. I take your point and I feel that the business community ought to be much more active in shaping this debate. It is an area where we have not played the role that we should, and I intend to within the IOD.

Q7 Chair: Good. That is what I want to hear. You mentioned a survey. Could we have the results of the survey? If you could send it to us, that would be very helpful.

Simon Walker: Yes, I would be very happy to do that, and I was going to quote once or twice from it today, if I may?

Q8 Chair: Yes. I think I know the answer to this, but it would be useful to have it on the record. Would removing students from classification as economic migrants make any real difference in the system? Nicola probably is best placed to answer.

Nicola Dandridge: It would make an impact in two primary respects. Removing them from the definition of net migration, which is the UN definition that we are particularly concerned about, would mean that we were not caught up in the Government’s commitment to reduce net migration. I should say here that we are not seeking to take students out of the system completely or to take them out of the UN definition, which we can’t do. What we are saying is, for the purpose of policy development, can we treat international students as temporary migrants, not permanent migrants? That is what all our competitors do, the US, Canada and Australia. They operate by the UN definition in terms of UN data returns, but for the purposes of policy development, to a quite stark degree they distinguish between permanent and temporary migration, and international students are always regarded as temporary migrants. Perhaps more significantly on that point, so do the OECD where very specifically-and this is the Bible for international data, as far as education is concerned-students are not included as permanent migrants. It would immediately have an impact in that respect. I also think it would re-categorise students in a slightly different way politically and socially, in terms of our external communications, and I think for the very reasons Simon has just outlined that it is equally important.

Jo Attwooll: Obviously for the purposes of policy-making, we are saying to treat international students as temporary migrants, but we also have the view that if they were subsequently to switch into a work based category at the end of their studies, that is when they should be viewed as being more permanent additions to the population.

Chair: Interesting.

Simon Walker: Obviously there is a reasonable political debate, and it is good that there is a debate about immigration, but my worry is this is the only lever that is readily available to have an impact on the ultimate figure because of the way that figure is calculated. Therefore, it is the one that is available and tends to be the one that can be seen to be used. I think that is a mistake because we know that the vast bulk of overseas students go back eventually. We also know that there is not public hostility to overseas students by and large. There is quite strong support.

Q9 Chair: Can I just clarify? When you were talking about "lever", you are talking about the redefinition?

Simon Walker: As a policy lever for Governments of any party. It is one of the few levers that is readily available that can show results. But it is a misleading result because it is not in the area that people who are worried about immigration are fundamentally concerned about. I would have thought it would be a sensible thing to take away that lever by moving to the OECD definition and focusing on issues that people are concerned about, rather than damaging applications, as students to this country are not what people are fundamentally concerned about.

Q10 Paul Blomfield: On that point, do you think it-the inclusion of students in migration figures-has the impact of perhaps unintentionally distorting policy? I mean in the sense that, if the Government’s objective is the reduction of real net migration but student figures are in there, there is a kind of perverse incentive to encourage quick outflow, for example, by reducing post-study work routes and discouraging inflow. You hit your migration objectives more quickly than you would otherwise have done but do not make any real difference to what we like to talk about as real immigration.

Nicola Dandridge: Yes, you have put the case extremely well, and that case has been advanced by IPPR and others. That is exactly the point, that to some extent the inclusion distorts the picture and does not allow a focused analysis of where people’s concerns really are, which is about permanent migrants, and also perhaps people who are abusing the system. There has been an excellent piece of work by the Migration Observatory, which is an Oxford based group that has looked at public concerns about immigration and-to pick up on the point that has just been made-the concern is very much about illegal immigrants and people who stay, particularly in unskilled jobs. If that is the public’s concern, then that is what we need to address, and the inclusion of international students does indeed distort that analysis, precisely for the reason you identified that international students come and then they go, so in steady state they should not really impact on the net migration figures.

Q11 Nadhim Zahawi: Can I just get something clear in my head, because we have the Minister coming after you? On the UN definition-this point is very important because you can see what will happen, the moment we try to move the definition, and I know our colleagues on this Committee are, quite rightly, looking at this in a constructive way, but you can see what the Opposition would do in the court of public opinion, that is, say, "They are just moving the definition around to suit their policy." So the UN definition includes international students, but you are saying some countries then nuance that by having temporary and permanent-is that correct? Which countries are those? Could you just repeat that for this Committee?

Nicola Dandridge: Yes. The UN definition defines a migrant as anyone staying in the country for over 12 months, which-

Q12 Nadhim Zahawi: Which we have to abide by.

Nicola Dandridge: We do indeed, and there is no dispute about that. But by including students in that definition-sorry, this is just an aside and I will come back to your point-there is a distortion inherent already, in the sense that you have this artificial cut-off point at 12 months. As an illustration of how difficult this is, we are doing an international student exchange scheme with Brazil at the moment called Science Without Borders. It is very high-profile. It is supported by Government. It is 10,000 students coming in from Brazil.

Chair: We have just come back from Brazil.

Nicola Dandridge: Well, you know all about it in that case, and we are very proud to be doing this and it feels a wholly good thing to do. Those students originally were planned to come in to the country for 12 months, and we were all mightily relieved because it meant that they would not be included in the definition of net migration, and so everyone was very happy. However, what has emerged is that their English is not particularly good, so they have to come for an additional three months now, paid for by the Brazilian Government, and so they stay for 15 months. This has caused such concern in Brazil because the immediate response from the British ambassador and others is, "They are not going to be able to come to the UK." Of course, we have reassured them and explained that is not the case. But I think it is illustrative of the artificiality of the definition that we are already worried that these wonderful students are going to fall within the definition of "net migration" because of the UN definition and the way the Government has interpreted it. Sorry, that is a bit of an aside, but I think it is a good illustration of how this works in practice.

Q13 Chair: It is what actually triggered this particular session.

Nicola Dandridge: Oh, really? Anyway, to return to your question about who uses this and who does not. It might be useful if we provide you with details of this but, in short, Australia, Canada and the US do not. For policy purposes, they all distinguish between temporary and net migration and international students are firmly in the temporary category for the purposes of their policy development. These are our competitors. Interestingly, the only country among our competitors who does equate the UN definition with international students is New Zealand. But they have a very different approach to the issue, because they are actively seeking to encourage net migration, as a matter of policy, and so they see international students as one of the mechanisms of securing an increase in net migration. So although they do it, interestingly, they do it for policy purposes. But I think the ones we need to look at in particular are the States, Australia and Canada, and they very clearly-

Q14 Nadhim Zahawi: Australia and Canada-

Nicola Dandridge: They do not.

Nadhim Zahawi: They do not for exactly the same category of student? There is not a different arbitrary timescale that triggers the definition?

Nicola Dandridge: No.

Q15 Nadhim Zahawi: Once they have permanent work, then they are considered in the net migration?

Nicola Dandridge: Absolutely. When they shift their status within the country, they fall into a different category, but when they are in the country as international students they-

Q16 Nadhim Zahawi: So a three- or four-year course, whatever the course is, they-

Nicola Dandridge: Absolutely right. I think this is quite important, and also the OECD definition, which does not either. Perhaps, if we may, we can let you have a more detailed analysis of what other countries do because I think it is very revealing in this respect?

Nadhim Zahawi: It is incredibly important. If we can have that, that would be very helpful.

Simon Walker: I had thought-and Nicola knows more than I do-that the OECD definition said that, if you were there up to 36 months in a student capacity, you were not counted at part of net migration.

Nadhim Zahawi: That was my next point.

Simon Walker: If that is the case, in a sense, it provides a reasonable way out because, as I understand it, Australia had exactly the same political pressures that this country has on immigration issues more broadly. The political problems in a sense are only going to get worse. If there is to be a review of this definition, it would seem to me that this would be a sensible time to do it rather than in a year or two years’ time, on the assumption that this issue continues to be inflammatory and that this gets confused in a wider debate.

Q17 Margot James: My question is for clarification. Does not the effect of the way our rules operate put us in the same category as the US, Canada and Australia? Because any student who has been here for at least a year will be counted net. They would be cancelled out in the figures over a period of time, would they not? They would be counted in as an immigrant and then, when they left, they would be counted out, so the net effect is surely the same as what operates in Australia, Canada and the US. Is that not the case?

Nicola Dandridge: Yes, you are right but there is a lag. There is this net migration bounce, which is referred to, because there are lags between them coming into the country and leaving the country. Because the inflow of international students is rising-albeit not as much as we would want-the impact is that the exit data significantly post-date their entrance data. I think that point was being made earlier-that this is in fact distorting our analysis of the figures, because that time lag does not properly account for inflow and outflow.

Q18 Chair: We have actually strayed into somebody else’s question, but it does not really matter insofar as we have the evidence that we want. Could I just finish off my section of questions? To a certain extent you have anticipated what I was going to ask, and that is, basically, would a more flexible visa system be more helpful to universities and is there anything in the UN definition that would prohibit this?

Nicola Dandridge: We are certainly not suggesting that we can start changing the UN definition. I do not think anyone is suggesting that. It is simply that the UN definition is a definition, and it seems to us that we are letting epistemology determine policy here. It is no more than a definition. What we are saying is that we can be flexible. Other countries are doing it quite comfortably. We should, and we should make sure that our policy is determined by policy-based reasons and not a very artificial and somewhat limited definition.

Chair: Can I bring in David Ward? [Interruption.]

Q19 Mr Ward: Announced with a fanfare. Thank you.

Having said all that, if I were Damian Green-under pressure-I looked at the figures of a 13% increase in UCAS applications. Some are going down from some countries. Some are clearly going up from other countries. What is the problem?

Nicola Dandridge: If I can address that point. I believe that the 13% UCAS figure dates from January. It is actually going down. The most recent is 10% I think from May 2012, and that is exactly the-

Q20 Mr Ward: Only 10% higher?

Nicola Dandridge: Yes. It is good but-there are a number of "buts"-there is a decline overall in the projected increases, and a downward trajectory. It is very early in the cycle to be able to predict the impact of these changes because it takes quite a while to work through. We are hearing the feedback from other countries in recruitment fairs now, which will feed in to 2012-2013. What we are seeing in the statistics now is probably a reflection of what was happening 12, 18 months ago. Even now, we are seeing a reduction. Our concern is how this will play out in the future. All the signs are not good. I think relying on the data now is perhaps slightly misleading.

Having said that, there is also an issue about looking beneath the aggregate figure. The 10% increase, whatever it may be, is of course positive and wholly welcome, but that is against the background of us having had a very dominant and wonderfully successful market position and we are slipping. The international student market is growing and we want to be part of that. As I mentioned before, we are also observing reductions from some countries and in some subject areas. For instance, a lot of the increases are accounted for by Chinese students, which is completely wonderful and long may that continue, but nonetheless it is just one section of the world.

