The second is more important. It is what Brady describes as, “make your case clearly” or they will not understand. He describes the sense of bewilderment, turning to anger, contempt and disengagement by our European partners at the sight of the British trying to withdraw their support from something they invented in the first place. You cannot be a little bit pregnant. You cannot be a little bit divorced, but lots of people try. Many of us have seen friends have trial separations. They attempt to end in reunion, but they normally wreak havoc on relationships, partnerships and the prospects of future generations.

1.45 pm

Lord Clinton-Davis: My Lords, in recent times we have witnessed the transformation of the European Union—previously warring countries co-operating,

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growing in economic strength and developing their negotiating power. We are living in a competitive world of power blocs. The European Union has also developed social policies that have been a worldwide example.

Of course, the Union should not be static, but our position should not be poisoned by threats and ultimatums. If federalism leads to a new treaty, then the British people, like all others within the EU, should be able to express their opinion in a referendum. Shouting from the sidelines is no substitute for being constructive and sometimes critical.

It is my experience within the EU that all controversial proposals are tackled in depth. Of course the Commission and others can make mistakes. They are human. Her Majesty’s Government are not exactly a shining example to the country. The Commission does its best, as do all the other institutions.

What this Tory-led Government really want is the adulteration, even the elimination, of the European Union’s social policies. It would be absurd for the UK to absent itself from specific areas of policy. Estrangement from our partners would be utterly mistaken, and that would be the inevitable outcome of what the Government are proposing. The pathetic aim of trying to pacify the Eurosceptics, who are so prominent in the Tory Party today, is bound to fail, and it will deserve to.

1.47 pm

Baroness Donaghy: My Lords, I thank the noble Baroness, Lady Noakes, for her welcome initiative. She may remember that many months ago we had a conversation about Europe, and I told her that I was one of the only members of my local Labour Party to take the day off work during the 1975 referendum to urge people to vote no. The noble Baroness informed me that she, too, had taken the day off work to campaign for a yes vote. We have both developed different points of view from all those years ago—I because of the Social Chapter possibilities, which gave workers rights and women opportunities during an era, the 1980s and 1990s, that was pretty bleak for both. The noble Baroness’s view was affected by the very same issues, which I think she sees as red tape. I have a great deal of respect for her views, even though we may not agree. I simply want to illustrate that, as Europe develops, we are all entitled to change our minds and openly debate issues on their merits.

For 10 years, during the 1990s, I was one of the representatives of the TUC on the European TUC executive. I was privileged to move in the ETUC executive acceptance of the framework agreement on part-time workers, so I plead guilty but proud of my part in ensuring that workers, particularly women workers, should be treated equally. The irony was that we were working hard at the European level on these Social Chapter issues. They were negotiated and agreed with the social partners, which included the CBI, and I watched these directives being implemented, except in the UK. That Alice in Wonderland position was put right when the Labour Government were elected. While I think that the Prime Minister’s clever speech contained something for all views, except for those of us who

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support workers’ rights, a referendum is too far off to get worked up about. However, I agree that we should trust the British people, if and when the time comes.

Finally, I may be alone in this view but at present we have expert debates in this House arising from the European sub-committees, which are too rich for my diet, or we have one-dimensional exchanges in Question Time: “We should all leave Europe”, “Oh no we shouldn’t”. Those of us who are interested in the wider framework issues are looking for opportunities to discuss them in an intelligent, challenging forum where not everything is black and white and where there are no easy answers.

1.50 pm

Viscount Eccles: My Lords, noble Lords have gone back a long time, but I am going to go back even further. Some 63 years ago I was fortunate enough to be in Strasbourg when the Council of Europe met. Of course, the two world wars were on everyone’s mind. Winston Churchill made what I think would now be called the keynote speech and the Conservative Party delegation was led by Harold Macmillan. Since then, whenever I use the word “Europe” I include in it the United Kingdom; I do so again today. We have been on a very long journey since, but the idea of giving up and leaving does not yet occur to me.

However, where is Europe now? It is riven by uncertainty. It has two financial crises that differ from each other. The reasons for the crises are not yet fully understood, and as for putting to bed the question of the responsibility for them, we are still a long way from that. The crisis in the United Kingdom is the first one and the eurozone crisis is the second. The outcome of both is entirely uncertain as we debate this matter today. All we can do is analyse what we know. What we must agree on is that there have been flaws in the direction of travel, otherwise we would not be where we are. Can we just wait and see whether, having lived beyond our means, things will in some way correct themselves and we will be able to continue on the same path? That does not seem credible. Things have changed very radically over the past 63 years. There is a global market now of which Europe forms 7% of the population, and things are happening elsewhere.

We need to think through the following proposition: is this convoy of 27 nations likely to go in the right direction without reform? I think not. Strategy, not just tactics, should be on the table and we need to get on with the debate.

1.53 pm

Lord Davies of Stamford: My Lords, in all my political experience I do not think I have come across a more absurd notion than a referendum that will only take place some four, five or six years after it is announced. But, of course, this is not a serious political idea. It is, as we know, a short-term and cynical party-political ploy designed simply to push the European issue beyond the horizon of the next election and to keep the Eurosceptics off the Prime Minister’s back until then. If there are costs in terms of investment and jobs and other costs to our national interest, then to hell with the national interest. That is what we are actually confronted with.

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If we need further evidence of the superficiality of this exercise, it is in the fact that the Prime Minister hardly mentioned what the objectives of this negotiation or renegotiation are going to be. In all that elaborate speech only one sentence deals with them by mentioning three things: the environment, social affairs and crime. We have only to look at those three in order to realise that either we are faced with what is essentially a hypocritical exercise that is not intended to be taken seriously or else something that would be disastrous if pursued. Are we going to pull out of the European environmental policy? Are we going to get rid of the commitment to reduce emissions by 20% from their 1990 levels by 2020? Are we going to try to do it unilaterally? Does the Prime Minister mean the non-climate change aspects of environmental obligations such as water pollution? Are British factories going to be allowed to release any kinds of effluent into our rivers? If we believe in having environmental controls, is it not in our interests to make sure that our competitors on the continent of Europe bear the same level of costs? It is quite clear that this has not been thought through at all. It is an entirely cynical, short-term exercise.

The same applies to social policy. I would love to see the Prime Minister fight the next election on the basis that he is going to get rid of the working time directive or the parental leave directive. Is that to be taken seriously? And what about crime, which comes under justice and home affairs? We are told that the Government are already intending to opt out of the justice and home affairs chapter. In that case, what is the point of renegotiating something that we are going to opt out of? None of this makes sense.

There are many aspects of this which worry me. Obviously I am anxious about the costs of the uncertainty and even more anxious about the costs attached to our leaving the European Union, if that is the ultimate aim of this exercise; it could easily lead to that bad accident. However, my worst anxiety is that our continental partners will say—they may be far too diplomatic and astute to do so, but it is what more and more of them will think—“For heaven’s sake, the British are hopeless. They cannot make up their minds. They have been humming and hawing and coming and going for 30 years. They always oppose everything and they are very difficult. For God’s sake, if they want to leave, let them leave. Let’s conduct this negotiation in such a way that they end up having to go”.

When that happens, what is the prospect for this country? The prospect is the one that we have been trying to avoid for 500 years. It is why we fought Philip II, Louis XIV, Napoleon, Nicholas I and the Kaiser. We will find ourselves with a superpower on the European continent with whose policies we have in practice to align ourselves although we will have no influence whatever on their formulation. That is the position we shall be in, and under the shadow of that superpower we shall live for the rest of time—regretting the appalling decisions that we came to in a fit of absence of mind.

1.56 pm

Lord Framlingham: My Lords, I warmly welcome the Prime Minister’s speech simply because at long last it has set my party on an unstoppable path to serious

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treaty changes and a referendum. However, I have two reservations. The first is that I believe that the changes needed are so profound that they are unlikely to be agreed by the other countries, and the second is timing. These things are not going to happen until 2017. Anyone who has run any kind of organisation knows that when it starts to go seriously wrong, as Europe is doing now, its decline has a habit of accelerating. I do not believe that time is on our side and I am anxious that we will be overtaken by events.

A wise man once said, “All great issues are essentially very simple. We make them complicated when we do not want to face them”. I believe that that is true of Europe. The issue of Europe is essentially very simple. It is about who governs this country. That sounds simplistic, but it is true. It was the question in 1975, it is the question in 2013, and it is the question that the British people understand. It will be the question in 2017—and I have no doubt, when it is put to the British people, what their answer will be.

1.58 pm

Lord Hamilton of Epsom: My Lords, I do not terribly want to get involved in a debate about what will happen when the referendum is held. Rather, I will make two points. The first is that within the next 12 months, I suspect that the Labour Party will commit itself to an “in or out” referendum, whether the noble Lord, Lord Davies, likes it or not. It is completely unsustainable for any party to stand at the next election saying that it is not going to hold a referendum when a major party like the Conservatives is doing so. I suspect that the Liberal Democrats will follow suit as well.

Not for the first time, I find that I agree with the noble Lord, Lord Kerr. He knows, as most noble Lords in this Chamber know, that the construct of the EU has been a series of treaties which need unanimous support, and that if you want to revise those treaties, it has to be done with unanimity. I therefore suggest that the chances of Britain renegotiating a position that entails treaty change is virtually non-existent, and by the same token, it will not be possible for Germany, Holland, Sweden and Finland to renegotiate to make the EU more competitive. If something needs treaty change, it will not happen; that is the reality of the position that we are in.

I have absolutely no idea who will win the election of 2015, but we will have either a Labour or a Conservative Prime Minister. Then what will happen? If Ed Miliband is Prime Minister, he will go off to Europe and come back with a minimal number of concessions. He will not be able to pull off the same trick as Harold Wilson: namely, minimal renegotiation and a vote for us to stay in the EU. He would have to win major concessions—which I do not think he will get—and, of course, at that stage he will be faced by a Conservative Opposition, led, I suspect, by a different leader, who will campaign vigorously against any move to keep us in the EU. Alternatively, if David Cameron wins, he will have to go off to Europe and come back with very serious concessions. I suspect that the best that he will be able to achieve will be some hybrid solution for the United Kingdom that will leave us more out of the EU than in. Either way, I do not see that we will do anything other than come out.

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That brings us to my noble friend’s Liberal Democrats, who already have the somewhat suspect reputation of being the people whom Conservative and Labour candidates least want to face in an election. They have now added to that the reputation of being unreliable and untrustworthy when it comes to the coalition agreement that was set up at the beginning of this Parliament. So I do not think that an awful lot of people will want to go into a coalition with the Liberal Democrats ever again. If the opinion polls are right, they will probably get only 10 seats at the next election, so the question may not even come up.

2.01 pm

Lord Lea of Crondall: My Lords, if a speech can be a 180-degree turnaround from a previous speech, this is it. The context of the Prime Minister’s speech is, of course, the Conservatives’ frustration, because they have missed the boat. The eurozone is recovering and the pound is falling against the euro. Therefore we no longer hear the speech from the noble Lord, Lord Lamont, proclaiming that the euro is dead. The problem now for the Conservative Party is the dictum, “If you can’t beat them, you’d better join them”, so the frustration grows apace.