I was having a discussion with a Vice-Chancellor last week, who was expressing concerns that he is a university and he has to offer a diversity of subjects. He can’t just offer business and management courses, which is what many students from China wish to do. He is seeing reductions in applicants from India, particularly postgraduate. He is very worried about the impact on STEM, and that distorted effect of the market is of real concern to him because he runs a multi-faculty university. It is that sort of narrative that is causing real concern, so I think just looking at an aggregate 10% increase, although that is to be welcomed and something we want to hold onto, it is not the complete picture.

Q21 Mr Ward: In terms of those countries where there are reductions, Brazil and India, can you isolate the visa changes as being the sole factor or is something else going on?

Nicola Dandridge: No. We can’t, and it would be impossible to do that. There are number of factors here. When we asked Vice-Chancellors they said that Government policy was probably the primary factor. That is their view. There are undoubtedly other factors at play, not least the behaviour of our competitors.

We have done a quick analysis of what other countries are saying about international students, and I think this is not insignificant for this debate. Can I just quote you some of those policy announcements from other countries? Perhaps I can send you this; it is only two pages, but it is very interesting to see what they are saying because I think accounts for some of our-

Chair: Do not quote two pages.

Nicola Dandridge: No, I am not going to quote two pages. I am just going to read out certain extracts.

Chair: We would be very pleased to have the two pages.

Nicola Dandridge: I will send it to you. Can I just give you a flavour of it?

Chair: Yes.

Nicola Dandridge: For example, from America, President Obama says, "Today we provide students from around the world with visas to get engineering and computer science degrees at our top universities. But our laws discourage them from using those skills to start a business or power a new industry right here in the United States. So instead of training entrepreneurs to create jobs in America, we train them to create jobs for our competition. That makes no sense ... Look at Intel and Google and Yahoo! and eBay. These are great American companies that have created countless jobs ... every one was founded by an immigrant. We don’t want the next Intel or Google to be created in China or India. We want those companies and jobs to take root in America"; so, a real political drive to keep these international students.

In Australia, they have changed their policy on visas as part of the Government’s commitment, "To position Australia as a preferred study destination for international students". They say, "International education plays a vital role in a growing economy ... so it’s important we give it the best possible support", and they have set up the International Education Advisory Council-this is the Knight review-that will be charged with helping "inform the Government’s development of a five-year national strategy to support the sustainability and quality of the international education sector".

We have New Zealand, where their strategy aims to double the economic value of international education to $5 billion over the next 15 years. They want to achieve annual growth in tertiary enrolment of about 7%.

We have Canada-this is the last one-Canada’s national strategy is to reinforce Canada as a country of choice for study and conduct world-class research, and there is a plan in British Columbia to increase the number of international students. Then my final quote is from the Minister for Immigration in Canada, who says, "We’ve created my favourite immigration class, the Canadian Experience class. This is something that should have been done ages ago. We used to tell foreign students who came and got Canadian degrees and diplomas, ‘Thanks very much, you now have a degree that will be recognised by a Canadian employer, you have perfected your English or French language skills, now please leave the country and if you want to immigrate, get in the back of an eight-year long queue.’ Talk about madness". They say, "Now we have the Canadian Experience class", which says basically, "We want to keep you.""

The point about all this-and I will send you the details because I think it is illustrative-is this is what our competitors are doing. They are sending out a message that, "We really want these highly skilled, top-end, elite, undergraduate and postgraduate international students to power our economies".

Q22 Chair: I think we have the message, yes.

Nicola Dandridge: Here, the message is very, very different. Going back to your point-and apologies for being rather long-winded about this-we cannot say that it is only due to the Government’s policies. The atmospherics, the way this is playing internationally, I think, is what is causing our problems because our international competitors are investing and expanding their markets.

Q23 Mr Ward: If that is the picture at the national level, could you just-and you have already indicated this-give us some feeling for the impact on the institutions, institution to institution, within the university sector?

Nicola Dandridge: Of the changes we have seen?

Mr Ward: Yes.

Nicola Dandridge: I rely on our own survey as perhaps the most up-to-date evidence here because it is real time, and what they are saying is that their projections are now being reduced by about 30% on what they would have hoped to have been recruiting in terms of the international student market, and so projections are going down. They are still projecting an increase but they are not as large as they would have hoped, and they are citing the Government’s policies as the primary reason. As I say, undoubtedly what is happening internationally is a factor in all that, that the market is becoming much more globally competitive, and also the various political events. I think some of them have cited the Arab spring in terms of impact of recruitment in the Middle East, so there are other factors at play here.

Q24 Ann McKechin: Simon, I wonder if I could focus on the issue about this country’s business relationship, particularly with BRIC nations where the Government has a declared aim of rapidly increasing our trade and business with these countries as part of generating new jobs. Both you and Nicola have commented on the current impression because we do not have hard facts and figures yet, but on the impression that is being given abroad, to what extent do you think this is actually having a damaging impact on our business relationships with these countries in particular?

Simon Walker: I think it is damaging our business relationships. It combines with other factors in terms of getting here, and a sort of sense that Britain is not as open as it ought to be. So I think it is one of the factors, but a leading one. A lot of the atmospheric side of it is important.

If I could cite our survey though: one in six of our members said that they employed graduates from outside the EU, who have graduated from a British university in the last five years, basically to help with exports. It ranges from Brazil to Belarus-all over the place. The same proportion was worried that policy changes at the moment were going to cause a problem for their organisation. Remarks like this were made: "An employee who was Belarusian was very helpful in translating our literature for a campaign to market our company in that country, helping secure important meetings with the client"; "I have worked with Chinese and Indian graduates who have assisted with taking business to China and India. They are a great asset to a company if you use them correctly"; "I work almost all the time with middle and senior managers in the wider Middle East. They have a strong affinity to the university town they attended to study." "It is not difficult", this member said "to draw a positive conclusion about the need to keep the flow of foreign graduates moving."

Another one, "We have a consultancy contract with a family business in Yangon to help them develop a school. The eldest son who is leading the project did his A-levels in the UK and graduated from Imperial College. His younger sister is about to go to the LSE." There is a lot of, "It enables us to enter the home markets of the graduates with known staff who are home grown in both the country and company sense". I mean, that sums it up.

Q25 Ann McKechin: And presumably language is an issue? It came up in the case of Portuguese when we visited Brazil. We have relatively few Portuguese speakers. Of course, in China it is the same issue.

Simon Walker: Absolutely. The language issue is hugely important, but so is the cultural issue. The company with the Belarusian said that it was actually culture almost more than language because they could find Russian speakers, but knowledge of that society. These are probably middle-sized businesses. I do not know exactly what each of them is, but they are not huge multinationals with great resource to staff up in specific areas if they make a push into Burma. They are small businesses that need to attract someone who knows that market.

Chair: Thanks. Rebecca, to a certain extent the question you wanted to ask has been covered. Is there anything you want to add to it?

Q26 Rebecca Harris: I might as well see if there is anything to add. You have all been quite vivid about the atmospherics, the messages we are putting out and also the interpretation of the definition of migrant but are there any other important respects in which our visa regime is different from our competitors?

Nicola Dandridge: That is not a very easy question to attempt to answer. There are quite stringent restrictions on international students coming into this country. But it is absolutely not our position that there should be unrestricted access. It is probably a question of scale, in the sense that some of the restrictions are reported to make it quite hard for students to come in and they are tougher than some of the restrictions imposed by our international competitors. I think that is clear.

Perhaps I can focus on one area that has caused real anxiety, and that is changes mid-cycle. In other words, changes that the Government has made that affect students who are already in the country. An illustration of that is, for instance, post-study work, where many of the students already in the country now have changed rules in terms of what post-study work they can do. They came in on one basis and now find themselves in a different situation.

Another is the restrictions on the maximum length of stay. That was introduced mid-cycle, so students came in on one basis and now find themselves subject to another. Looked at in isolation, the changes that the Government has introduced we can live with. It is the aggregate that means we are viewed as being tougher than our international competitors, and we can give you examples of that if that is helpful. Also I think the way that the changes have been announced and implemented, in particular the changes mid-cycle, have actually been quite damaging. We are aware that some of the messaging that is going back home from these students is that life is really quite difficult because of these immigration laws.

Q27 Rebecca Harris: Is it more the perception than the reality that is doing the damage, do you think?

Nicola Dandridge: I think it is both. For example, on post-study work, we now have quite restrictive arrangements in terms of what sort of work you can access in that it has to be over-is it-£20,000 or £25,000?

Jo Attwooll: £20,000.

Nicola Dandridge: You have to earn over £20,000 or the going rate for the job, if higher, which is not a requirement in other countries. For example, if you are an international student coming here to work and to study in the cultural sector, the cultural industries where salaries are very much lower, it is extremely difficult to get a job now and do post-study work here. Although in principle the £20,000 salary threshold is workable, in practice it is causing difficulties for certain groups of students. It is not a requirement imposed by our competitors. The aggregate of all these changes-that is just one example-means that, yes, it is quite hard. I think that we are viewed to be at the more stringent end of the spectrum, and that is a question of substance and also perception.

Simon Walker: Could I add that pharmacy students is another particular case that I had heard about? Britain is something of a Mecca for the brightest pharmacy students internationally. As I understand it, they have to do a year of work following their training in the UK in order to qualify, but that was changed mid-cycle. The pay that they would have received in those roles would have been less than the £20,000 level. That caused huge alarm and has done great damage, both to our ability to attract pharmacy students but also to viable and important businesses. The fact that it happened when people were in the second or third year of their degree was particularly unfortunate, because they did not know what was going to happen afterwards.

Nicola Dandridge: It caused a lot of bitterness, the fact that these changes were being made mid-cycle. In a sense the perception was, "We’ve come to this country on one basis and now it appears that different things are being asked of us, but we’re already in the country". The fact that some people were no longer able to access post-study work, who thought that they were going to be able to in order to fund some of their studies, particularly caused concern.

I think it would be helpful if we let you have our analysis of the different requirements, because it is quite a complex picture. But you can’t look at an individual aspect, you have to look at the aggregate, and when you look at the aggregate, you realise that actually the bar is set quite high.

Q28 Mr Ward: Particularly more so in China. I think we picked up a feeling that it was not simply the rules, but the message the rules sent out, in terms of the welcoming nature of the country towards overseas students. Have you identified that at all?

Simon Walker: Absolutely. This is no longer a welcoming country in many respects. I don’t mean to stray into other territory, but I think the Ambassador to China’s letter, which was in the newspapers a few weeks ago, pointed out that we have one-tenth the number of Chinese tourists that Paris has. Sorry that is a diversion, but it does say something about attitudes to this country. I could see why Paris might nudge us out, and I recognise there are technical complications as well, but 10 times the ratio is just appalling. We see it in statistics, in terms of the difference in trade between Brazil and the UK and Brazil and France. Again, I think the ratio is something like 10 to one. These things are having material effects that flow through to the business world. They are not the only reason, but add them all together and this isn’t a great place to do business.

Q29 Mr Ward: We obviously have had colleges closed down, so were we regarded as a soft touch?

Simon Walker: I don’t know, and I would have to defer to Nicola on that. I have heard anecdotally that a lot of the colleges that have been closed down were quite rightly closed down because they were working outside the system. Essentially they were fraudulent. As I understood it, most of that has now been done and it does also seem to be a separate issue from the one that we are talking about.

Nicola Dandridge: Can I just add to that, because I think it is so important that these are dealt with as separate issues? If there is any suggestion of abuse or bogus colleges, we are absolutely 100% behind the Government on that. It just has to be dealt with. As it happens, it is an absolute top priority for UUK to work with the Government on compliance. It seems to me that that is entirely separate from the discussion we are having today. I understand why it is raised but to merge the two seems to me rather dangerous, both in policy terms and also in terms of external messaging.

Jo Attwooll: I think on the perception side of things, there has been an atmosphere over the last 18 months to two years of just a constant feeling of change and bearing down on numbers in the UK. That is still a message that is going out. That has certainly led to a huge amount of very negative press coverage overseas, which I don’t think has helped, and certainly that applies in countries like China and India, because of the nature of the changes and the ongoing changes. There is nothing more planned at the moment, but the language is still very much of bearing down, clamping down on the numbers and restricting people coming here. Some of the changes that have taken place have impacted on international students who are already here, like the closure of post-study work and the imposition of the maximum length of study requirement, which now says you can study at degree level and above for only up to five years. It excludes PhDs, but still impacts on some legitimate combinations of study. That fosters a perception that if you come to the UK, you are not going to be certain that the ground will not shift while you are actually already here. The grounds on which you came here in the first place, and what attracted you, might change midway through your time here because of the retrospective application of some of those changes.

Chair: Can I bring in Paul Blomfield? Again, you have already anticipated some of the questions, but I am sure Paul has some.

Q30 Paul Blomfield: I would like to probe a little bit more on post-study work because while Sheffield industrialists that I talk to probably don’t use the same language, they echo the point that Barack Obama was making in the quote you shared with us, Nicola: the restrictions have impacted on their capacity to grow their business utilising some of the brightest and best that we have brought into our engineering school, for example.

Simon, is that a general experience or are my Sheffield industrialists and Barack Obama out of line?

Simon Walker: No. I think it is a general experience. For many of our members, because they tend to be small- and medium-sized businesses, it is a particular problem because they lack the resource, if they really want someone, to keep them. It is frequently about skill shortages. Again our survey drew examples: a company that had four UK graduates from outside the EU because of cyber security as a particular sort of issue, when there were few, if any, UK graduates who had those relevant skills; an engineering firm in Reading that talks about a recent hiring from Malaysian-a young Mandarin-speaking engineer who has been a "total success"; a software company that has used the freelance services of graduates who have previously gone to the firm on placement as undergraduates. Sometimes this translates to people who will continue to work for firms remotely from overseas. We have an example in Colombia where someone is still working for a company remotely via the internet, so businesses can have that solution too.

It also yielded problems. We had a member who said, "We employed an MSc graduate in web design, who was refused a visa to stay in the UK because we were paying £2,000 below the London rate, even though we are based in Coventry." They lost that person. Another one said, "We had a great candidate from New Zealand on an internship. The visa situation made it impossible to retain her and now she is working in Japan. Maybe that will open up an opportunity for us in the future, as we are on good terms with her, but the reality is the policy has already hurt us." So the impact is absolutely there and on the backbone of the British economy firms, as well as on the big multinationals.

Jo Attwooll: I just want to add an example to that. The provision for post-study work now sits under the Tier 2 route. As Nicola mentioned earlier, there is a minimum salary that applies to that route, so it is either £20,000 or the going rate for the job, whichever is higher. One example: the UK Border Agency has codes of practice that set out the going rate for individual professions. For a new graduate chemical engineer, the going rate for that job is £25,400, which I can imagine for some small chemical engineering firms is probably quite a prohibitive salary, particularly in certain regions of the UK.

Another example perhaps of the perverse nature of that requirement is that the salary listed for a trainee solicitor outside London is actually £16,650, but because it has to be either £20,000 or the going rate for the job, whichever is higher, any trainee solicitor, wherever they are based outside London, would have to earn £20,000, even though the Border Agency has said that the going rate for that job is actually far less, so there is a perverse incentive on two fronts: pushing up salaries that non-EU students would be expected to earn, and also potentially forcing a firm to pay more for a non-EU graduate, substantially more than they would actually for a UK graduate, which would have implications for a lot of firms.

Q31 Paul Blomfield: Thanks very much for that. Again, that has anticipated something I was going to ask, because when we looked as this issue previously, when the £20,000 threshold was set, the Vice-Chancellor of Sheffield University expressed concern that the average graduate starting salary was £19,500 for Sheffield, so there is a regional dimension, and also raised the particular problems in subject and sector areas. In many cases, where a level of postgraduate study is a requirement for qualification and entry into professions-architecture was mentioned, and Simon has mentioned pharmacy-obviously you concur that that £20,000 threshold is too one-size-fits-all. How would you change it? What sort of flexibility do you think is needed?

Jo Attwooll: The codes of practice that are used to determine what those salaries are, for Tier 2, are currently being reviewed by the Migration Advisory Committee. One potential option is that the salaries listed list entry-level salaries for graduate professions, and also salaries for more established professionals. That perhaps would allow for some variation in particular professions, so that in those professions where the salaries are typically lower than maybe £20,000 there could be a lower salary rate for new entrants into that profession listed in the code of practice, instead of an arbitrary £20,000 limit.

Nicola Dandridge: I think exactly that point-if there could be flexibility in terms of the salaries being responsive to specific industries and sectors. I have been most exposed recently to concerns from the creative and cultural industries, which recruit large numbers of international students, and simply none of them qualify. So, if it could be more sector specific-a bit of a generalisation there, but generally salaries are very low in that area-but to address your point, also regionally specific. That sort of flexibility can be built into the system through the codes of practice, which Jo alluded to, and it would be much more responsive as an arrangement that would not have this perverse impact.

Q32 Paul Blomfield: Thank you very much. Probably a final Sheffield anecdote. Again, the Vice-Chancellor of the University of Sheffield shared with me a case of a postgraduate student who, because of the new restrictions, had decided not to stay, not to seek post-study work in the UK, gone back, and this was a major story in The Times of India. Is that a common phenomenon? How far is this closure of the post-study work damaging our reputation and our recruitment?

Simon Walker: I think very significantly, and I think British diplomatic posts are also reporting that. But anecdotally it is quite often drawn to my attention how much damage it does, and there are numerous headlines we could refer to. It is a big problem.

Q33 Paul Blomfield: Explain why you think that post-study work is so important. I ask that because when I questioned the Home Secretary on this issue, at one stage when we were debating it in the Chamber, she said that really international student recruitment, and the individual choices international students make when deciding whether to go to Canada or the UK, should be based solely on the quality of the education, other things should not count, so why is it so important?

Simon Walker: Our members are approaching it from their own perspective, actually. The ability to access these people is important for their firms, so they are not doing it-those examples I cited-as an act of charity. They are doing it because it is helpful to their businesses, and quite often that will continue for a period with people who wish to stay here. From that perspective, I think they regard it as valuable for them. But there are other reasons why students find it attractive.

Nicola Dandridge: Let me identify three, and I am sure my colleague, Jo, will have more. Whatever the reason, it is viewed as being absolutely essential and we know that in practice it is a driver for international student choice as to where to study. The reality is many of these students don’t actually take up the post-study work, but they need to know it is there as an option for them. We know that in practice this is hugely influential in terms of the deciding where they study, which is why-going back to the point made by Rebecca Harris- the fact that we are tougher in our requirements on post-study work is significant in itself.

The second reason is that many of the academic subjects, on which we absolutely excel in this country, are quite vocationally focused; it is the engineering, it is the industry engagement, our universities are very strong on that. We are far more industrially engaged than other countries and, therefore, that is a real attraction. It is no coincidence, as you will know, that the Brazil scheme has a work placement built into the Student Exchange Programme, and we are very good at that. It is integral to the way that international students approach their higher education qualifications. They do it to get a job, to get better qualifications. They are not coming here to learn Latin, necessarily, they are coming here to do engineering and various subjects like that.

The third reason why this matters is that it is an area that our international competitors are really promoting. I will not refer back to those headlines, but an emerging theme through what the country leaders are saying is that we really want to be able to offer post-study work because that is an attraction to international students. Also it is the mechanism that we can use to draw on the brightest and the best of these international students to feed our economy-the point that Simon was making. Those three arguments are powerful and persuasive for international students. Jo, do you want to say anything?

Jo Attwooll: Basically, one of the biggest issues is that there is a massively growing market for international students. When they try to assess which country they are interested in going to, they look at the entire package that is on offer to them and, as Nicola was saying, the option of post-study work is a draw for individuals, even if they never choose to actually take it up.

To give you a different example, it is like choosing which gym to join. You might choose a gym that has a swimming pool over one that doesn’t but never actually use the swimming pool. It is the same sort of scenario, basically they will compare what all different countries offer and make a judgment on that, and, at the moment, the UK is very much going in a different direction from a number of its key competitors.

Q34 Margot James: Are you concerned that the post-study work route changes will affect the postgraduate teaching of STEM subjects?

Nicola Dandridge: Yes. That is a real anxiety, in that many of the subjects-as you say, particularly STEM and engineering-are dependent on international students to make them viable, and those are the ones that I think we really need to watch. The trends are not good-that is why we are seeing dips. We are seeing expansion in business and management, but reductions in students coming in to study the STEM areas, and I think that could start having long-term impacts on the viability of some of these courses for our domestic students as well.

Q35 Margot James: How important is international collaboration and the sharing of research methods for innovation?

Nicola Dandridge: It is completely fundamental. We have not spoken about research, but of course many of these international students come and then do PhDs, then form the backbone of many academic faculties, and then feed and promote international research collaborations. You will well know universities are hugely global now. They just operate in a global sphere, and that is where research is at in large part. Many of the major innovations are a reflection of international research collaboration, so it is incredibly important.

Q36 Mr Ward: The "squeezing out" analysis, one of the reasons-so we are told-that we have such a poor national football team is because we have all these international players coming across here and playing in our Premier League, which makes our Premier League very, very good, but our national team rubbish or poor, poorer that it would have been, reasonable at penalties and so on.

Is there a squeezing out? Is there an argument there in terms of-I can see how these people go into industry and so forth-are we squeezing out what needs to be home grown students who are then available for industry? Is that a fallacy or-

Nicola Dandridge: I was thrown by the football analogy, but I take your point. First, international students and domestic students are [currently] completely separate markets, because all the student number controls that apply to the domestic student market are completely independent of the numbers of international students coming in. Sometimes we see very misleading headlines saying that international students are keeping our domestic students out of university places, and that is simply not true. They are [currently] totally separate markets, and the controls that relate to domestic students have absolutely nothing to do with international students.