The Prime Minister’s speech is intended to set up a scenario where he demands the repatriation of things such as employment rights, as my noble friend Lord Monks pointed out—as if, incidentally, that would make workers more inclined to vote to stay in the EU. However, as we heard—from the noble Lord, Lord Kerr, I believe—there is no such thing as a retrospective opt-out. The Labour Party—correctly—will have nothing to do with this scenario, including the referendum hypothesis. Apart from anything else, you do not expect the Labour Party to get heavily involved in highly imaginary negotiations conducted by an equally highly imaginary Conservative Government in 2016 or 2017, which, as everyone knows, are intended only to keep the Conservative Party together.

A Labour Government responsible for a hypothetical referendum presupposes equally a Labour Government, which I believe will be elected in 2015. Until nearer that time, what crystal ball are we supposed to look into and to say that one thing or another needs renegotiation followed by a referendum? I am sure that we in the Labour Party are not going to invent such a scenario on the back of an envelope just to meet the wishes of those who read the Daily Mail and the Daily Express. The fact is that this is a crisis for the Conservative Party; it is no crisis at all for the Labour Party.

My non-political friends to whom I talked last weekend, for example, are aghast at the political cynicism of the referendum announcement in particular. They do not think that this whole business has anything to do with the national interest. I therefore think that it will not necessarily be of any benefit to the Conservative Party.

2.04 pm

Lord Watson of Invergowrie: My Lords, this might be termed the “boiling an egg” debate, because that is probably one of the very few things that you can usefully accomplish in the amount of time that each of us has been given to speak today.

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I find myself very much aligned with my noble friend Lady Donaghy, who said that she campaigned for a no vote in 1975 for reasons of working people’s rights but has now come round to face somewhat the other way—as, indeed, have I. I would be very concerned should we, as a country, depart from the European Union. Perhaps the noble Lord, Lord Owen, summed it up best when he described the Prime Minister’s speech last week as the words of a party leader and not a Prime Minister—that is exactly it. I really think that the European Union and our place within it are too important to be used as a way of dealing with a little local difficulty within the Conservative Party.

On the question of a referendum, I will ask: why now? I do not see why at all, but why now? Nothing of any great importance has occurred within the past few months. You could say, “I believe that referendums are appropriate for parliamentary democracy”. Referendums do have their place—certainly they were appropriate in 1975, for the Scottish Parliament, for the Welsh Assembly and, indeed, for the voting system. But what has happened to make this a pressing issue? Furthermore, what is likely to happen of a constitutional nature? I think it is key to a referendum that it should involve something of a constitutional nature. What has happened in the past few months or will happen in the next five years to make a referendum necessary? You could say it could have happened after Maastricht or Lisbon, but I do not see why we should be positing it as a notion now, because there is no constitutional issue per se to discuss. The basic question would be: do we stay in the EU?

The noble Baroness, Lady Noakes, opened the debate by talking of uncertainty. I think that she talked rather disparagingly of scaremongers. I ask the noble Baroness whether the following are scaremongers: Sir Andrew Cahn of Nomura, Sir Richard Branson, Sir Martin Sorrell of WPP, the CBI, and indeed the noble Lord, Lord Browne, a close confidant of the Prime Minister. These are people of some substance, as indeed is Sir Nigel Sheinwald, who has made some pretty pithy statements in the past few days. So there is a bit more to it than perhaps meets the eye. The response might be, “What about the 50 business leaders who wrote to the Times?”. When you read their statement, it is clear that they did so very strongly from a position of wanting to remain within the European Union. That is different from the wishes of many people advocating a referendum who want us to withdraw.

I think that there will be a referendum, as various noble Lords have said. It is pretty much inconceivable that any of the main political parties will not suggest that at the 2015 general election. Therefore, I think that those of us who are in favour need to start making the positive case for remaining in the EU. We should not just deal with negatives but talk the case up.

I conclude by referring back to the noble Baroness, Lady Noakes, who said that she regarded the prospect of a referendum in 2017 as an exciting one. Well, placing her head in the mouth of a lion might be exciting, but it is not something that I would recommend.

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2.08 pm.

Lord Birt: My Lords, I thought the Prime Minister’s speech was exceptionally well crafted. He articulated why history and geography helped define the UK’s very singular attitude to the EU. He identified where and why many are unenthusiastic about some EU regulation. However, he also captured very well the benefits of the EU—the economic advantage and influence that arise from being part of the world’s biggest single market and political bloc. The EU has a bigger aggregated GDP than the US, and we are twice as big as China.

Most of us share the vision of the UK as part of a flexible network of independent European nation states, combining voluntarily, issue by issue, on matters of mutual interest. That is where, of course, we are now. We are out of the euro—thank goodness—and out Schengen, but in the single market, in NATO, unlike six other EU countries, and in the fight alongside France in Libya and Mali.

All organisations benefit from time to time from a reappraisal. However, the Prime Minister’s speech creates a problem of perception. Pace the noble Baroness, Lady Noakes, my work routinely takes me into contact with the world’s leading investors, with trillions of funds to place. They are already nervous of the eurozone and understand the UK’s dependence on it. They are careful decision-makers and I have no doubt that they will be further unsettled by the prospect of a referendum. The PM’s announcement was well argued, and the party-political need for it was understandable, but it was not cost free.

2.10 pm

Lord Whitty: My Lords, I thank the noble Baroness and to some extent, for reasons I should explain, the Prime Minister for getting us to this debate. The Prime Minister has presented us and our European partners with a false prospectus: a referendum in four or five years’ time, on terms as yet unclear, and in economic and political circumstances that are unknowable. In so far as his negotiating position prior to that referendum is discernible from his speech, it is self-contradictory. His main point is that he wants to strengthen the single market, but he is looking to opt out of key pillars of that single market. You cannot have a true single market without common labour standards—the Social Chapter. You cannot have a true single market without some degree of commonality on financial regulations, which he resists to the benefit of and on behalf of the City of London. You cannot have a true single market without common environmental standards. That agenda is not one that can be negotiated without European partners. He might have a bit more luck on the justice side, but even there, although there may be some prospective, minor, further derogations, there will be no retrospective opt-outs, as the noble Lord, Lord Kerr, has said.

The PM has created unnecessary irritation among our European partners and damaging uncertainty for global investors. However, he may politically have done us all a great favour, in that he has at last provoked the pro-European elements in all parties to come out of their shell and start arguing the pro-European

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case. I have long been a pro-European, since before 1975, when it was deeply unpopular in the Labour Party, particularly in the left wing of the party, of which I was otherwise a member. I have often been dismayed at the lack of effective engagement by British Governments with Europe—my own as well as this one. I have often also been dismayed at the occasional arrogance and ineptitude of European institutions in relating to the real concerns of the people. However, it remains the case for Britain that our prosperity, our influence in the world and our prospects of reaching global agreements on climate change, trade, and peace and development depend utterly on the UK being a leading, constructive and authoritative partner within Europe. I ask those who object to the whole concept of ever closer union what they think are the consequences of the opposite dynamic. They need look no further than the borders of the EU, at the former Yugoslavia.

Like my noble friend Lord Grenfell, whose speech I greatly admired, I am not afraid of a referendum. However, whether we have one or not, in what timescale and on whatever terms, the Prime Minister has now triggered a revival among those of us who wish to argue the pro-European case. We will do so with equal passion and, one hopes, more logic than I suspect the next speaker, who will make the opposite case. To that extent, I thank the Prime Minister.

2.13 pm

Lord Pearson of Rannoch: My Lords, in this heavily Europhiliac debate, I thought I would concentrate on just one of the basic misconceptions to which noble and Europhile Lords, and indeed the Prime Minister, still cling: that the single market is a good thing and that we might lose inward investment, free trade and jobs if we left the EU and its customs union. The single market is a bad thing: it is what imposes the thousands of regulations which weigh down all EU economies in their trade with the markets of the future. Together with the euro, it is the economic iceberg which will eventually sink the whole project of European integration, at great social cost.

As for us, in the mean time, our free trade with clients and suppliers in the EU will inevitably continue when we leave it. Articles 3, 8 and 50 of Lisbon oblige Brussels to negotiate a free trade agreement with a departing country. The EU already has FTAs with 67 countries and dozens more are in the pipeline. As its largest client, and with our substantial trade deficit, we will hold the whip hand in agreeing our own free trade agreement, which will be unique to us.

Your Lordships may have missed the Government’s Written Answer on 14 December to my noble friend Lord Stoddart, who had asked whether the burdens of single market regulation applied to countries signing FTAs with Brussels. According to the Answer:

“It is not the case that as a result of these trade negotiations the countries concerned will have to adopt all the legislation and regulations that apply to EU member states. The aim of these negotiations is to eliminate, as far as possible, duties applied to trade in goods and to address non-tariff barriers that affect trade in goods in services—ie rules, regulations and practices that affect market access. Non-tariff barriers can be overcome through a variety of methods. These include the adoption of international rules”—

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the World Trade Organisation—

“mutual recognition of approaches to testing, standards, et cetera, and commitments to end discriminatory practices”.—[

Official Report

, 14/12/12; col.

WA 263


What more do we want?

Why should inward investment be affected when the reasons for investing here will not have changed? It is interesting that our Invest in the UK agency gives 13 good reasons for investing here—and not one of them is our membership of the European Union. Therefore, I hope we will hear no more scaremongering from the same old quisling voices of big business and elsewhere, which told us that if we did not join the euro, the City of London was finished. It became number one in the world, so why should we listen to them now? Some hope, my Lords, but I trust that the British people will ignore the Brussels propaganda when the time comes.

2.16 pm

Lord Liddle: My Lords, the three-minute rule has produced many excellent speeches in this debate, including many strong ones from my side of the House. Obviously, in keeping my own remarks brief, I cannot refer to them all but will just refer to two on our side. First, I thank the noble Lord, Lord Grenfell, for his humour and, secondly, I thank the noble Baroness, Lady Symons, for the originality of her speech. She made a major point of constitutional significance about the Civil Service role in drafting legislation. I hope that the noble Baroness, Lady Warsi, will answer that point in her reply. I also greatly enjoyed many of the speeches from the Liberal Democrat Benches and from the diplomats on the Cross Benches. There were excellent speeches from the noble and learned Lord, Lord Howe of Aberavon, the noble Lord, Lord Bowness, and the noble Viscount, Lord Eccles, on the Conservative side.

There are certain principles that we all accept in this debate. Everyone in this House, except for those who want to get out, believes that Europe needs fundamental reform. We would go along with what the noble Lord, Lord Howell, said about the need for a more dynamic and flexible European Union than we have today. We would support, in general terms, the unobjectionable principles that the Prime Minister set out in his speech. We all recognise that there is a particular problem where we have to seek safeguards—because of the closer integration of the euro area, those of us outside it must have safeguards against discrimination as a result of the euro area acting as a voting bloc.