On the contrary, it is the international student income that in many ways-directly or indirectly-enables universities to keep various faculties open, but also the numbers point means that many of the subjects are sustainable. I have made that point before, but it is particularly in STEM areas that the numbers-particularly at postgraduate level-are such that if it were not for the international students, that postgraduate provision would fall away. It is exactly the reverse of the English football team analogy that you have just described.

Simon Walker: Could I make one adjacent point? My daughter is at Keele University at the moment. Like other students there, she benefits enormously from the range of international students who are there. It is a real benefit to British students because this is not necessarily the most internationalised society. Our students don’t go abroad as much as they ought to. That also came up in our survey, where member firms felt that it benefited students-it benefited their British recruits-who had been in international environments with international students who had mixed with students from other cultures at their British universities. That benefit should not be underrated-the way that it makes our universities better and full of more potential for UK students.

Q37 Paul Blomfield: I just want to follow up on a point on STEM subjects, and to probe a little bit further, because clearly the teaching of STEM subjects is an important concern to us all, not only in terms of sustainability of postgraduate programmes but in the potential impact on undergraduate programmes. Again, there are Sheffield anecdotes, and I am thinking of the kind of critical mass provided by international students sustaining the viability of some of our undergraduate programmes. Is that a fair assessment, and is it a general experience? If we are on a downward trajectory, are we threatening the opportunities for UK undergraduates to benefit from top quality STEM teaching?

Nicola Dandridge: Yes. I think it is too early to draw apocalyptic conclusions about the closures of departments, but the trends are not good. It is particularly apparent now, because of the reduction of Indian students-students coming from the Indian subcontinent to study STEM subjects-that is where there are already questions being asked about the sustainability of certain subjects.

You are absolutely right, the example that you are citing is what we are hearing from a broad range of Vice-Chancellors. I was speaking to the Vice-Chancellor of the University of Surrey last week, and he reported exactly the same concern about the sustainability of some of his engineering courses. So, yes, this is a theme and a narrative that is emerging, primarily for postgraduates but, yes, also impacting on undergraduates.

Chair: Thanks. Do you want another one, Paul? Okay, we have time.

Q38 Paul Blomfield: Thanks. It is on a different issue. Again, I don’t mean to be so locally focused, but I know my Vice-Chancellor would want me to ask the question. There was an article in the Financial Times recently quoting an international law firm, to the effect that the UK visa processing system is recognised as the most problematic in the world, so the question is separate from the main trajectory of our questioning, but it is about your views on the complexity of our visa regime. Do you have any observations on that?

Nicola Dandridge: We have had 13 changes to the visa rules.

Jo Attwooll: No, it is at least 14 since 2009.

Nicola Dandridge: Fourteen changes since 2009 and the impact that the incessant and relentless changes has had, in terms of the universities’ capacity to deal with it-although they have-but also on the international messaging about the fact that there is a clamping down that is carrying on and on and on, is quite stark. Certainly, if we send you the chart showing the different visa requirements between the UK and our international competitors, I think that will validate your suggestion that actually we have the toughest visa regime. I don’t know about the whole world but certainly, among those players in the international student market, I think the answer is undoubtedly yes.

Q39 Ann McKechin: I wonder if I could clarify something. Nicola, you mentioned having the toughest regime. The Public Accounts Committee, in their report in March this year, pointed out that, under Tier 4 when it was originally introduced, they probably allowed 40,000 to 50,000 people just to wander in and start working, and they actually never turned up for study. I have spoken to UKBA and they said that that problem affected Russell Group universities right down to further education colleges.

Do you agree that it is not necessarily that the system was not tough enough, but that there is an issue about whether the complexity is required or whether simplification, still with tough enforcement, really should be the aim of UKBA and UK Visas in terms of the system that they affect?

Nicola Dandridge: That report was historical and predated the changes, and so I don’t think anyone is suggesting that 40,000 students should be able to walk in now. Certainly, now the system is tough and we, at Universities UK, have been supportive of the points-based system. We think it has introduced an element of transparency into the process and we want to work with it. We want to stop these endless changes and, of course, the threat that is hanging over us, like a Damoclean sword, of reducing net migration is a major change that is still potentially in the future.

We want to work with the Government now, not have any more changes, to remove that threat and have a more intelligent and sophisticated definition of net migration, but also work with them on abuse. I think transparency is part of that. I agree, that is a very fair point, that the complexity has perhaps obscured to some extent how we can engage with any abuse that takes place, though higher education is very compliant on the scale of things.

But most significantly, this blurring of abuse and net migration is perhaps the most unhelpful thing. It is unhelpful in terms of public engagement. It is unhelpful in terms of how we address these issues as a matter of policy. Also, it is unhelpful in terms of the message that goes out to international students. On all counts, I absolutely agree with you: we need transparency, we need to separate out these net migration issues and we need to just stop having so many changes, which is very damaging.

Q40 Mr Ward: I am not sure what your knowledge would is of the international comparators really, but there seems to be a body of evidence that this is a classic case of right hand and left hand in Government, with part of it clearly seeing the benefits of increased students from overseas, and another part that is resisting that.

You mentioned Obama, so clearly right at the very top in the American system there is a voice saying, "This is something we need to do". Is this peculiar to our country, in terms of the way in which there are different parts of the Government dealing with this issue?

Nicola Dandridge: It is perhaps most stark in the UK at the moment, but we have seen quite dramatic policy changes in other countries. The Knight review in Australia was the response to a previously much more hard-hitting visa regime, which led to a significant reduction in international students going to Australia. We have also seen a very dramatic shift in policy in France.

François Hollande has announced a shift in approach towards international students and a change in their engagement with the international student market. I think what we have observed internationally is changes in policy, but what is apparent in this country is perhaps unease about the public statements of those involved with foreign relations and business, and those concerned with the Home Office. I think that is perhaps a distinctive feature of the UK.

Q41 Mr Ward: I think Adrian was saying he was somewhat disappointed about business not banging the drum loud enough. Is there an argument that businesses and universities are not really working together effectively on this?

Simon Walker: I don’t think we have been working together as effectively as we should have been. I think the Chairman’s point is absolutely right that business ought to be talking about this far more because it is impacting at all levels. Perhaps because the benefits are so diffused within firms, and within the economy as a whole, business has not historically seen the damage that this is doing overall.

Q42 Mr Ward: There ought to be an Institute of Directors or something that brought these views together. Maybe we ought to think about something like that?

Simon Walker: We are trying. If I could just touch on the last point too, I think there is a degree of tunnel vision from certain parts of Government about this. I was at a conference recently where a Home Office official-and I don’t mean to castigate him personally-said to all of the university people who had gathered there, and Nicola was there, "You’re in the migration business. It’s the biggest game in the migration world, bigger than work permits, bigger than family reunion, bigger than asylum." That is not the right way of looking at what universities do. I don’t think you would say that to a business audience, so I think you are right about right hand-left hand because Britain is clearly not going to be a great defence power, and may not be a great economic power, but it is a great intellectual power. It really is, in terms of the cultural, intellectual and, indeed, business leadership globally that this country provides. That is what I see being threatened.

Nicola Dandridge: Perhaps a point that we have not made sufficiently is just how successful the UK has been, not just in international student recruitment but provision overseas, TNE, which is a slightly different point. But this is a huge success story, and there is a certain irony that when we have a success story, in both political and economic terms, we seem to want to shoot it in the foot, which is very much how it feels at the moment. The fact that, in terms of international student numbers we are second only to the United States, is something we should be shouting about as being a tremendous success and it does inform our economy potentially, and it is a tremendous benefit.

Q43 Chair: I need to bring the proceedings to a close, that point is well taken. You have argued about powerful case there. Have you had meetings with Ministers in BIS and the Home Office to make this case? Do you feel you have an effective dialogue with them and that it is understood?

Simon Walker: Yes, I do. There is a fundamental political problem with a worry by some Ministers that what seems to be the rational response, which is a reclassification process, will be politically taken advantage of and go down very badly with the Daily Mail, for example. I see the problem, and I think that something that tries to take the specific part of this issue out of the immediate political cauldron is what is needed to defuse the potential political problem, which I think we all recognise.

Q44 Chair: Nicola, do you have anything?

Nicola Dandridge: I think Simon has expressed it perfectly. That is exactly our perception as well. We are having an informed and positive discussion with both Departments, but I think the perception of "fiddling the figures" of the UN definition seems to have acquired a disproportionate effect that we don’t feel is justified.

Chair: Jo, do you wish to add anything?

Jo Attwooll: No, Nicola has put forward Universities UK’s view.

Chair: Thank you. That is incredibly helpful. We are interviewing the Minister next, and your comments will feed into the questions that we give him and of course the report that we will produce afterwards. Thank you. That is very helpful indeed.

<?oasys [pg6,cwe1] ?>Examination of Witnesses

Witnesses: Damian Green MP, Minister of State for Immigration, Home Office, and Carolyn Bartlett, Head of Student Migration Policy, Home Office, gave evidence.

Q45 Chair: Good morning, Minister. First, thank you for agreeing to come before the Committee. Before we start, I realise we don’t have a nameplate for your officer. Perhaps, for voice transcription purposes and to help us, you could introduce yourself and your officer?

Damian Green: Thank you, Mr Chairman. I am Damian Green, the Immigration Minister, and this is Carolyn Bartlett, who is Head of Student Migration Policy at the Home Office.

Q46 Chair: Thank you very much. I will open. We have just returned from Brazil, where student immigration-if you wish to call it like that-was an issue. We have been talking to representatives of Universities UK and the Institute of Directors previously, and I think they have argued very persuasively that, first, higher education in this country is a huge earner for the country and needs to be expanded; secondly, that our economic rivals globally have understood this message and are pursuing that, and that we could lose out very considerably in the short, medium and, indeed, very much in the long term, unless we reclassify students as non-migrant workers.

In your recent Newsnight interview you seemed to be arguing that the UN definition of immigration was an obstacle to this clarification; could you explain why?

Damian Green: That is the internationally agreed definition. An immigrant is somebody who arrives in a country and stays for more than a year. It is a straightforward definition; it has been used for decades. Everyone-indeed, notably in the last few days the Leader of the Opposition-has recognised that immigration is a difficult issue. It is a problem for this country. I think trying to redefine our way out of the problem is absurd. It would not be credible to the public and we should not do it. Government should not try to fiddle the figures to get their way out of a problem.

But I think there is a wider point, which is that to say somebody who comes here for three years as a student is not here, so doesn’t count, is just absurd. Nobody is arguing that somebody who comes here to work for two years or for 18 months is not an immigrant; of course they are an immigrant. To say that people who may come here for longer are not immigrants, because they have a student visa, just seems to me to be frankly silly, and it is the sort of silly argument that is often most passionately put by very clever people, and that is what we are getting in this case. It doesn’t fool anyone, the idea that somebody can be here for three, four, five years or longer but in some way do not have an impact. They are living somewhere, so they are having an impact on housing. They will be taking public transport. If they are here for three years, it is quite likely they use the health service. All the immigration pressures on the public services, which we all know about, are as affected by an individual student as they are by an individual on a work permit, so I just think this whole debate is a complete dead end because it does not accord with any kind of commonsense.