Having said that those are principles on which we all agree, there is a fundamental disagreement about the Prime Minister’s strategy of renegotiation and referendum. People ask what Labour’s position is on a referendum. One might seriously ask how it is that the Prime Minister thinks that, at this delicate stage in our economic recovery—and that is putting it mildly when GDP is falling—and in an era when business, since the financial crisis, has become extremely risk-averse, a commitment to a referendum five years hence will help our economic recovery. Is it not the case that this is bound to add one way or another to the considerable

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pall of investment uncertainty which hangs over our economy? If the Prime Minister now believes, in January 2013, that a referendum is in the national interest, why, in October 2011, did he impose a three-line whip on his Members to vote against a referendum? Why, in his press conference after the June 2012 summit, when asked about a referendum did he dismiss it with a sweep of the hand and say what the British people want is a Government who stand up and fight for them in Europe? It was only the uproar in the Conservative Party—let me remind the noble Baroness, Lady Noakes—the day after that forced the Prime Minister to write his famous article in the



“For me the two words ‘Europe’ and ‘referendum’ can go together”.

Our position is clear. We have always argued, as we did during the passage of the EU Act 2011, that if there is a major transfer of powers or a big treaty there should be a referendum. At the moment we do not know whether there is going to be a treaty and we do not know anything about its contents or timing. The Prime Minister’s policy represents a unilateral demand to come up with something by 2017 that he can sell to the British people or we will be off.

There are many contradictions in this renegotiation policy. One is whether those who favour it regard a treaty change as essential to its success. Listening to the Benches opposite, particularly to the noble Baroness, Lady Noakes, I have found all this very confusing. On the one hand, the argument is made that we have to secure fundamental change if we are going to be able to recommend the yes vote to the British people, yet on the other, it is said that the treaty change may not be essential. In my view, it is impossible to achieve fundamental change in the way the EU works without treaty change. Of course we may be able to negotiate changes in policies or protocols that protect our position in various areas, but we will not get fundamental change without treaty change. I would like this question to be clarified in the Minister’s reply.

There is a lot of reference to the proposals of the Fresh Start Group as the kind of sensible mainstream view of what needs to change. My noble friend Lord Monks has already dealt with the social and employment aspects of that. This is not acceptable to our partners. On financial services, it cannot make sense to argue for the reintroduction of some form of unanimity on this aspect of the single market when in the other part of our mouths we are arguing that our partners should agree to major extensions of the single market in other areas. That is a completely contradictory stance, and the noble Baroness, Lady Noakes, ought to recognise that.

It was interesting that we had 40 speeches in this debate, with eight from Conservatives broadly in favour of the Prime Minister’s speech, but the question of where they will end up after the renegotiation is unclear. If David Cameron remains Prime Minister after 2015, he is going to face a harsh political choice: win a referendum yes and split the Conservative Party, or bow the knee to his party’s last ditchers, and, even more dangerous, fanciful renegotiators such as the Fresh Start Group, and secure his place in history as the Prime Minister who led Britain out of the European Union. He will have overwhelming support on this

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side of the House if he puts the country before his party. There were passages in his well-phrased speech last week where I just about managed to convince myself that that was what he might do. However, it would historically require a breach with a whole tradition of Conservative statecraft that the national interest is best served by keeping the Conservatives in power and winning elections.

So much is at stake here for all of us. Who really fancies Britain’s chances, in decades to come, as an offshore island? There is the real risk that five years away that is what we are going to end up as—maybe as a successful tax haven for hot money, various kinds of tax dodger and fleeing oligarchs, but there is no future for Britain shouting across the Channel, “Continent cut off”, at the 400 million steadily integrating single market. That is not going to bring real investors and real jobs in real companies to Britain. We need to be there.

We will end up being politically ignored by Washington and powerless to defend our values and interests against all the multiple challenges that we face, never mind the new ones that pop up in the desert in north Africa. Do we really want what is happening in the world today, which is the rise of the East, to mean that we opt out of the West? Let us hope that the Prime Minister means what he hinted at, that he will campaign to stay in Europe, with his “heart and soul”. Let us hope that those words were not a public oration sop to pro-European opinion, particularly business opinion, which rightly fears that he has set his European policy on a trajectory that he certainly never wanted, in the hope of a positive outcome that he has not the faintest idea how he is going to achieve. There were many fine words in the Prime Minister’s speech, but it was very bad day for Britain.

2.27 pm

The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi): My Lords, I am grateful to the noble Baroness, Lady Noakes, for calling this debate to take note of the Prime Minister’s recent speech on Europe. I will try to address some of the individual questions from noble Lords but am sure you will agree that, with more than 40 speakers, I may not be able adequately to address all the issues raised and all the questions asked. The noble Baroness, Lady Donaghy, suggested a possible further debate with more time, and that may well be an option that your Lordships’ House can consider. The interventions today have been widespread in both view and substance and, like the noble Lord, Lord Liddle, I am struggling to highlight which of them really stuck in my mind. However, the contributions of the noble Lords, Lord Grenfell and Lord Hamilton, were amusing and engaging and brought interesting perspectives.

I will start by briefly recalling the context in which we are having this debate. Europe is facing a time of crisis. The Prime Minister highlighted in his speech the three main challenges facing all of us in Europe: the changes within the eurozone and the crisis that it brings; the lack of competitiveness in the face of a transformed global economy; and the democratic gap

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between Europe and its people. Faced with these challenges the European Union cannot stay still. For the eurozone to succeed, we accept that the countries that are part of it need to change. How they co-operate and the rules by which they work need to change. As Europe changes, our relationship with Europe will, and should, change. As the Prime Minister has said, we cannot bury our heads in the sand. We must face up to these challenges and ensure that the relationship that we have with the reformed EU at the end of this process is one that better protects our national interests and the integrity of the single market.

The noble Lord, Lord Hannay, is right in some of what he set out as criteria for negotiations. We are not only seeking an improvement in Britain’s position; we are looking for an improvement in the way that the EU works that will benefit all of its members. We want to see a more competitive and flexible EU, to show that power can flow in both directions and national parliaments to have a bigger role. The Government have been clear that we believe that active membership of the EU is in our national interest. The Prime Minister has said that when there is a referendum, he will campaign “heart and soul” for a vote to remain in a reformed EU.

There are many reasons why we are convinced that the best place for the United Kingdom is inside the EU. On the economic side, the EU supports UK jobs, prosperity and growth through increased trade, within the single market and through free trade agreements with non-EU states. The EU represents a market of 500 million people, with a combined GDP of around £11 trillion. It is the largest single market in the world, with a larger economy than those of the US and Russia combined. If Britain was not a member of the single market, UK firms would face export tariffs, reducing their competitiveness in Europe. The size of the EU and its global importance as an export market give Britain much greater influence with international trading partners than would be the case if we acted alone.

The single market also helps the UK to attract inward investment from both inside and outside Europe. The UK is the top destination in Europe for inward investment, attracting one-fifth of all foreign direct investment projects in Europe in 2011, for example. The single market encourages competition and innovation across the EU, bringing tangible benefits to people, as prices for consumers are driven down and productivity levels increase. However, this does not mean that we think the single market is complete. Indeed, further single market reform has even more to offer the UK through simplifying regulation, liberalising services, and developing a single digital market and a single market for energy.

Away from the economy, our membership of the EU can help to advance our national interests, influence and values internationally as part of a 27-strong—soon to be 28-strong—collective voice. I am not just talking about collective negotiation of free trade agreements with third countries, although these bring large economic benefits to member states, including the UK, and are a useful way of encouraging market opening in those third countries; I am thinking about the intelligent use

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of sanctions, which in the case of Burma have been attributed as one of the most effective levers in encouraging the regime to implement democratic change, and which the EU has implemented in response to the situations in Iran and in Syria, for example. I am also thinking about the common security and defence policy missions, which are a fast-moving response to security issues of real interest to the UK, such as piracy. Successes include training the Bosnian police force and increasing stability in Georgia.

The UK has long been a champion of further enlargement of the EU, which is key to achieving the UK’s economic and security interests in central Europe and the European neighbourhood. In 2011 the UK exported £16.6 billion in goods and services to the newest member states, approximately twice our exports to India.

The right reverend Prelate the Bishop of Wakefield spoke about the contribution of the EU to peace in Europe. The PM recognises the role that the EU plays within NATO in bringing peace and the rule of law to European countries. We hope to continue this through our support for the enlargement process.

There are also less quantifiable benefits, which we now take almost for granted. Membership of the EU provides freedom for British people to live, work, study and retire in Europe: 1.5 million UK citizens live in other EU countries, and UK citizens are able to work anywhere in the EU without requiring a work permit. Around 260,000 UK citizens are employed in other EU member states. There are 435,000 UK citizens claiming a pension and living abroad in an EU member state. Our membership of the EU also helps our students. Between 2011 and 2012, more than 13,500 UK students took part in the Erasmus scheme, studying for part of their degree in another European country.

I welcome the support of the noble Lord, Lord Williamson, for the balance of competences review. The PM has set out the principles of how he wants to change the EU and the UK’s relationship with it, not the specifics. The balance of competences review will give us an informed and objective analysis of where the EU helps and where it hampers. We expect this work to conclude during 2014.

My noble friend Lady Falkner asked what a fresh settlement would look like. All political parties will look at the evidence provided by the balance of competences review and use that to generate ideas for future policies. She is aware that this is being done over a period of four semesters, on specific subjects.

The noble Baroness, Lady Donaghy, spoke about EU measures on social policies, especially in relation to gender equality. I can assure her that there is no suggestion whatever of undermining gender equality and we have clear national legislation to support the current position.

The noble Lord, Lord Giddens, asked some very specific questions. What will the PM do if he does not get his concessions? We are not going into this negotiation looking to fail. We are confident that there are some very clear principles in the wider European Union. We have support among member states which also feel that we can have a better Europe. The answer to

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everything is not simply more Europe. He asked whether we were simply cherry picking, as did the noble Lord, Lord Kerr. The answer is no. The UK wants reform of the EU for the benefit of all member states. What we will be putting forward will show that. There were a number of other questions and the noble Lord may have to write to me to get the answers to them.

My noble friend Lady Noakes mentioned the Fresh Start report. The Foreign Secretary has written a foreword to this document, as my noble friend is aware. He welcomed its contribution to Conservative Party policy thinking, saying:

“Many of the proposals are already Government policy, some could well become future Government or Conservative Party policy and some may require further thought”.

This report is a valuable contribution to the debate and includes some ideas that are already government policy.

The noble Lord, Lord Monks, spoke of the benefits of EU social policy. The Prime Minister has said nothing about seeking to undermine the European social model. I think all parties agree that we need to look at how the working time directive impacts on our ability to run our health service, and we need to ensure that we remain competitive. As Chancellor Merkel has said,

“If Europe today accounts for just over 7 per cent of the world’s population, produces around 25 per cent of global GDP and has to finance 50 per cent of global social spending”,

surely something has to change.

My noble friend Lord Howell spoke about the need to build alliances. He is quite right. The UK does have alliances. The PM noted in his speech:

“So let us use this moment, as the Dutch Prime Minister has recently suggested, to examine thoroughly what the EU as a whole should do and should stop doing”.

The noble Lord, Lord Blair, spoke about opting out of the criminal justice system and whether this would make things more complex. We have committed to a vote in both Houses before a decision on whether or not to exercise the JHA opt-out. The UK national interest will be at the heart of any future policy and we are committed to a constructive working relationship with other member states on this.

The noble Baroness, Lady Symons, and the noble Lord, Lord Dykes, asked very specific questions about legislating on a referendum and whether that will be drafted by civil servants. Civil servants will not be working on this. It would not be HMG policy. Any work on drafting legislation before the election will be done by the Conservative Party.

We have had a wide-ranging discussion today and I was hoping that, unlike the other place, this is not a place where politics is always to the fore. Unfortunately, the noble Lord, Lord Liddle, was quite passionate in his critique of the Conservative Party. He said that Labour’s position on this was clear. I have to come back at him and say that Labour’s position on this is at best unclear and at worst dithery and confused. He will of course be aware of his leader’s comments at Prime Minister’s Questions on 23 January, where the right honourable Ed Miliband said:

“My position is no, we do not want an in/out referendum”.—[Official Report, Commons, 23/1/13; col. 305.]

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Of course, only days earlier he had said:

“Committing now to an in/out referendum has big costs for Britain”.

Labour is clearly still formulating its policy. Worse than the present position, the noble Lord should also reflect on what his party did in government. Let us not forget that Labour waved through above-inflation hikes to the previous EU budget; gave away £7 billion of our rebate but failed to reform the common agricultural policy; signed up to the eurozone bailout; gave away our opt-out on the Social Chapter; and refused us a referendum on the Lisbon treaty. This is not the kind of place where these discussions should happen. We are not like the other place but the noble Lord, Lord Liddle, clearly wants this to be part of the discussions.

With the ongoing euro crisis the European Union is changing. These changes are raising a series of fundamental questions about the future of the EU and Britain’s place in it. The questions will not go away and we should be playing a leading role in shaping that debate. Britain should want to remain in the EU. We need to be in the single market, not just selling goods to Europe but with a say in the rules as well. Public disillusionment with the EU is at an all-time high and people feel that it is heading in a direction for which they did not sign up. We must address these matters, as the result is that democratic consent for the EU in Britain is now wafer thin. This must worry the party opposite as much as it worries us.

We want to negotiate a new settlement in Europe focused on competitiveness, fairness and respect for national democracies, and which allows powers to flow back to member states. We want fresh consent for this settlement. The Conservative manifesto in 2015 will commit us to negotiating a new settlement in the next Parliament. If we win the election we will hold an in-out referendum to stay in the EU on new terms or to come out if those terms cannot be negotiated. We will complete this negotiation and hold the referendum within the first half of the next Parliament.

It is clear that there will be challenges ahead on the road to a reformed European Union and a new settlement for the United Kingdom. But as the Prime Minister said, we believe strongly that Britain’s national interest is best served in a flexible, adaptable and open European Union, and that such a European Union is best with Britain in it. We will strive to achieve the right outcome for Britain and the right outcome for the rest of the European Union.

2.42 pm

Baroness Noakes: My Lords, I thank all noble Lords who have taken part in this good debate. I agree with the noble Lord, Lord Liddle, that three minutes did not diminish the quality of the contributions. That is the only thing on which I think that I agree with the noble Lord, Lord Liddle.

A regular criticism made of the Prime Minister was that this was simply a party political move. As my noble friend the Minister has pointed out, however, there is widespread disillusionment in the country with the EU, and in polls there is regularly a majority of the country which does not wish to stay in the EU

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and wishes to have major renegotiation. That is what my right honourable friend the Prime Minister is responding to, and it is unworthy of other people here to suggest that is solely for party political reasons.

My noble friend Lord Howell made the point that the Prime Minister wants to negotiate changes that benefit all of Europe and not just the UK. Of course it is the national interest that will determine how we vote when we get a referendum. While we want to benefit the rest of Europe we will judge the result against our interests and that is important. As my noble friend the Minister has pointed out, we are still unclear about the Labour Party’s position on a referendum, but I agree with the noble Lord, Lord Watson of Invergowrie, and others that the Labour Party will probably have to come to the table and offer a referendum to the people. Given the popular view of the voters, that will be irresistible and is just a matter of time. To him and all other doubters on this subject I say, “Bring it on”.

Motion agreed.

Visas: Student Visa Policy

Motion to Take Note

2.44 pm

Moved by Lord MacGregor of Pulham Market

That this House takes note of the impact of student visa policy on admissions to universities in the United Kingdom and Northern Ireland.

Lord MacGregor of Pulham Market: My Lords, I thank the many distinguished noble Lords who have put their names down to speak in this debate. There are several, such as my noble friend Lord Norton of Louth, who for good reasons are unable to be here but would like to have participated. That is a sign of the concern that there still is on this matter. The time pressure put on us means that I will have to be succinct on the issues and there is much that I will have to leave out.

There are three basic points with which to start. I strongly support the Government’s overall immigration policy. I entirely agree with the steps take to deal with abuse and bogus applications in parts of the private sector, the education sector and English language schools. Today we are talking solely about universities. I welcome the helpful steps that the Government have taken to alleviate some of the concerns expressed not least by five Select Committees in both Houses, and in particular the decision to disaggregate the student numbers in the migration figures. That was a big step in the right direction but we need to go further.

The achievements of our universities are one of the major UK success stories. Many are recognised world leaders, comparable to the best anywhere, especially in the United States. Overall our university sector has an internationally high reputation and the demand for places from overseas is strong. Non-EU overseas students contribute over 10% of total university fee income. The contribution to that reputation from overseas undergraduates, postgraduates, research fellows and professors working and studying here is great. The benefits

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that our universities bring to local economies are substantial, not only in their spending on local goods and services but also in their contribution to key economic developments. The huge growth in the science and research parks in Cambridge is just one outstanding example. The universities are a major expert earner, accounting for £8 billion now and with an expected to increase to £17 billion by 2025 on recent trends. They are the fifth biggest positive contributor to the net balance of payments.

The vast majority of overseas students are not permanent immigrants. They are migrants. The universities have excellent systems for tracking what happens to them. Most eventually return to their own countries or elsewhere. A 2010 Home Office study showed that of the individuals who entered as students in 2004, only 3% had settled permanently by 2009. They do not claim benefits. It is a condition of their visa that they have no recourse to public funds. They are net contributors to the economy and not a drain on public funds. They are unlikely to require NHS care because of their age profile. They are totally unlike bogus applicants and many other immigrants.

There are countless examples of them returning to their own or other countries and becoming permanent ambassadors for the UK. They are our best ambassadors when they leave our shores. They find prominent positions in government, foreign services and defence, industry and commerce, education and elsewhere. This is so-called soft power. In short, these are absolutely not the sort of immigrants that the public and the media have in mind when they call for tougher controls on immigration. They are the opposite, real assets to us, and that needs constantly and regularly to be made clear in the context of policy decisions. In so far as there has been public concern about students, this was related to bogus ones, and I hope that that problem has now been dealt with.

Overall figures of new entrants from non-EU countries are only slightly down in 2012, by 0.4%. Most overseas students are postgraduates and their numbers are down by 1.9%. Not much, one might say, but I suspect that this is only the start of a trend. First, in what is a hugely competitive industry, as many in this House know, numbers in most of our major competitor countries—America, Australia, Canada and some EU countries, which are fast developing courses in the English language —are up.

Secondly, some universities have told me that they found that last September the number of postgraduate applicants who had even paid deposits and then declined to come had increased. Thirdly, the perceptions that the UK was imposing tough new restrictions, being less welcome to new applicants and spouses, and even closing for business, have grown considerably since these figures were compiled. This goes particularly for the Indian subcontinent, where numbers are already substantially down and compensated for only by a rise in China.

Unless action is taken, future years will show a considerable decline in entrants. On the Indian subcontinent and, I am told, in some African countries, this perception has been especially evident as a result

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of the London Metropolitan issue. I do not have time to go into that in detail. Suffice it to say that the hostile publicity in India after that matter focused on the students who either had to or could not find other places—and it was huge. That, combined with individual stories about visa difficulties with the UK Border Agency, has been immensely damaging.

Fourthly—and this is difficult to explain in a few words, certainly to people outside this House—the claims sometimes made by Ministers that there are no limits on non-EU applications are simply not believed. This is due partly to the perceptions that I have already described, partly to difficulties with the UK Border Agency—of which, more in a moment—but perhaps most of all to the following point. In order to meet the Government’s target of reducing net migration to tens of thousands by 2015—and we are still a long way off that—and since students are the largest category of migrant, a further reduction in student numbers seems inevitable. The Migration Advisory Committee’s report states that a reduction in non-EU student numbers of 87,600 in the period 2012 to 2015 would be required to meet that target. The Institute for Public Policy Research has an estimate of 50,000 fewer non-EU students, translating to a loss to the UK of £2 billion to £3 billion per annum. These figures suggesting limits are becoming widely known and are fed by the perception of the way in which the UK Border Agency is applying its controls and rules to potential and already-in-place students from non-EU countries.

So what is to be done? I will be as brief as possible to enable as many speakers as possible to have a little bit more than the two minutes allowed. I have two points to put to my noble friend. First, it is clear that the UK Border Agency is overstretched, overbureaucratic and underresourced. Universities are highly responsible and want to clamp down on any bogus students and those who break the rules. I have talked to various vice-chancellors, seen the Universities UK submission and read the excellent article in the Daily Telegraph of 24 January by Sue Cameron, which accurately sums up the impressions that I have gained. The stories of unnecessary difficulties are legion. The UK Border Agency seems to be making students feel as unwelcome as it can. The amount of time, energy and costs that universities are having to use up is high, and all this is now being used by competitors in other countries to imply that the UK is closed for business.

I have a list of complaints and suggested improvements from Universities UK which I do not have time to repeat. Today, I shall mention just one or two of them. It makes the following points: that the UK Border Agency requirements of tier 4 sponsors have changed 16 times since 2009, making it incredibly difficult for sponsors to keep track of requirements; that changes have been made to visa requirements in the middle of the universities’ admission cycle, which has led to individual institutions having to review by hand thousands of offers already made to prospective students; that the UK Border Agency helpline is often unable to answer questions about changes to the rules; and—this is a particularly important point—that universities frequently tell Universities UK that they have received no feedback from the UK Border Agency following a tier 4 audit visit, either to inform them that they are

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compliant or to point out shortcomings or potential weaknesses. Many universities are making this point to Universities UK, and I hope that the Government will take it up.

Secondly, and most important of all in the light of all that I have said, I strongly support the recommendations of the five Lords and Commons Select Committees, including the Public Accounts Committee. It must be rare to have five committees from both Houses making the same points time and again. I am not sure that I can recall that ever happening before in my long period. It is important therefore that the Government take heed of what they have all said and remove international students from the net migration target. All five committees have powerfully argued the case. I quote from just one, the House of Commons Business, Innovation and Skills Committee, reporting in September 2012. It states:

“Whilst we understand that the UN definition of migration includes overseas students the Government is under no obligation to use that definition for the development of domestic policy”.

That is a fundamental point: it is perfectly reasonable to have the figures under the UN definition, but they should not be used for the development of domestic policy. The committee goes on:

“Removing overseas students from the Government’s migration targets would allow universities to compete on a level playing field with their international competitors”.

That is again an absolutely fundamental point. By changing the system, we would come into line with what happens in America, Australia and Canada, where they are making great appeals to overseas students. The report continues:

“It would also allow the Home Office to concentrate on economic migrants and their value to the United Kingdom”.