Q47 Chair: You have raised a number of arguments that I think in themselves might be worthy of a debate, but I am not going to follow those particular arguments on this occasion. What I want to come back to is that our international competitors acknowledge the UN definition, but for their own domestic purposes and policy purposes, they have a different one. Indeed, given the fact that most students actually go back, there is a perfectly reasonable argument for saying that they are not migrants or immigrants, insofar as they are not going to stay here.

Damian Green: As I say, plenty of people come here, go back, or plenty of people come here, move somewhere else, and come back here. In an increasingly global world this will happen a lot, so if we arbitrarily say that this group of people who happen to have come on this type of visa do not count as immigrants but everyone else who comes for more than a year does, it just seems to me to be dishonest, frankly. The claim that, "Oh other countries do it differently", bears quite a lot of examination. They all count them as immigrants. Some of them put them in a temporary migrant category, but they still count them as migrants. We put them in a student category and we count them as students and we disaggregate that, so we know perfectly well. But the truth is, they are here. Therefore, as I say, they are using public services. Immigrants, as we all know, do good things and some do bad things and there is a balance to be struck. What seems to me to be absolutely unarguable is that if a human being is here for a period of time, then they are here and therefore they are an immigrant.

Q48 Chair: The arguments that you put are equally relevant to our international competitors, but they have a policy that makes a distinction. This does not, and it seems to me that you are making political arguments.

Damian Green: Australia and the US both include students in their net migration statistics, as we do. They choose to label students as a temporary category in their visa statistics, but they count towards net migration in Australia and America. I think this feeling that Britain is in some way different is just not borne out by the facts.

Q49 Chair: But they do not base their policy on it?

Damian Green: They have a different policy from us. At the moment, neither Australia nor America has a policy of driving down net migration, whereas we do. We have said that we will get net migration down to the tens of thousands by the end of the Parliament, but that is just a policy difference. As you say, the debate is often framed as though we are in some way doing something different with our immigration numbers from everyone else. My contention is that we simply are not.

Q50 Nadhim Zahawi: Minister, I think you make a powerful point on the technical argument, but I would take you towards the perception gap. We have heard evidence that in places like India and Brazil, there is now a perception that we are not welcoming international students in the same way as America, Canada and Australia. Maybe-just maybe-what they are doing with the definition, i.e. defining students as temporary immigration rather than permanent, is salesmanship. Would you not agree that if our competitors are doing something that allows them to deliver the international perception that they are open for business, we ought at least to just look at what they are doing and see whether we can learn from it and sometimes copy it?

Damian Green: The perception argument is a really interesting one because, again, you have to delve through to the facts of what is happening. Interestingly, at a time when the universities are arguing that we are sending out these wrong signals, the actual applications- the UCAS application figures for this coming September-are 10% up from outside the EEA. Around the world, 10% more students want to come to Britain this year than last year in the full knowledge of all the changes that have come in. Within that, you see differences in different countries. Chinese applications are up, but Indian applications are down. There are clearly different perceptions against an underlying growth, I would point out.

Absolutely, I can say that no Minister-neither a Home Office Minister nor any other Minister-is going round the world saying international students are not welcome. We absolutely welcome the brightest and best. I say this wherever I go abroad. I know David Willetts, my colleague who is the Universities Minister, says the same thing. All Ministers say this. The awful truth is that this wrangle over the definition-as I say, it seems to me the argument is just slightly silly-gets reported in foreign countries. As soon as somebody uses the phrase "not welcoming", then of course that is a headline in a newspaper or on a website overseas. That is what fuels that particular perception. I do my best to go round the world ending it.

Q51 Chair: Before you go on, my understanding is that applications were down from China. Do you have any figures there?

Carolyn Bartlett: I do not have the figures with me, I am afraid, but we can write to the Committee on that. My recollection is that university applications from China are up around 9,000, but I would have to check that and get back to you.

Q52 Chair: Okay, but they are down from India, I believe?

Damian Green: Yes.

Carolyn Bartlett: Yes.

Q53 Nadhim Zahawi: We heard evidence that that increase of applications to UCAS has fallen back from 13% down to 10% because of a time lag. Are you concerned about that decrease in the increase?

Damian Green: It is for the universities to market themselves. But, very explicitly, how can we contribute to the market? First, we have not put a cap on university applications from overseas in the way we have on work visas, which I would hope sends a very clear signal that we regard this as a different type of sector. Secondly, we spend a lot of our time trying to make the visa system as smooth as possible, so that people can apply within the terms. In the end we will have to refuse some people because their applications are not good enough. We process about 1,000 student visa applications every working day, so we get through a lot.

You made a comparison, and the Chairman made it as well, with other countries. America, for example, insists on interviewing every student applicant. We do not do that. Australia has just introduced a new credibility test, and a general test about the intention to remain. If they think somebody is planning to remain, they will not let them in. There is a misconception that everyone else in the world is loosening their system and we are tightening ours. Actually, since the Knight report in Australia, they have loosened parts of it but they have tightened other parts of it. As I say, if you want to be a student in America, you have to go through an interview. We do not interview everybody. We do interview some people; we do test their credibility and it is very useful doing so. We did a pilot of it, and I think 17% did not pass a basic English test. They said they were coming here to study at a university, at least-

Carolyn Bartlett: With about 17% of those interviewed from a university, our entry clearance officers had some concerns about their genuineness. A number did not have the language skills that would be expected of those coming to universities.

Q54 Chair: How do you account for the increase in students going to the US and Australia, given the tightening up-in your words-of their visa application regime?

Damian Green: There are more and more international students. It is a pool that is getting bigger every year. As countries, particularly China and India but indeed Brazil, where the Committee has just been, hasn’t it? Yes. As these countries become more prosperous, more and more of their young people want to study internationally. All the countries with big education sectors-us, America, Australia, Canada and so on-have a widening pool to fish in. As I say, our numbers are going up. The Americans are going up. The Australians are going up as well. If you look back historically, they go up and down. Australia had a huge problem a few years ago when there were violent riots. I think I am right in saying that an Indian student was actually killed in Sydney. There were real problems there and inevitably applications from India dropped off a cliff after that. They are clawing their way back in that particular market, but it is a big and growing global market.

Q55 Paul Blomfield: Can I ask the Minister to comment specifically on the international comparison in terms of how statistics are presented? Because you said, and rightly said, that in the States the net international migration figures produced include students, but those figures are produced by the Census Bureau, aren’t they? American immigration policy is driven by the figures produced by the Department of Homeland Security and those do not include students, do they?

Damian Green: American immigration policy is different from ours. I think that is just a-

Q56 Paul Blomfield: Yes, but my point is, it is driven by figures that do not include students, isn’t it?

Damian Green: Yes, at the moment it is, but I think-

Carolyn Bartlett: Sorry, the visa statistics of the US do include students. They label them as temporary. It is a temporary category, so it is-

Q57 Paul Blomfield: But they are not included in the net migration figures produced by the Department of Homeland Security?

Carolyn Bartlett: The net migration figures following the international definition are produced by their Census Bureau, as in the UK they are produced by the ONS, not by the Home Office.

Q58 Paul Blomfield: But I agree with the point that you are making; the Census Bureau do include students, but my point was that immigration policy in the States is driven by the Department of Homeland Security figures, which do not, as the Minister conceded.

Damian Green: In any country, if you are producing figures from two different sets then you inevitably look at both. We have visa numbers. We have net migration figures. The Home Office produces the visa numbers. The ONS produces the net migration figures. As it happens, our target is for net migration, so on your analogy you would be saying that immigration policy is driven by the ONS. It is not, it is driven by the Home Office because I am the Immigration Minister at the Home Office. I hesitate to follow you down this path of saying that one set of figures drives immigration policy in any country.

Q59 Paul Blomfield: It is an over-simplification to say that the Americans include students. They don’t in the critical set of figures that they produce.

Damian Green: They do in one set of figures, but not in another set of figures.

Q60 Chair: The crucial point is that, in this country, we have a policy objective based on one set of figures and, while other countries may have that set of figures, they don’t base their policy objectives on it.

Damian Green: They do not have the same policy objective. That is the root of the difference. I think we are devilling the detail there, when the main detail is that it is this Government’s policy to reduce net migration. It is not the US Government’s policy to reduce net migration. That is at the root of the difference between us and the American policy.

Chair: I am not sure that that is not the US approach. It is just that they accept that students are a different category.

Q61 Julie Elliott: Minister, we accept that there is a 10% increase, but we have had evidence saying it is much less than what the projected expected increase was. Against that background, and on the language skills, isn’t it right that in America at the moment the language skills tests have actually been relaxed where ours has been increased? Also, on the 17% of people being interviewed, anecdotally from my university we have had cases of people being really frightened, not expecting to be interviewed, whose language skills on appeal have been found to be quite advanced. But it is the fact that they have been picked out, removed from their friends and interviewed under quite clinical circumstances when they were not expecting it, arriving in a foreign country that they have never been to. Perhaps that is not the best way to test somebody’s language skills. Would you acknowledge there might be a problem around that?

Damian Green: It is a very small problem if it is. If you can speak a language to a level where you can benefit from a course at a university, it is not unreasonable to check whether you can benefit from that university course or not. If you can speak a language to that level, then you should be able to pass a conversational language test. A lot of the interviewing we do is overseas, isn’t it, before people arrive?

Carolyn Bartlett: Yes, where we interview and wish to test language skills, we apply a basic test of whether there is basic conversational English. We would not test to B2 level. But we have given flexibility to universities to make their own language assessments. Unlike private sector colleges, where we have insisted on secure English language tests, we have said universities may make their own language assessments. It might be that universities have chosen to do something in a certain way, but we have allowed universities that flexibility.

Q62 Julie Elliott: Is it not that some people are being questioned when they arrive in the country?

Damian Green: It will be the universities. As we say, we actually give a specific privilege to universities that they can assert that somebody has reached the language level, which we do not give to private colleges. The universities are privileged within the system.

Q63 Julie Elliott: But are some people not being questioned at immigration to test their language skills?

Damian Green: They are being tested overseas, yes.

Carolyn Bartlett: Overseas or at the border?

Julie Elliott: At the border.

Carolyn Bartlett: It is possible that some people will be questioned at the border. It is not a routine thing.

Julie Elliott: I am struggling to hear you.

Carolyn Bartlett: I am sorry. Yes, some people are questioned by border control officers at the border.

Q64 Julie Elliott: Is that the best way to test language skills, do you think?

Carolyn Bartlett: I do not think that that is routine.

Damian Green: But it is not a bad way. If somebody says they are coming here to study a course, an academic course at a university, and frankly they can’t speak a word of English, then it seems to me not unreasonable for any immigration system to question whether they are actually going to benefit from the course. One has to think back to the early days of the points-based system, when it was introduced in 2008 by the previous Government. After six months or so, large chunks of it had to be suspended because of huge abuse. I am not making a partisan point at all; I think the previous Government was quite right to do this. In certain parts of northern India and Nepal and I think one part of China they just suspended all applications, however good the student was, because people were arriving in this country in droves. There was an enormous spike in applications, and many of them clearly did not have the language skills or any other skills to benefit from the courses they were applying for. If you do not do any type of credibility test, you are in danger of opening up to people who are clearly just scamming the system.

Q65 Julie Elliott: I do not think that was actually what my question was about. I have no issue with people having to have a level of language skills. Clearly, people have to have a level of language skills to come here to study in English. That is absolutely obvious. I am talking about people who have already passed language assessments in their own countries and are then being secondarily questioned at immigration, by people here, and sent back in very frightening circumstances. At the university in my constituency, I have certainly had anecdotal experience of that and on appeal people have come through because they can speak English.

Damian Green: It used to be the case, of course, that they would not have passed any language test. We have only recently done a pilot on this kind of credibility testing. For a number of years, people did not need to prove any kind of language skills. Border control officers ask a set of questions at the border and I can imagine that, if it appears that somebody cannot speak any English at all, cannot understand the simple questions they are being asked, and you find they are applying for a university course, all I am saying is it is not an unreasonable question mark to arise.

Q66 Mr Ward: From the answers so far there seems to be a remarkable degree of silo mentality, in that you have a job to do, you have a task, a policy to follow in terms of reducing immigration. Whatever is outside that-the economic benefits, the perceptions of this country as being unwelcoming, the fact that there has been a reduction in the growth in student numbers and that there has been a reduction in our world share of this- seems to be outside your remit. Therefore, a migrant appears to be a migrant appears to be a migrant. Is there no differentiation in terms, or is one migrant, who happens to be contributing to the local economy, exactly the same as another one who may be on the dole queue?

Damian Green: No. We try really hard not to sit in silos. That is why we specifically favour university students. The whole point of this bit of immigration policy is to favour the brightest and best, to favour those students who are likely to prove of long-term benefit to this country. In a whole host of ways, we skew the system in favour of those people. They are allowed to work when they are studying at university. If they get a graduate level job, they are allowed to stay here after they have been to university. That job does not have to go through the resident labour market test. In terms of selling overseas-because I absolutely agree with the point that perception is all in this-for the first time ever there is now a taskforce that is led by David Willetts, which consists of Universities UK and UKTI and bodies like that, which the Home Office is part of. Your criticism would have been valid in the past when there were silos, but absolutely we try, both in terms of framing the policy and in day-to-day practicalities, to put in force this idea that Britain needs to grow, we want the most talented people from around the world to choose to come to Britain, and we try to do that.

Interestingly, we are in the first year of this and the figures show that is what is happening. There has been a significant fall in the number of student visas issued. The number of student visas issued has gone down 57,000, but the percentage within that overall total that goes to the university students has gone up from 50% to 66%. The policy is achieving precisely what I think this Committee would want it to achieve, which is that the proportion who are coming, who are going to be of most economic value to the country in the future, is rising and is rising quite fast. What is happening is that the long tail of, frankly, dodgy colleges and so on and dodgy courses is disappearing, and it is disappearing quite fast. There are 500 fewer colleges bringing in foreign students now than there were this time last year. We have swept away what we wanted to sweep away and the proportion, therefore, of university students is going up.

Q67 Mr Ward: Universities UK and IOD, are they simply out of touch?

Damian Green: I disagree with their analysis-obviously, from what I am saying. Of course, they are in touch with their own sector and they are lobbying you. Straightforwardly, that is what lobbying does. It is what politicians are for. They are here to be lobbied. They would always want fewer restrictions.

Q68 Chair: Can I just intervene, Minister? This Committee has made two trips, one to China and one to Brazil. On both occasions we had overwhelming evidence of the UK higher education visa policy damaging relations with those countries, from both the business and the academic community.

Damian Green: In what detail? Which bit? Because I am absolutely conscious we can always improve our visa policy, we can always try to do things more quickly and we can always try to help people more in their own language, all that kind of thing. But, as I say, the facts are that we issue 1,000 student visas every working day, so clearly 1,000 people a day get through the system. But I am more than happy-

Chair: This is not just about interested bodies here lobbying this Committee.

Q69 Ann McKechin: Minister, just following on from what the Chair said, Universities UK advised us this morning that there have been 14 different changes in the regulations since 2009. Perhaps that might be one of the reasons why this Committee has formed a distinct impression from its evidence abroad that we view migration from students as a problem rather than an opportunity. Would you agree?

Damian Green: I would not agree with the last bit. Absolutely there have been lots of changes. A new Government was elected in 2010 with a radically different immigration policy, and we have spent our first two years in office implementing what we said we were going to do, so there have been lots of changes. Over the next two years there will be fewer radical changes. Systems always need tweaking, not least because if people produce credible evidence that the system is obstructing the brightest and the best students from coming here, we will look at ways of reforming that, but the big radical reforms have happened.

Q70 Ann McKechin: If I could just stop you there, one of your changes is about the issue of a migration cap. You made a statement earlier this morning that there was absolutely no cap on student numbers. Is that correct, and will that remain so for the rest of this parliamentary session?

Damian Green: We have no current plans to introduce a cap on student numbers.

Q71 Ann McKechin: In terms of net migration levels, if necessary to achieve the levels that you have indicated as your policy, that would mean there would be a diminution in other visas but not in student visas?

Damian Green: No, that is not the same thing at all as not putting a cap on. As I just explained, the number of student visas issued in the first year of the policy fell by 57,000. The Migration Advisory Committee has come up with a number of figures by which it estimates-it has to be done in slightly broad brush ways-what the fall would need to be for us to meet our target. I think the most recent one was 87,000 or something like that. If you take-I don’t know-a 70,000 reduction in student numbers, plus the dependants that come with students, then you would be hitting that sort of number. As I say, in the first year, the fall in student visas has been 57,000, while the percentage going to universities has gone up. That is precisely what I would have hoped to achieve.

Q72 Ann McKechin: Some of the complaints that were discussed earlier this morning when we took evidence were about these changes you mentioned, which actually happened to some students mid course. One example given was pharmacy students who, as part of their qualification under the course that they were completing, required one year of work experience at the end of their degree. But as you have abolished the Tier 1 qualification, this in effect meant that students who had already started their course before you changed the rules were potentially denied the ability to complete their necessary professional qualification. That rule change in an arbitrary manner I hope you would appreciate is not exactly seen as a welcoming gesture.

Damian Green: We have changed the system. We have a specific point about pharmacists because we are aware of that problem, which we have dealt with.

Carolyn Bartlett: Yes, they can come in under Tier 5 of the points-based system, if they are sponsored by their professional body, and the professional body is in talks with the Department of Health in order to do that so they can complete their post-registration training here under Tier 5.

Q73 Ann McKechin: Do you believe that that new solution would cover all the existing students who had entered this country prior to the rule change?

Carolyn Bartlett: Yes.

Q74 Ann McKechin: Thank you. Can I also just ask about another issue that has come to my attention in Glasgow? This is about a state college. It is a public college. It did not meet the criteria that were required, in terms of the stringency of the entrance requirements, and it has acknowledged that there was fault. However, they already have a significant number of bona fide students who have already entered the UK, who are in the middle of a course but now face having to find another college to complete their studies. If we are trying to attract foreign students, these types of stories, such as those we heard today, can very easily be in their own local press within days of it occurring. They are not the people at fault. There is fault by the institution and that is acknowledged. The UKBA is right to say that it wants this system implemented properly, but we have ended up with a system where students have come in perfectly properly, have done everything they have been asked to do, but are actually going to end up potentially not being able to complete their course through no fault of their own. Is that the type of change that is not necessarily helpful?

Damian Green: If a college has broken the rules, as you say, then clearly we need to take action. We do have specific quite lengthy periods where people can find new courses because obviously we anticipated this particular problem. They have 60 days, is it?

Carolyn Bartlett: Sixty days, yes.

Damian Green: We give them a couple of months to find a new course, as I say, precisely to meet that type of problem. There will be entirely innocent, genuine students who have accidentally signed up to an institution that is breaking the rules and, therefore, loses its sponsor licence.

Q75 Ann McKechin: In terms of a two or three year course, it sends out an impression that, "There is a bureaucracy and you don’t fit in it." It gives an unfriendly impression.

Damian Green: I have to say if that is the impression given then the fault is the institution’s that was breaking the law. If people break the law, law enforcement agencies have to enforce the law. Absolutely, there are innocent victims when people break the law, and that is why we have set aside this 60-day period so that genuine bona fide students can find a new institution.

Q76 Ann McKechin: What lessons have your office and the UK Border Agency learned through the implementation of the various changes? Minister, you have commented on the fact that you would hope that there will not be further changes on the scale that we have witnessed in the last two years. What lessons have you learnt and what reassurances can you provide to foreign students who are thinking of coming to the UK?

Damian Green: One of the lessons we have all learnt, frankly, is the extent of the potential abuse that was in the system. If you had told me before we embarked on this that there would be 500 fewer institutions taking foreign students within a year of instituting the reforms out of the 2,500 that used to do so, I would have thought that was an extraordinarily high number, but those are the facts. The reassurance I can increasingly give students from overseas, apart from the fact that genuine students are very welcome at genuine institutions if their main purpose is to study, is that they are much less likely today to be ripped off by a bogus college than they were a couple of years ago because we now have a proper accreditation regime, so that every college gets inspected by a proper inspectorate, which did not happen before. Whereas two years ago you might well have found yourself as a perfectly genuine student at a bogus college, and we have all heard anecdotes about people being given their certificates on the first day and all that kind of thing, I am not saying that is driven out, you never drive out criminality altogether, but you are much less likely as a student to come to Britain and find a really disappointing educational experience than you would have been in the past, because we have driven out wholesale large amounts of abuse. I think that is a good, reassuring message to send round the world.

Q77 Ann McKechin: I would certainly concur with you about the need to be tough, but there is a difference between toughness and complexity. One of the comments made today by the Institute of Directors was about the level of complexity in the visa system, which was adjudged to be one of the most complex in any western nation. To what extent has your office learnt about how we can try to simplify and ease that process?

Damian Green: We are trying much more to provide people with guidance in their own language, which was one of the complaints-"Everything has to be done in English." To some extent one can argue that if you are coming to do a university course you ought to be reasonably proficient in English, nevertheless we provide more guidance in other languages. Also, we are moving steadily towards online applications. We have all filled in forms; it means you do not need to fill in pages 1 to 83 because if pages 2 to 78 do not apply to you then online you can avoid that.