That is a point that I made earlier. The report goes on:

“We recommend that, for domestic policy purposes, overseas students should be recorded under a separate classification”—

we are moving, thank goodness, towards that—



“not be counted against the overall limit on net migration. That does not mean that we wish to hide the level of overseas students studying in the UK. The Government could make clear the distinction by publishing, alongside its net migration data, detailed information on the number of overseas students studying in the UK, their country of origin, the number who remain here after they have completed their studies and the number who remain in higher education”.

The committee then makes the following, terribly important point:

“Such an approach would make clear the difference between permanent immigration and study and crucially it would demonstrate clearly that the United Kingdom welcomes overseas students and values the contribution they make to our economy”.

I could not put it better myself. I stress again that such a change would bring our universities into line with the systems in our major competitor countries.

Yesterday, all five chairmen of the committees wrote to the Prime Minister on this point in view of his forthcoming visit to India, where the problem is most acute. I cannot recall an occasion on which the chairmen of five Commons and Lords committees have taken such action. I am sure that, on his visit, the Prime Minister will yet again powerfully and splendidly promote

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the cause of British exports. This change would be most timely and welcome in relation to one of Britain’s key export sectors.

At the Conservative Party conference in October 2011, the Prime Minister said:

“I want the best and brightest … scientists and students from around the world to get the red carpet treatment”.

I say amen to that. It is precisely what this change would do. My noble friend on the Front Bench has a deservedly high reputation in this House. I am sure that he will listen. I hope that, as a result of this debate, he will feel able to pursue both these points, on the UK Border Agency and on taking the migration statistics out of the target, with the relevant colleagues in government. If he can achieve progress on that front, it will be warmly welcomed by very many in this Chamber.

Lord Lucas: My Lords, may I point out that, on the mathematics of the speakers list that we have in front of us, we actually have three minutes each?

2.58 pm

Lord Howarth of Newport: My Lords, it is a pleasure for me today to follow the noble Lord, Lord MacGregor, as it was when he was Secretary of State for Education and I was his Higher Education Minister. Our vision then for higher education, as it remains now, is of a UK universities system that is internationalist and open to ideas, people and collaborations from across the world, with a diversified student body and diversified sources of finance and less dependence on the taxpayer. That remains the vision of Ministers at the Department for Business, Innovation & Skills, but it is apparently not the vision of the Home Office.

The message that comes from government is confused but is interpreted across the world as being that international students are no longer welcome in Britain. As a result, applications are down, particularly among postgraduate students, which is a great worry, and the share of the market in international students achieved by our universities is stagnant when it could be so strong. The best and the brightest, whom the Prime Minister wishes to encourage, are those who can most easily go elsewhere.

Why does the Home Office have a veto over BIS? The Home Office is pursuing in blinkers an inappropriate political pledge at the cost of damaging universities, our economy, our culture and our influence across the world. This is nothing to do with stemming the flow into this country of poorly skilled migrants, which is indeed a threat to employment and public services. It is nothing to do with dealing with the rackets at bogus colleges. There is a systemic failure in government.

Who are staff at the UK Border Agency to second-guess universities as to whom it is appropriate to admit? I fear that staff at the UK Border Agency are not themselves the brightest and the best. I hope that the Minister has had the opportunity to read the evidence given to us by Million+ on behalf of Modern Universities. It is a story of ever changing regulations, constant threats to universities and an absence of guiding principles and a proper code of conduct. There are reports of staff monitoring universities who are ignorant and sometimes in breach of the law and

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who behave with a rudeness and an incompetence that are entirely unacceptable. The tone of the Home Office and the UKBA in this area has been deplorable.

The Home Secretary has said that there should be an extra 100,000 out-of-country interviews. How is she to ensure that the agencies that carry out these interviews will be competent and not corrupt? One can only fear that this is part of a plan to reduce drastically the number of visas granted in the run-up to the general election.

It is right therefore, as the noble Lord and five Select Committees have said, that these statistics should be disaggregated while complying with the UN requirements so that university-sponsored students are taken out of the net target for migration. In that—

Baroness Garden of Frognal: My Lords, there are only three minutes each. People need to sit down the minute the clock hits three. I am afraid that there is no leeway.

Lord Howarth of Newport: I will simply say then that universities, business, cultural institutions and politicians of all parties are asking the Home Office to listen to what is being said and to change its approach. I very much hope that the Minister will be willing to do so today.

3.02 pm

Baroness Sharp of Guildford: My Lords, I thank the noble Lord, Lord MacGregor, for raising this important subject. I declare an interest as a visiting fellow at the University of Sussex and as a former university teacher. I also echo the thoughts expressed by the noble Lord, Lord MacGregor, about how as a House we undoubtedly condemn the bogus student issue and welcome the fact that the Home Office has moved to disaggregate the statistics.

Nevertheless, according to the 2011 figures, 566,000 people came through immigration into the UK and 351,000 left, so net migration was 215,000. As we have heard, the Home Office has a target of reducing this by the next general election, in 2015, to less than 100,000. In 2011, 174,000 non-EU overseas students enrolled to study at UK higher education institutions. We know from the Home Office research based on the 2004 cohort of students that only about 3% of these students actually remain permanently in the UK in jobs after five years. Therefore, of those 174,000 students fewer than 10,000 will be added to the net immigration figures.

However, the UK Border Agency has a target to cut net immigration to the tens of thousands. If it could cut the number of students by 50,000—from about 175,000 to 125,000—by tightening up on student visas, that would mean only a short-term gain, not a long-term one. If the figure is reduced to 125,000 and only a very few remain, that would mean only 3,000 to 4,000 remaining.

I can only assume that this is a Home Office strategy, because it is making it as difficult as possible for those from non-EU countries to come here as students. Only yesterday, when I was at UCL giving a seminar on a masters course, I heard of a student from Lebanon

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who had been lined up to come here and join the course. She had filled in all the forms and been through the interview but in the end failed to meet the deadline for applications and was turned down because the Border Agency and the company that it uses failed to tell her whether she had passed the interview. This is a cheap, short-sighted strategy and not worthy of this country.

3.05 pm

Baroness Prashar: My Lords, following on from the excellent and constructive introduction by the noble Lord, Lord MacGregor, I just want to ask some questions. In the face of such compelling evidence of the damage that this policy is doing to our reputation and long-term benefits, why are the Government not willing to remove international students from their target to reduce net migration as recommended by five Select Committees, including EU Sub-Committee F, of which I am a member? If all the changes that the Government felt necessary have been implemented to tackle abuse of the system, why will the Government not change their policy and use the opportunity to join the British Council, of which I am a deputy chairman, Universities UK, UKCISA, of which I am a president, and others in a drive to say that international students are welcome in the UK?

The benefits that will result from this change in policy are glaringly obvious: it would enable universities, the British Council and embassies to speak with one authentic voice in promoting the UK’s welcoming image to overseas students and it would enable UKBA to work collaboratively with universities to ensure visa compliance. It would be a positive outcome for everyone. At present the negative messages are undercutting the excellent and constructive work of organisations such as the British Council and the universities.

The British Council is creating new partnerships and sustaining long-term ones to encourage students and is building trust. The Government should be capitalising on this work and taking advantage of the growing global market for students. Competition is growing from countries such as Australia and Canada. The best and most innovative research comes from international collaboration; nearly half the UK’s research staff and PhD students are non-UK nationals. We should be ensuring that all policy initiatives support the objective of attracting international students, treating them well while they are here and building long-term good will in the national interest.

Furthermore, the process for obtaining a student visa has become far more extended, complex and confusing. The additional imposition from April of face-to-face interviews for students is yet another example. It is an obstacle race from start to end when the students are here. Why can the government agencies not work collaboratively with universities to improve matters? It is time we were told why the Government are continuing to pursue a policy that is so against our long-term interests.

3.07 pm

The Lord Bishop of Wakefield: My Lords, I thank my noble friend Lord MacGregor of Pulham Market for securing this crucial debate and for the clarity of

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his introduction. My recent association with the University of Huddersfield has been illuminating on this issue. I declare an interest both as a former member of the council of that university and as an honorary graduate.

Huddersfield University has been crucial in supporting community cohesion in West Yorkshire, where there are substantial Asian minorities. One of the keystones has been the university’s work with overseas students. It has welcomed significant numbers, notably from Asia. This has been a two-way process, with the university validating degrees in east Asia. That interplay has emphasised those values for which Britain has been famous, including tolerance and good government.

Overall, we have established a remarkable reputation not only for tolerance but also for offering education to overseas students. In earlier times, other rather less welcoming nations might have been less ready to accept people such as Karl Marx and Sigmund Freud to their shores. Any number of political leaders across the world have spent part of their university education here. As the British Medical Association pointed out in its recent briefing, we have also gained enormously from other countries through medics who have trained here and have stayed.

I turn now to a different scenario. In the 1990s, while I was working at Lambeth Palace, we established the St Andrew’s Trust. This has brought students from Russia, Georgia and other countries to study theology and pastoral care. Those students return to their countries to occupy positions of significant influence. That initiative was intentionally dovetailed with the Government’s Chevening scholarships at the same time as the Government were developing the Know How Fund, for the same objective of soft power.

In a wide-ranging briefing, Professor Edward Acton, the vice-chancellor of the University of East Anglia, pointed to a clamour for the rules on student visa applications to be changed. It is common sense for students to be in a different category, as the noble Lord, Lord MacGregor, suggested, and treated as temporary migrants, so that both they and we can benefit from their attendance at our universities. Operating now in a market economy, our universities need to attract overseas students to help to balance the books.

Saint Benedict, whom I cited in an earlier debate today, called his monks to welcome all into community. They want to welcome them, he said, as if they were Christ. That seems to me to be a principle to which, of whatever religion or none we may be, we might want to adhere. I strongly urge Her Majesty’s Government to review the policy in the ways suggested by the noble Lord, Lord MacGregor, and to once again welcome those who ultimately benefit our economy, as our own policies elsewhere suggest.

3.11 pm

Lord Wei: My Lords, I, too, am grateful to the noble Lord, Lord MacGregor, for tabling the debate. I declare an interest as someone who often works with universities, particularly east Asian student communities, organisations and bodies.

When our country is in desperate need of growth, the question of how we treat visitors to it is of utmost importance. As the son of a Chinese immigrant, I support

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carefully managed immigration and deplore the previous Government’s mismanagement of it. However, I must say that I am unconvinced that today’s Home Office and UKBA approach to student visas will address the two underlying root causes of uncontrolled net migration from Europe and a lack of imagination.

Let me start with Europe. Because we are part of the EU—I welcome the Prime Minister’s recent pledge to renegotiate our relationship with it—we have the ability neither to police migration from within the EU nor to prevent people from engaging in welfare tourism. That is likely to intensify from 2014 onwards. What can we do about it? It seems that the answer right now is not very much. Instead, we attack non-EU university students, few of whom have been proven to abuse the welcome that we give them, as a means retrospectively to deal with excessive EU immigration.