Carolyn Bartlett: We have also instituted a system whereby a set of low-risk nationalities have less of a documentary burden, so they can apply without supplying all the background information. That is based on compliance data about low-risk nationalities. We have made the process a lot easier for them.

Q78 Julie Elliott: How does your Department take into account the benefits of international students to the UK when considering the student visa regime?

Damian Green: All the time. As I say, we know the ones who are likely to be of most long-term economic benefit to the country and we unashamedly skew the system in their favour. Indeed, in the midst of trying to control immigration better than before, we have introduced new routes specifically to encourage these people. We have an investor and entrepreneur route and we are developing specifically a graduate entrepreneur route, so that those who come here and want to set up businesses in this country have a special immigration route for themselves. I think it answers Mr Ward’s point about silos. We are deliberately responding to the marketplace, and trying to create immigration routes that will encourage the sort of people we all want to see flourishing in this country.

Q79 Julie Elliott: Thank you. We heard evidence this morning from the Institute of Directors as well as Universities UK. One of the things that the gentleman talked about were the informal networks built up through years studying here that are disappearing, particularly with the lack of students from certain countries where historically they have come from. One of the additional benefits of having international students studying in this country is that direct link with inward investment to an increasingly global economy. Is there not a danger that the student visa restrictions will have a direct impact on good business relations that the UK has established with countries such as China, and their desire to do business in partnership?

Damian Green: We will check the actual numbers but, as I say, it is my belief that the Chinese numbers have gone up hugely and are still going up. Specifically in China I do not think that will apply. We will continue to develop international networks.

Q80 Julie Elliott: What about the Indian subcontinent, where it has almost completely stopped?

Damian Green: As I say, most of the reduction-well, as far as I can see, all the reduction-has come in sub-degree level courses, many of which were of questionable value. The number of applications to UCAS is 10% higher this year than last year, so I think that, on the fear that we have discouraged people-I mean, it is an essential point of this, are we discouraging people?-the facts show that that is not the case. We are in a period of transition so there will be nervousness. But, as I said, the radical period of changes were inevitably in the first couple of years of Government. We can now let the system settle down and see what tweaks are needed.

Q81 Julie Elliott: Let’s look at the Indian subcontinent, where we heard evidence this morning that applications have dried up very, very significantly. In the university in my city, they are almost saying there is an element of feeling that we are closed for business. The Institute of Director’s gentleman this morning talked about several generations of people coming here to study and suddenly this generation is not coming. He was very concerned from the perspective of the business community, the people they are involved with. Not the universities, but the business community are very concerned about the ongoing impact that not having those informal networks that are built up while people are studying here will have on businesses. Do you not acknowledge there is a problem there?

Damian Green: There is clearly a worry there, otherwise the IOD would not be saying it. But the sensible thing I can do as a Minister is actually address individual issues. The subcontinent, not just India but Pakistan and Bangladesh as well, did see a huge surge under the early days of the points-based system. It is perfectly clear that some of that surge in numbers was abusive. It was people just exploiting the system. The fact that we have swept away a large part of that abuse will mean that fewer people than before are coming from the subcontinent, but that is just part of proper immigration control. We now need to move on and we do need to do this collectively. That is why we work very closely with UKTI, and with BIS generally, to make sure that the message that, if you are a genuine, good university student, Britain is still welcoming is pushed out more and more. That is what we need to do, to say, "If you wanted to come to do one of these courses that, frankly, were not very valuable and may just have been a bogus college that will be of no value to you, those courses do not exist in Britain anymore, but actually universities are still there and still want your custom. If you are a genuine student who can benefit from it and if you are actually coming to study and not just as a way of getting a work visa, then please come."

Chair: We are, shall we say, getting a little behind, so I will bring in Paul Blomfield now. If you can make your points concise, that would be helpful, and of course the answers.

Q82 Paul Blomfield: Yes, okay, thanks, Chair. Just very briefly on the 10% increase in student numbers, which you rightly celebrate, Minister. That is, of course, in the context of a hugely expanding market, isn’t it? Isn’t where we stand in relation to market share the critical thing we ought to be looking at? Is it not also true that our market share is falling, particularly, for example, in relation to Australia where, post the Knight review, which you referenced, they have in critical areas a more encouraging visa regime?

Damian Green: As I said, the Knight review is quite interesting because it led to a loosening in some areas and a tightening in others. The Australians have gone through radical changes in their system for a longer period than we have, so the uncertainties there will be greater. It is a competitive worldwide market in a growing pool, so-

Q83 Paul Blomfield: We are talking about market share, are not we?

Damian Green: Our market share is falling?

Paul Blomfield: Yes.

Damian Green: It is for the British Government, the universities and everyone to say what type of students we want and what numbers of students we want. Market share is one relevant measure, but there are clearly other relevant measures, including quality.

Q84 Paul Blomfield: You were focusing on the 10% net increase, but actually that is within a hugely expanding university education marketplace in which our market share is falling, which you have acknowledged. Perhaps I can move on to my second question. You have rightly said that immigration is an issue of concern to us all in politics and is regularly raised on the legendary doorstep with all of us. You have also rightly said that we need to be seen not to be fiddling the figures. Is not the nub of the problem here, in terms of how we treat students as part of the figures, that by including students in the net migration figures we might be seen to be fiddling the figures? Because if you have a policy in relation to students, which discourages inflow and encourages outflow-for example, by a more restrictive post-study work regime-you are going to have a short-term impact on your net migration figures that will look publicly very positive, perhaps in two or three years’ time, but actually does not address the real issue that concerns people on the doorstep, which is not about students, is it?

Damian Green: What people object to on the doorstep is a variety of things. I really think we have always defined net migration in the way we do now, and it seems to me to abstract quite significantly the largest single group out of it, and student migration is by far the biggest contributor to gross or net migration. To say suddenly, "Right, for various reasons we’re taking this out of the figures", as I say, I think there are more deep-rooted objections to doing that, but one of the objections is certainly that that would be seen as fiddling the figures.

Q85 Paul Blomfield: My point is: isn’t including them in the figures shifting our focus away from those areas of migration that are of real concern to our constituents when they raise them with us?

Damian Green: No, I do not think it is, because a lot of the people who came in on student visas were the people working. That was the abuse in the system. That is why people wanted to come in on a student visa because they could work legally or they could work illegally. It is the feeling that the system is out of control that lies at the root of the public anxiety.

Q86 Chair: I think everybody acknowledges that something had to be done about it, but there is the issue of throwing the baby out with the bathwater, which appears to be what the current student visa regime is doing.

Damian Green: As I have said several times-if we are running out of time I will just say it very briefly again-that is absolutely not the intention of the policy. It is why we have not put a cap on. It is why we favour university students. It is why we allow people to carry on working if they have a graduate-level job without going through the various hoops you would have to go through otherwise. We skew the system in favour of bright students. We skew the system in favour of the universities to meet that precise objection.

Chair: I will just bring in Paul before moving on to the subject of post-study work visas, which I do not think accords with what you have just said.

Q87 Paul Blomfield: Minister, I do not think anybody is suggesting for one moment that that is the intention of your policy, but it could be-and does seem to be from the evidence we have-the net effect of the policy that it is holding us back from exploiting the growing market for international students.

Damian Green: It should not and, as I say, we have gone through radical changes and there are always periods of uncertainty. As people get used to the system, then the universities can go about their business, it seems to me.

Q88 Margot James: We heard earlier from the Institute of Directors and Universities UK that they feel that the ending of the post-work visa in April was a retrograde step. We want to hear your views on that, but if I could illustrate that with a couple of examples they gave us. One was of the potential distortion of subject choice. You have pointed out that the Chinese student numbers are increasing. As we know, Indian student numbers are reducing-LSE by 20%, Aston University by I think it was 30%. We heard that this was endangering the study of STEM subjects because large numbers of Chinese students opted for business and management courses, whereas Indian students tended to opt for STEM subjects. What would your reaction be to the overall position of Universities UK and IOD, and that example in particular?

Damian Green: I will ask Carolyn to talk about STEM because we were looking at that specifically before coming here. The old system allowed students to stay around for two years, even if they did not have a job. We did a study on the 2004 cohort, which showed that, I think, only about a third ended up with graduate-level jobs. Roughly speaking, a third had non-graduate-level jobs and a third were just claiming benefits. At a time when we have regrettably high, though falling, unemployment and something like 300,000 unemployed British graduates, it seemed to us a very peculiar public policy to say, "You have two years to look for a job. We know that two-thirds of you are not finding graduate-level jobs, but nevertheless carry on and compete in our labour market with a very large number of unemployed British graduates". The system used to be too loose. It used to be exploited for people to do low-skilled work. But absolutely we want valuable graduates; we want international graduates to stay here, so all we ask is that they get a graduate-level job offer. The good ones will and many, many people will. They will be able to stay here. On STEM specifically, Carolyn, you have the figures, haven’t you?

Carolyn Bartlett: On STEM specifically, the UCAS figures showed a rise of around 13% of people applying for STEM subjects. That is obviously an encouraging development. We have also had the Science Without Borders project in Brazil, which brings about 10,000 STEM subject undergraduates to the UK for a year. I think there are positive signs on STEM.

Damian Green: I should emphasise that 13% is 2012 applications.

Carolyn Bartlett: Yes.

Damian Green: Applications under the new system, which people tell me is discouraging STEM in particular, are actually up 13%. They are up higher than the general level. If anything, we are skewing the system towards the STEM undergraduates whom we all value.

Q89 Rebecca Harris: Given that we were told in the earlier session how our main competitors in this area had relaxed their student visa process, and there is some debate about that, how much do you analyse what our competitors are doing in terms of their student visa regimes to make sure that we are being competitive relatively?

Damian Green: We work very, very closely particularly with America and Australia. There is a thing called the Five Country Conference, which is essentially the Anglophone countries: us, America, Canada, New Zealand and Australia. The five countries work very closely together across the range of immigration issues, so not just in our visa issuing but we look at whether we can share. For instance, in the long run I would love to be able to share visa facilities with them. One of the objections people have is that you have to give biometrics; you have to give your fingerprints. If you are in China or India, it is a big country; you may have to travel a long way to do it. It would clearly be sensible if friendly countries, countries we trust, can work together very closely so that we could exchange basic information like, "This is the fingerprint of that person, and they have applied for an American visa; they may then want to apply for a UK visa". All that kind of thing is the sort of long-term work we are doing. Obviously, therefore, we regularly talk about policies as well in the way that Governments do, in that we are friends and allies but we are also competitors in terms of trying to get the best students, but regularly is the answer.

Q90 Rebecca Harris: The Institute of Directors made the point, which you have acknowledged, that there is also a perception issue as well as to whether we have actually made life more difficult. We know that the US State Department has added nearly 600 extra staff in their consulates worldwide to interview students and make sure student visa applicants are seen before some business and tourist ones, which clearly makes the point as well that they are open for business for international students. How much work are you doing on trying to deal with the perception, therefore?