The consequences of that policy are potentially ruinous: lower growth as fewer students come to stay, invest and create jobs; a decrease in trade, with fewer people able to help us to communicate with the emerging economies of the world; and universities declining and less able to rely on exporting education to balance their books. A policy goal and target that in themselves are well motivated better to manage immigration risk becoming tools for protectionism, economic decline and European hegemony over our sovereign affairs.

However, with more imagination, we could reverse the damage being done while still meeting our objective of having better, more carefully managed net migration. We should start with the basics: exclude students from the immigration statistics, like most other developed countries; have simpler, more affordable visa processes; authorise visas for part-time masters; and let students and other immigrants stay to work after their studies, particularly for trade-related roles.

Let us use our foreign aid to help countries where most of our immigrants come from to create better alternative destinations than ours. Let us encourage some of our young people to emigrate and learn how to do business in emerging markets, reducing the net migration totals in the process. It is time to stop making the international student the bogeyman of our dysfunctional EU-directed immigration policy. Are my noble friend and the head of UKBA willing to meet me and others to discuss more innovative ways to help to manage immigration and to help this country to grow again?

3.13 pm

Baroness Warwick of Undercliffe: My Lords, I thank the noble Lord, Lord MacGregor, for holding the Government’s hands to the flame on this crucial issue. I declare an interest as a member of the council of UCL.

President Obama made a speech yesterday from which I wish to quote because it shows what we are up against. He talked about the brilliant students studying in the US from all over the world, earning degrees in the fields of the future. who want to turn their big ideas into big business. He wants America to help those students to stay because,

“if you succeed, you’ll create American businesses. And American jobs”.

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Other countries appreciate the long-term strategic importance of international education. The risk for us is that we have our priorities wrong—that we are complacent about our leading place in this fiercely competitive field and squander our advantage as a result.

The noble Lord, Lord MacGregor, referred to the unprecedented move of five Select Committee chairs today urging the Prime Minister, if he is committed to growth in the market in which the UK excels, to add action to words, remove students from the net migration target and encourage them to choose the UK. In the light of that, will the Minister urge the Prime Minister to reconsider? I echo the question asked by the noble Lord, Lord MacGregor, about government targets. How will the Government meet the target of reducing net migration if not by reducing substantially international student numbers?

I make one final point about figures. Universities’ real fear is that the rate of growth is slowing, but today’s UCAS figures showed an increase in international student applications, so why the anxiety? Those figures give a very partial picture. UCAS figures represent only 20% of the total intake to universities. They exclude postgraduate students and are figures for applications only; many will not translate into enrolment. A far more accurate picture can be gained by looking at figures for actual enrolment. The statistics agency HESA has just published the figures on the number of new entrants to universities in 2011-12. They show a decrease for both undergraduates and postgraduates. Those figures are a warning of what might happen if we do not change course. Does the Minister acknowledge that the latest, more worrying, figures give us a more accurate picture of what is happening to international student numbers?

3.16 pm

Baroness Benjamin: My Lords, I, too, thank my noble friend for securing this important debate and declare an interest as the chancellor of the University of Exeter, where we have had a rapid rise in the number of international students because we have reached out to the world by creating one of the UK’s most successful world-class universities. We are proud to have 5,000 exceptionally brilliant international students from 140 countries, including China, Hong Kong, India, Vietnam and the USA.

These international students make a massive contribution to increasing diversity and have a positive impact on the life of the university and international understanding in the south-west, where celebrations such as Diwali and the Chinese New Year are now firm dates in the city’s calendar. This is vital in an area that does not enjoy the same level of cultural diversity as London and other inner cities. International friendships forged in the south-west will benefit us all long term.

At a time of financial insecurity we should also acknowledge the positive economic impact that our international students have on jobs and local investment. An independent study that we commissioned from Oxford Economics found that our international students

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contributed over £88 million a year to Exeter’s GDP and supported 2,880 jobs. In the south-west economy, that rises to over £104 million per year and 3,280 jobs.

This success is at risk if we do not continue to provide a warm welcome to international students. Why are the Government proposing to do the reverse? Universities in other countries will take our market share. This makes no sense because in this competitive international market students can go anywhere to study where they feel welcomed. From my personal experience on graduation days, I know that they love coming here. Higher education is a great British success story and we should not damage its future international competitiveness. I beg the Government to reconsider.

3.18 pm

Lord Sutherland of Houndwood: My Lords, I thank the noble Lord, Lord MacGregor, for introducing this debate so carefully and for laying out the issues so accurately. I agree with everything that he said. It is not often that a politician hears that, but today one does. I want to take a different route, however, and I must give an account of my own links with universities. I have links with more than a dozen universities, which I would be happy to spell out on another occasion.

I will start with a team list. It is an international team: from Hungary, Edward Teller, Enrico Fermi, Leo Szilard and Eugene Wigner; from Switzerland, Felix Bloch and Otto Frisch; from the Netherlands, George Uhlenbeck and Samuel Goudsmit; and from Germany, Rudolf Peierls, Gregor Wentzel, Bernard Peters, Hans Bethe, James Franck, Charlotte Riefenstahl and Wolfgang Pauli. They were all members of Robert Oppenheimer’s team in the Manhattan project in Los Alamos. They were recruited to that team by Oppenheimer and they were recruited because they clung to Oppenheimer. They were bright physicists—some won Nobel prizes both before and after Los Alamos—and with them the centre for physics research, at a critical time in the history of the West, moved to the USA.

Oppenheimer met all these scientists in his early studies as a postgraduate in Europe in the late 1920s. All of them were willing to attach themselves to Oppenheimer. By then many of them were already working in the USA. What moved them around is the fact that science and physics are international. They worked together, driven by intellectual curiosity and by enthusiasm for their subject and not limited by national boundaries. They were willing, ready and able to move at a time of critical importance and they all were all key members—I am indebted to Ray Monk’s biography of Robert Oppenheimer for this—of Oppenheimer’s team that got access to this important research before Hitler could capitalise on it.

I ask now: where would we be today? That was a climate of opinion that encouraged this international movement, driven by curiosity and intellectual ability. Is that what the Government have in their current policy? As we are hearing all round in this debate, the answer is no. Interestingly—I include a footnote saying that I am indebted to the noble Lord, Lord Hennessy, for this quotation—Churchill said:

“We had better German scientists than the Germans”.

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That made the difference and it was a critical difference. I put it to noble Lords that the lumbering system that has been set up does not serve us well. We have a lesson to learn from history.

3.22 pm

Lord Lipsey: My Lords, the noble Lord, Lord MacGregor, said it all. I would like to add a couple of minutes-worth from the perspective of my role as chair of the Trinity Laban Conservatoire of Music & Dance. I understand the dilemmas of trying to curb immigration, but extending control to students has gone too far. It is undermining a highly profitable British export while diminishing the intellectual and cultural vitality of our nation. Nowhere is this truer than in music and dance, which by their nature are international. They are for all human beings.

Just as talented students from India and China want to come here to study music, we are slamming the door in their faces. To add a music point, one of the great attractions of our music conservatoires was the two-year rule whereby students could work in music two years after they graduated. Some 29% of our masters students took advantage of that route to the great benefit of our culture and their careers. That is now vastly more difficult. First, you have to show that you can earn £21,000 a year, and that is not easy for a student. Secondly, you have to be able to cite an employer. If you are a musician, you usually have a portfolio career as a freelancer and you do not have an employer. This route is therefore barred to them. Many of them, as a result, are not going to come.

Even the exception for exceptional talent is a not a very good one. You have to go back to your country of origin to apply. You then have to have the application endorsed by a competent body such as the UK Arts Council. There is, in any case, a limit of 1,000 on places. When you take that into account, the attractions for music students are being reduced so that we will become a second-class power where, in many ways, we have led the world. The sooner we exempt students from these rules, the better.

3.24 pm

Baroness Howe of Idlicote: My Lords, I join others in congratulating the noble Lord, Lord MacGregor. I thank Universities UK for its invaluable briefing, and I speak in support of three of the issues it has raised.

First, although at 13% we are currently second in the market for overseas students after the USA, there is growing competition for such students. Canada wanted to double the number of overseas students there and not make entry more difficult, as this Government are doing. Secondly, we have already heard about the five parliamentary Select Committees, and their follow-up letter. Let us hope that it works a miracle. Thirdly, we should remember the significant contribution that these students make to their university towns and cities. The University of Exeter has been mentioned. Its report estimated that the GDP generated by its overseas students directly supported no fewer than 2,480 jobs in that city. Contacts with fellow

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students from overseas can lead to future research or business opportunities for British graduates as well as for themselves in other countries later on.

As a trustee of the internationally renowned Architectural Association School of Architecture, I am reminded of the successes which graduates from that school have achieved. The noble Lord, Lord Rogers of Riverside, has his world headquarter offices in London, from which outstanding international buildings are designed and built; or, to take an example of a younger brilliant generation, Chris Lee, originally an overseas AA student from Singapore, has set up a successful collaborative office for his generation of architects in Britain, from which they, too, are designing buildings all around the world.

However, unsurprisingly, the AA school is even less happy than Universities UK with the current Government’s policy for overseas students. Because the AA school is classed as an independent private school, overseas students with a tier 4 visa at the AA are not permitted to work during term time or in vacations, yet overseas students studying for an architectural degree at a UK University can—all this despite the fact that the AA school has achieved full accreditation by the Quality Assurance Agency for Higher Education, and has the same tier 4 visas. Like other noble Lords, I can only hope that the Government will now agree to remove genuine overseas students from the category of illegal immigrants.

3.27 pm

Lord Wilson of Tillyorn: My Lords, like other Members of this House, I am grateful to the noble Lord, Lord MacGregor, for the opportunity to raise this important issue. I have an interest that has expired so recently that I should mention it: until the end of the previous month, I was Chancellor of the University of Aberdeen.

The general points have been made by all speakers that graduate students coming from overseas are extremely welcome, not just for the fees but because they enhance the whole student experience at the university to which they come. Secondly, assuming, as is the case for most, that they have been well treated, when they leave they are life-long friends and ambassadors for Britain, and points of contact.

Nor is there any doubt that we have severely damaged the reputation we have for welcoming overseas students. To pluck one statistic out of the air, the number of overseas students coming to Scotland from India in the past year has dropped by over a quarter. That is just one of the countries involved.

A number of practical things could perhaps be done. I will raise two and ask whether the Minister will look at them. First, there was until recently in Scotland a very good scheme called Fresh Talent, under which my students could stay on and have their visa extended for two years. I know from experience that some of the people who did this were very valuable to the economy in Scotland and very valuable when they went back to their home countries.

There was a similar scheme in England for a shorter period. That was cancelled a few years ago. Is the Minister prepared to have that looked at again? It was

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an extremely good scheme. It has been to some extent replaced by another scheme whereby MBA or PhD students can stay on provided that they have what is called “skilled work”. That is a very good idea. I suggest that the numbers are much too small; the total is 1,000 visa places.

There is another issue, which perhaps affects some parts of the country more than others. Skilled work means that one is getting a salary of at least £24,000 a year. That seems excessive, since, in the case of Scotland, the average graduate salary is £21,500 per year. I ask the Minister whether that could be looked at again to get a more realistic salary level.

Above all, as other noble Lords have said, we have created an atmosphere that suggests that students from overseas are unwelcome. Many noble Lords have suggested that figures for immigration should not include students. I totally agree. Above all, surely we must give the impression not that overseas students are unwelcome but that they are very much valued and very welcome in this country.

3.30 pm

Lord Cormack: My Lords, it is a great delight to follow the noble Lord and to support my noble friend Lord MacGregor. I declare an interest as a member of the council of Hull University, as a senior associate and member of St Antony’s College, Oxford, and as somebody who lives in Lincoln, where we have two new but vigorous universities.

The point made by the noble Lord, Lord Sutherland, can be echoed year after year. At this very moment, there are four recent graduates of St Antony’s College, Oxford, in the new Mexican Government. From that postgraduate college in Oxford, young men and women attain positions of influence and authority in their countries year after year. Are we really saying to those who apply, “You are not welcome.”? That is increasingly the impression that they are getting.

The vice-chancellor of the University of Lincoln said to me that having the “highly trusted” status conferred on it by the UK Border Agency makes it an adjunct to that agency, yet it then finds itself criticised for unreasonable delay and inexplicable changes in rules and regulations. It is a wholly unsatisfactory situation. We are giving a very bad impression that this country, which over the centuries has welcomed so many and nurtured so many talents, is not as welcoming as it should be. It is in flat contradiction to the policies of the Department for Business, Innovation and Skills and to the underlying ethos of the foreign policy of the Foreign Secretary. It is, frankly, wrong to have a policy that is unwelcoming, unhelpful and unimaginative and that does none of us any service.

I do not wish to see illicit immigrants benefiting from the rules of this country, but it is far better that the odd rogue should get in and stay in than that we should turn away someone who may win a future Nobel prize or be a Prime Minister of a Commonwealth or other country. That really imbalances what it is all about. I beg the Government to have a policy that is sensitive, imaginative, understanding and that redresses the unfortunate impression that has been given over the past two and a half years.

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3.32 pm

Viscount Hanworth: My Lords, a particularly worrying aspect of the figures that have recently become available is the fall in the numbers of overseas postgraduate students that they record.

A reality of UK universities is that postgraduate courses in all subjects are largely sustained by overseas students. There are very few native British postgraduate students. There is virtually no provision for the support of postgraduate students via grants or bursaries. In order to sustain themselves on their courses, students must vie for posts as teaching assistants. It must be acknowledged that the widespread use of postgraduate students to assist in the teaching of undergraduate courses is having a deleterious effect on the quality of the education. An inevitable consequence of the dearth of native postgraduate students will be evident to anyone who visits a university department. There are declining numbers of native British academics within the departments, and they tend to be the older members who are passing into retirement.

Within many departments, the junior staff, who are predominantly recruited from abroad, are staying for periods of only two or three years before moving on, either to their countries of origin or to other English-speaking nations. Nowadays, many European universities are open to English-speaking academics, whatever their countries of origin may be. In the departments in which I have served, the annual rate of staff turnover has rarely fallen below 20% in recent years, and on occasion a full 30% have left at the end of the year.

What I am asserting is that British universities are in peril. My own perceptions, which have been derived from first-hand experience, contrast markedly with the self-congratulatory tenor of some of the accounts of the university system that I have been listening to. Now, we see a Government who are wilfully kicking away some of the props that support the university system, of which the flow of overseas students is a vital one. To me, at least, the motives of the Government are unfathomable.

3.35 pm

Lord Phillips of Sudbury: My Lords, I declare an interest as chancellor of the University of Essex. I am proud to say that it is the second most international university in the UK after the London School of Economics. Forty per cent of our students come from outside the UK and, in postgraduate studies, 46% come from outside the EU, so we know a bit about the impact of the changes made in recent times. In a country which is so proud of its internationalism, which has given the world its language and which has a university sector that, as many have said, is the jewel in our crown in many ways, it seems extraordinary that we should have done what we have, knowing what happened when the same thing was done in, for example, Canada and Australia. It seems unhappily bizarre.

I should like to add to what many noble Lords have said, correctly, about the hidden benefits of our universities—the invisible aspect, if you like. Everybody has, rightly, mentioned the experience of our foreign guests, but I put it to the House that the embellishment

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of the experience of our native students is no less important and, in some ways, more important. It widens their horizons, gives them sympathies they would otherwise lack, and creates relationships that will remain with them for the rest of their lives. Do not ever let us underestimate the sheer human factor of these bonds, which last a lifetime and spell out positive vibes in a strange and negative world.

I want to touch briefly on bureaucracy. The new regime is bureaucratic to a degree. It is demoralising for the universities; it is obfuscating for students at home and abroad who wish to come here; and it is hugely expensive. At Essex we are spending £100,000 a year just on policing what are called the confirmation of acceptance for studies arrangements—God help us. In this world of fierce competition vis-à-vis university students, let us not score this own goal for a minute longer. As the noble Lord, Lord MacGregor, said in opening this debate so well, let us create a level playing field again.

3.37 pm

Baroness Valentine: I declare that I am chief executive of London First, whose members include higher education institutions. My brief contribution today will follow the same theme as pursued by many who have already spoken.

I fully endorse the Government’s quest for an immigration policy that supports growth, addresses public concern and clamps down on bogus students. However, our actual policy is based on incomplete data and tends towards populism.

First, we have a net migration target, the paradox of which is that if fewer Brits retire to Spain and more Poles arrive to do our plumbing, we close our doors to international workers and students. Secondly, we base our policy on figures from the Office for National Statistics, which, frankly, has no idea how many students return home after studying in the UK, even though they make up about half our non-EU migrants. All this leaves international students as a random balancing number at the tail end of our immigration policy.

Given that we have four of the best universities in the world and that higher education is our eighth highest export, we are playing a risky game of economic roulette with the £5 billion that those students contribute. That is without adding the valuable diplomatic ties of their alumni—Bill Clinton, Indira Gandhi or Aung San Suu Kyi, to name a few from Oxford.

Encouraging figures regarding more applications from India and China were released by UCAS yesterday, but they are a small sample and should be set against the fuller data for the past two years. Indian and Pakistani students have fallen by about a quarter, and the Financial Times business education league table shows that MBA students have declined by about a fifth. Early research indicates that the policy of reducing post-study work options is a factor. I know of at least one major accountancy firm whose principal non-EU graduate intake is Indian, because it is expanding its offices in India and likes to train its graduates in London beforehand. Are we trying to hobble it? Our closest competitors, Australia and the USA,

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have no target to reduce international students, have more robust data, and are implementing or considering more flexible post-study work routes.

I understand that the Government wish to ensure the legitimacy and quality of migrants, but we should not create a climate where students feel that they are unwelcome because of the rhetoric around targets or because of unnecessary inflexibility. The fact is that we excel at higher education and make money exporting it. We should shout this from the rooftops and do more, not less.

3.40 pm

Lord Hannay of Chiswick: My Lords, I, too, thank the noble Lord, Lord MacGregor, for instituting this debate. For too long we have been playing hide and seek with Parliamentary Questions, and it was time that we had a proper debate. I declare an interest as a member of the council of the University of Kent and as one of the guilty men—I think they are all men—who signed their committees’ reports.

First, I will say a word about the figures, which are frankly not at all as Ministers and the Government have presented them to the House for many months. The latest figures show a drop in the enrolment of first-year non-EU overseas students in 2012 of 0.4% and that non-EU overseas students for postgraduate taught degrees fell by 2%. When the Government said that the overall numbers of non-EU students were up by 1.5%, as they did, they failed to reveal that that figure resulted from increases of students from multi-year courses admitted before the Government’s immigration policy began to bite, and they concealed the downward trend now under way.

The drop in postgraduates was the first for 10 years, and the only reason that the figures were not even worse was because of the continued growth of Chinese students, which has masked, to some extent, the sharp drop in students from the Indian subcontinent. All this will be a lot clearer, of course, once the Government’s welcome commitment to presenting student immigration statistics separately from general immigration statistics takes effect. However, that will not solve the problem. It will simply make it easier to understand and to assess.

Those figures are bad enough in themselves, but they are a lot worse when you realise that the overall market for overseas students continues to expand rapidly and that Britain has, for many years, been a world leader. We are second in the league table, with 13% of the market in 2010. Our figures should have been going up, not stagnating or declining, if our market share was to be sustained. BIS estimates are that the £8 billion contribution of higher education to our economy will rise to £16.9 billion by 2025. A continuation of the present trends on admissions will inevitably lead to that figure being revised downwards.

No one disputes that Britain’s universities are among the best in the world, so higher education has the actual performance and the prospective capacity to be among the most successful invisible exports that we have. Even if, over time, more overseas undergraduates do their first degrees at home, as could very well be the case, we should be well placed to secure a substantial

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share of the postgraduate market. That makes the recent drop in that category of admissions even more alarming.

We are told a lot by Ministers, from the Prime Minister downwards, that we are in a global race for exports. Why, then, are the Government making the higher education sector, with all its capacity for expansion, an entry in the sack race? What needs to be done to remedy this deplorable situation? It is no good the Government thinking that the odd ministerial statement about Britain being open to business and about welcoming the best and the brightest will do the trick, particularly when such statements are usually heavily overlaid, as was the Home Secretary’s recent one, by the imposition of new layers of immigration bureaucracy, which will inevitably further discourage applications. What is needed is nothing less than to remove international students, both undergraduate and postgraduate, from their target to reduce—

Noble Lords: Order.

Lord Hannay of Chiswick: Yes. I have been chased around all day by noble Lords on the government Front Bench and I am close to the end.

Otherwise, the fact that students are the largest category of migrants and that 75% of those are university students will act as a chilling factor.

Noble Lords: Order.

Lord Hannay of Chiswick: I am sorry. I am coming to the last sentence.

What damage will the Government do by doing what all these committees ask? These students are not taking jobs away: they are bringing jobs to this country. They are financing British jobs. I hope that the Minister, who may be feeling a little lonely today and who is well known for his sympathetic responses, will set about changing this disastrous policy.

3.46 pm

Lord Judd: My Lords, I am involved in the governance of the University of Newcastle and the University of Lancaster and, after 30 years as a governor, I am now an emeritus governor of the LSE. We live in a highly interdependent global community. To be relevant, each centre of higher education, as a community of scholars, must be a living international community. This is indispensable to the very quality of education that they provide. Present arrangements potentially damage that quality.

Why do we have a one-size-fits-all approach? Why on earth should universities with a strong record of not losing touch with their students and with low dropout rates have to go through the bureaucratic hoops and expense of attendance registers and the rest? It hardly enhances their dignity and attraction as mature communities of self-motivated students. What really is the rationale for treating students as any other immigrant instead of being in a separate category, as happens in many other countries?

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An aggravating factor is the regional differences in the operation of UKBA. This adds to the uncertainty. Recruitment from India, especially of postgraduates, is certainly at risk. After China, India is hugely important in this context. The removal of the post-study work experience scheme particularly hits Indian recruitment. There are disturbing differences between what Ministers say about the vital need to win overseas students to the UK and what the too-often insensitive and unimaginative operation of UKBA presents in practice.

It boils down to this: are we determined to appear to the future leaders across the world as a neurotic, bureaucratic, small-minded, defensive little island to the north of Europe, so why go there to study, or as a dynamic, self-confident and welcoming player in the global community, which is an excellent place to be a student?