Damian Green: A lot and it is slightly swimming against the tide because if the thought is out there that we have changed the system to make it more unfriendly, reversing that perception is difficult but very, very essential. We have changed the system to cut out the abuse. We have changed the system to, as I say, skew it towards the best students, and skew it towards universities. Doing that at the same time as cutting out abuse I appreciate is a nuanced message to send out, but now we have the changes in place I think the sensible thing is to let the system bed down while we relentlessly go round the world saying, "The brightest and best students are as welcome as ever to Britain. Please come, we have some of the world’s best universities. You can come here and you can get yourself an extremely beneficial education".

Q91 Rebecca Harris: The Committee has clearly found criticisms by China and Brazil, and in both countries found anecdotal evidence that there was a real concern about the visa regime for students. We have also had lots of anecdotal stuff about India. It is incredibly important for our future economy that we have good trading links with them all. Have you had direct representations from those countries about concerns about the regime?

Damian Green: I was in China a month ago so I was talking a lot. To give you some practical example of what we do to try to improve this, China demand is hugely seasonal. This year, we have employed 150 extra people in our visa section in China for the summer. It is relatively simple things like that. What people want when they apply for a visa, whether it is a student visa or anything else, is a degree of certainty because they have to give documents and they want them back and we appreciate all that.

Q92 Chair: Is this student visas?

Damian Green: Not specifically, but obviously it affects the whole area. Part of it specifically for the summer is student visas because, as you will appreciate, the application period will tend to be the summer. They will arrive during September, so as well as a tourist surge that you get in the summer, you also get the student surge. In the important markets, we are getting much better at saying we should not just have a set of visa staff. We know now that in China, and indeed in India and other places, there will be a surge of student demand in these months of the year, so let’s have more people there so that we can deal with it faster. It is not rocket science, but it is what we are doing now that we did not used to do.

Q93 Rebecca Harris: Has it been raised with you by any of those countries either at official level or even through our consulate?

Damian Green: As I say, China is a constant one. It has not particularly been raised in the Brazilian context, which is why I am very interested if there are specific examples of things in the visa system that are discouraging Brazilian students from applying. I would genuinely be very interested in knowing about them because they have not been brought to my attention.

Q94 Rebecca Harris: The concern with the Science Without Borders programme was that they would be coming in for a year but it was then found that some of the 10,000 Brazilians would not have sufficient English. They would need to come for an extra three months to improve their English language beforehand, which would take them beyond the 12 months. That was a concern raised to us.

Carolyn Bartlett: If they qualify under our system, they can come for however long they want. If they need to do a short language course, our visa regime allows them to do that.

Q95 Chair: Can I clarify? If a Brazilian student wanted to do a year’s course on the Science Without Borders programme but their English was not quite up to it, they would be granted extra time in England to improve their English prior to doing so?

Carolyn Bartlett: Yes. There is something we have, which is called pre-sessional courses, so a university can sponsor a student to come in and undertake a short English language course to get their language up to B2 level, which we ask for at universities, before taking them on to their main course.

Damian Green: Again, we do that specifically for university. It is another example of our skewing the system in favour of universities. I am sorry to keep banging on about this, but given that I appreciate what the Committee is getting is, "Oh, well, the UKBA does not care about universities", we really do in practical ways like this try to skew the system to help the universities.

Q96 Rebecca Harris: Have you done any work or research on the extent to which people understand the system, whether there are misconceptions about the regime and people coming into it, and how much people understand what the current regime is?

Damian Green: We have not done specific research, but in a sense our daily life is that specific research because we get north of 250,000 student applications a year. Rapidly, if there are specific problems-and they tend to be different problems in different countries-our posts in those countries will get to hear about them and we can address them. We are in constant exchange with the people applying as well as, of course, in many countries people will be applying through agents. They will be using education bodies to apply and I know because I have met them, particularly in India. I had a session with all the education agents there. They are not backward in coming forward and saying, "This is the problem with your system", and so we are very open to that.

Carolyn Bartlett: UKCISA, which is the international council for student affairs, which is part-funded by BIS, also undertakes some of this research sometimes. Their most recent research showed that actually there has been an improvement in perceptions of the visa system for students.

Damian Green: Perhaps we could send that research to the Committee.

Q97 Ann McKechin: Could you send that research to the Committee?

Carolyn Bartlett: Yes.

Q98 Chair: What discussions have you had with BIS Ministers about the student visa regime?

Damian Green: As you would expect, I am in regular contact with BIS Ministers about the visa regime and other parts of the student experience. I assume officials do it even more often.

Carolyn Bartlett: Yes, we meet BIS officials regularly.

Chair: Sorry, can you speak up?

Carolyn Bartlett: Yes, we meet our colleagues at BIS regularly.

Chair: By regularly, do you mean monthly?

Carolyn Bartlett: About monthly, yes.

Q99 Chair: There does seem to be a public perception that Home Office policy and BIS policy are different, and that seems to be substantiated by the business sector public statements. Have you any observations you would wish to make on it?

Damian Green: All our policies are Government policies and are, therefore, agreed by all Ministers by definition.

Q100 Chair: Could I just put it to you that in May 2012, i.e. just over a month ago, figures were published that showed that annual net migration was actually at a record high of 250,000 a year? Could I put it to you that the policy obviously is not working? Would it not be better to accept the logic of the arguments put by the business community and the education community, and actually address this by taking student figures out of the annual net migration figures, at least for policy purposes?

Damian Green: Those figures were not for May. They were announced in May but they were actually the figures to last September, so they are somewhat out-of-date. It is just we get these figures-

Q101 Chair: I had them down for May, but-

Damian Green: No, they were announced in May, but they-

Chair: -even if they were for September, it would have to a pretty dramatic reduction to change them.

Damian Green: That is September 2011. We promised to get net migration down to the tens of thousands over the course of the Parliament. The figures you quote, Mr Chairman, are the figures to September 2011. In the student sphere, the first part of our reforms came in in April 2011. The second part came in in April 2012, so at least half of the student reforms would not have clearly any impact on those figures. The lesson I draw is that, yes, of course, it is hard pounding, immigration-

Q102 Chair: Do you think you can achieve your targets by 2015?

Damian Green: Yes, we think we can. The projections are that we can and will. The lesson to draw is precisely that we need to take action early on to have an influence now, so that we do get the gradual reduction in net migration that people expect of the Government. If I wasn’t confident that we were going to do that, then clearly more measures would be required. I just think redefining our way out of this problem is not a way of solving the problem.

Q103 Chair: It could appear on the surface that the student visa policy is not working, in terms of reaching the Government target.

Damian Green: No, that absolutely is not the case. As I say, those were figures for the time to September 2011. I quoted much more recent student visa figures. Those are the figures for March 2012, so they are six months later, and they show a 57,000 reduction in student visas. The most recent figures we get show very precisely that the student visa part of the policy is working.

Q104 Chair: Yes. I am talking about the Government policy on net migration figures overall. Could you give us a figure? You have just said it is working. Could you give us an estimate of what it will be by, say, the end of 2012?

Damian Green: No, I don’t think I should do a running annual commentary. What we have said is that by 2015 it will be down to the tens of thousands. We get these quarterly figures that are always nine months behind, so we will not get the end of 2012 figures until the autumn of 2013. Crystal balls get cloudier the further ahead you look.

Q105 Chair: We will be almost halfway through the Government. It is reasonable to see some progress.

Damian Green: Yes, absolutely.

Q106 Chair: At the moment, all you do is say progress on student visas, which is the one that is most complained about.

Damian Green: No, there is progress in other areas as well. In the last three weeks, we have launched our family policy. There are three big routes of work, students and family, of which students is by far the biggest. The first one we did was work and every month the cap has not been reached, so we have got the work visas down quite considerably. Student visas I just said. The family policy we announced about three weeks ago, so that will have an effect. It comes into effect on 9 July, so it will start having an effect from next month. Obviously, that will take some time to appear in the figures. Absolutely, we are dealing with every possible route and that is the only way to do it. You have to do it across the board to meet the targets we have set.

Chair: We will await the publication with interest. Paul indicated some time ago that he wanted to ask a question. We have reached the end of our time, though, and I am conscious that you have time pressures.

Q107 Paul Blomfield: Very briefly, Chair, following up on your question in relation to the views between BIS and your department, Minister. Are you telling us you are entirely of like mind or have there been any representations of any sort made by BIS to you over the reclassification of students?

Damian Green: Ministers discuss policy all the time, but sensible Ministers do not discuss private policy discussions in public. We all have views on our own policies and on other people’s policies, but, as I say, sensible Ministers keep those discussions private.

Paul Blomfield: I think we can understand that answer, thank you.

Q108 Mr Ward: Can I just get this very clear? Students are included in the net migration figures, and your target is to reduce net migration to the tens of thousands. All right, get rid of all the bogus college students-we understand that-but if your targets can be achieved by a reduction in the number of students from overseas who are making a positive contribution to this economy, and that can be proved, your targets will have been achieved, but will it not concern you that we have done something that is against our own self-interest in terms of economics?

Damian Green: I think the danger, and it is true in all things, is to regard everyone as being completely the same. Just as there are simplistic arguments, "Is immigration good or bad?"-the truth is some immigrants are economically and culturally hugely beneficial, some are neither, and some are actively negative-the same would be true through the spectrum of students. Some will end up starting businesses that employ thousands of people. Some will live off benefits and be a drain on the Exchequer. To try to generalise to say every student is equally economically beneficial seems to me not a very sensible way of proceeding. That is precisely why one of the things we are doing, along with reducing the numbers, is setting up a more selective system so that we try to attract people who are beneficial and stop people who are not beneficial, basically.

Q109 Mr Ward: Every student will bring in income in fees. Every student will contribute to the local economy through spending their own money in that. You could say that every overseas student who comes here makes a positive contribution, whether they stay on after the course and set up a billion pound business, or not.

Damian Green: If they stay on illegally and we have to enforce things against them, then they cost us money. If they-

Q110 Mr Ward: If they leave on the day of graduation?

Damian Green: We know that they do not. We have done a cohort study that shows that 20% stay beyond graduation, and large numbers of them stay and live on benefits. I think the calculation that every student is of economic benefit while they are here-the facts do not bear out that very basic calculation. It is true of most, but it is not true of some.

Q111 Chair: I find that a rather odd way to put it, given the fact that by your definition 80% who come here contributed to the economy and then left. Shall we say it might be quite interesting if a piece of work was actually done on that? I don’t know if any has been, but I would have thought the Government should provide it if they are to continue with this policy.

Damian Green: We have done a study called The Migrant Journey, which I am happy to send to the Committee.

Chair: I am sure we would welcome that. We are out of time. Thank you, Minister, for appearing before us. Obviously, we will be preparing a report in the light of the evidence that we have had from you and the representatives for both the universities and the business community.

Prepared 5th September 2012