3.48 pm

Baroness Afshar: My Lords, as an erstwhile foreign student in this country, I assure noble Lords that those of us who studied here in the halcyon days when we did not have to be measured by how much money we had took home wonderful memories and remain committed to this country. I guess that the 3% who stay now and those who, like me, returned generally do so for love rather than money. The good will that has been created so painfully over so many years is being completely destroyed by the Kafkaesque quagmire that is being created for the students who want to come here and for those who want to extend their visas by three or six months in order to complete their theses, about whom I particularly want to speak.

I cite the case of a single student, but I know that it represents a large number of others. This student had the necessary £10,000 in her account for the necessary 28 days before and all the rest of it. However, although she transferred the £10,000 from the deposit account into her current account, the day that this was being measured by the Home Office somehow it made a mistake.

The problem is that there is no one person to go to. If there is a mistake in your case, the only way to deal with it is to go to court. So the student had to hire a lawyer and go to court. The first court decided that she should leave. Then she had to appeal to a tribunal, which decided that the first court had erred but it did not give her any money; it did not reimburse her. Nor did it give her any evidence of its decision so that she could legally stay here. So the lawyer had to start again, making phone calls, and it took the student six months to assert her right to be in this country, by which time she was £10,000 the poorer. How she is going to stay here, complete her thesis and live is, for me, a problem. I do not see that students such as this or stories such as this are going to generate good will towards this country or bring back people who, like me, have remained committed for ever to this land.

3.51 pm

Lord Lucas: My Lords, we are one country. I hope that we all want some degree of immigration control and we all should want our universities to flourish and bring us wealth now and influence in the future. It is therefore extraordinary that we have ended up with

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two bits of our country working so diametrically against each other. Universities need the UKBA to be a partner in their marketing, to help them in the recruitment of students and to work with them. As we all know, we are seeing exactly the opposite. UKBA needs universities to help it in controlling immigration. As my noble friend Lord Phillips said, they are extremely unhelpful to the UKBA in doing so. They grouse and some of them really do not do what they should at all. The result has been a total breakdown in trust and in relationships. It meant that, when London Metropolitan University erred severely, the reaction of UKBA was completely irrational, except that there was no trust and no relationship on which to base a better reaction.

We need a fresh start. I know a lot of people are making an effort towards it, as I am—in a small way—along with the British Council and Imperial College. We had a very good meeting with the UKBA in December but things have now gone silent. I am sure my noble friend on the Front Bench knows what is happening. There is still lingering resentment and anger within the UKBA which is preventing these initiatives going forward. I very much hope that he will allow me a meeting with him and with the Minister to see if we can do something about that. Perhaps in many small ways we can build personal relationships by making small changes and experiments and by taking incentives. For universities like Imperial, that should be a gentle move towards something like a most trusted status. We need some way of removing the requirements of unnecessary immigration controls, just as they have been removed for independent schools. You do not find Imperial students wandering off to work as assistants in burger bars; they have far too much to do on their degrees.

There is a lot that can be done and I very much hope that my noble friend will help us do it.

3.53 pm

Lord Bilimoria: My Lords, during my childhood in India there was never any doubt that I would study here in Britain. My family has been educated here for three generations and I was brought up to believe that British education, along with that in the United States, is the best in the world. The point that has not yet been made is that foreign students enrich British universities and the experience of domestic students. We are in competition with Canada, Australia and the United States in particular.

I thank the noble Lord, Lord MacGregor, for initiating the debate. I agree 100% with everything he said in his very thorough speech and I am not going to repeat it. When the noble Lord, Lord Adonis, was Education Minister, I fought very hard in this House about the two-year postgraduate work visa and we managed to get unanimous support for it in this House. The Government listened; they changed their mind and it made a huge difference. I do not think the Government realise that for a foreign student, particularly one from India, in purchasing power parity terms it is really expensive to study in this country. Those two years help them to work and thus pay taxes, and save some money to pay for their education and enrich their bridge-building with this country for generations to come.

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Let us look at the way the UKBA behaved towards London Metropolitan University, an issue which has already been raised by the noble Lord, Lord Lucas. I studied there for a year before I went to Cambridge, and I am an honorary graduate and visiting professor. That action has set alarm bells ringing for potential foreign students around the world. The perception it created has become a reality so far as Indian students are concerned. The UKBA cannot even keep tabs on illegal immigration, but here it is going around shutting universities and kicking out innocent students, giving them 60 days to find another place. There is a presumption of guilt rather than innocence. I thought that we had a sense of fairness in this country and that you are innocent until proven guilty.

I have a few specific questions to ask the Minister about how London Metropolitan University has been treated that I should like him to answer. First, which agencies and government departments were involved in the decision to revoke London Metropolitan University’s tier 4 licence? Secondly, when was London Metropolitan University informed about the decision to revoke its tier 4 licence? Thirdly, how many London Metropolitan university students did not have the appropriate leave to remain on 29 August 2012, the day the licence was revoked? If the Government keep on including student numbers in their immigration figures because they have a target to meet, they will have to reduce the number of students. A reduction of 50,000 overseas students will hit the economy by at least £3 billion.

I conclude by saying that the Government must listen to the five committees, to the unanimous voice of this House today, and to the unanimous voice of the higher education sector. The Government have performed many U-turns already, from pasties to the aircraft for our aircraft carriers. Steve Jobs said that:

“Changing your mind is a sign of intelligence”.

John Maynard Keynes said:

“When the facts change, I change my mind”.

The facts have changed. I would say to the Government: listen to us and remove student numbers from the target immigration figures right now, please.

3.56 pm

Baroness Uddin: My Lords, I, too, declare an interest as an honorary graduate of the University of Exeter and the London Met. I am grateful to the noble Lord, Lord MacGregor, for giving me the opportunity to add my voice to those calling on the Government to change their mind and reconsider the position in the light of this discussion. I also thank the Bangladeshi Students Union UK for its illuminating briefing and description of the desperate plight of students. At some point I hope to be able to raise those concerns in more detail.

Not only do international students contribute to our economy, representing a significant body of income for all our universities, they also become ambassadors for the UK as part of our so-called soft power team players. I agree that we must have effective screening that can manage the processes of student entry and exit alongside systemic monitoring of all educational establishments to ensure that false applicants are prevented

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from entering the UK. Last summer’s visa policy resulted in large numbers of talented students rejecting our universities, which should be a matter of great concern to this House and all right-minded individuals. The London Met fiasco affected the largest body of African, Bangladeshi, Pakistani and Indian students, which may add to the already-held belief that our policies are deliberately targeting a certain minority body of students and are discriminatory.

Universities UK has said that applications by students from China, Pakistan, India and Saudi Arabia have dropped significantly. These countries send large numbers of government-sponsored students who are important not only vis-à-vis our international engagement, but are a growing source of new markets for our institutions. Indeed, Universities UK highlights that the visa policy impacts particularly on female students with dependent families and where they may be accompanied by a family chaperone. If these students are not allowed these flexibilities, surely they will not choose to study in the UK. Their government sponsors may send students to more family-friendly countries where even their presidents welcome them openly.

The UK has reached a crossroads with this Government’s policy, which ignores at their peril the call of educational establishments for it to be reconsidered. We should not compromise the long-held high reputation of the UK’s education sector.

3.59 pm

Lord Rana: My Lords, I thank the noble Lord, Lord MacGregor, for initiating this very important debate. I wish to declare my interests as being associated with Northern Ireland universities, helping them to forge links with India. I also declare my charitable trust, which funds an educational complex in a rural area of Punjab in India.

In the 1970s, 1980s and 1990s, because of the negative image of Northern Ireland, hardly any foreign students came there. We have been working hard for the last 10 to12 years to promote Northern Ireland universities in India and China, which are big markets for students, by introducing Queen’s University and the University of Ulster to their counterparts, creating more awareness about these universities in those countries. We have been successful in enrolling students for graduate and postgraduate courses for both those universities. However, with the present attitude of UKBA, as has been said, that has really come to nothing.

Of any area of the UK that needs foreign students, Northern Ireland is a most deserving candidate. Foreign students are a great benefit in Northern Ireland not only in the fees that they pay to the universities but in promoting tourism. Their friends, parents and relations come to visit them, which helps Northern Ireland’s tourist industry.

Last week I welcomed Matthew Hancock MP, Minister for Business, Innovation and Skills, who was leading a group of principals from UK colleges to develop educational links with Indian colleges. He came to our educational complex and was pleased to see the work that we had done. All these efforts promote Northern Ireland and the rest of the UK for parents to consider

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the UK as a destination for their children. We are competing against Australia, New Zealand and other countries. Some of them have really relaxed their regulations to invite more Indian students. So I recommend the Government to revisit their policy on students.

4.02 pm

Lord Giddens: My Lords, I declare an interest as former director of the London School of Economics. The LSE provides a fabulous example of the kind of a network of students and ex-students that can be built around the world. This is a means of transmitting British values and British institutions around the world. I very much agree with the noble Lord, Lord Phillips, when he said that this was of great value to British students as well.

I can only reaffirm the points made so eloquently by others. First, we should concentrate on attracting international students to the UK, not devise ways of putting them off. We are simply shooting ourselves in the foot—or perhaps an even more vulnerable part of the anatomy.

Secondly, as so many noble Lords have said, we must change the policy of listing overseas students as immigrants rather than as a separate category. We simply lose ground to the US, Australia and Canada, as many others have remarked, when the steps that have been taken so far are simply not enough.

Thirdly, what has not been discussed quite as much is that the worst kind of damage that is being done to universities and higher education is actually reputational. The reputation of British universities is fading in the eyes of potential overseas applicants around the world, and we have quite a lot of evidence of this. Noble Lords will know that once your reputation is damaged, it is very hard to recover. People here might not remember the example of Lancia cars, which used to rust to bits after about two years. No one buys them any more in the UK and they never got back in the UK. Once you have damaged your reputation, it is so hard to recover it, and this is what the Government are doing.

As other noble Lords have said, the Government are supposed to be against bureaucracy; that is one of their main objectives. They have created a monstrous thicket of regulations, which overseas students have to work through. I am one of the people who are mad enough to speak in this debate as well as the previous one on the EU, including the Prime Minister’s remarks that a good economy is supposed to be open, flexible and dynamic. This pile-up of regulations is the very opposite of that. As other noble Lords have done, I say to the Government: please, please rethink your nutty policy, in all of our interests.

4.05 pm

The Earl of Sandwich: My Lords, everything has been said but I defend the right to say it all again in three minutes. We have debated the issue many times, and the message has been loud and clear: we are losing students to other countries and are at risk of losing millions in revenue from an £8 billion industry. Education should not be confused with immigration. That is the

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view, as the noble Lord, Lord MacGregor, said, of all the relevant Commons and Lords committees. Today, with a new and reasonable Minister, we look for a more positive answer. I declare an interest as an unpaid member of the advisory board of a college in Nepal, which is linked with a private London college on the register of approved tier 4 sponsors, with highly trusted sponsor and educational oversight status.

One thing that has shocked me is that non-EU students in our colleges and universities are now fair game for immigration investigators, who seem to have permission to make random checks, search files and interrogate young people at will, on suspicion that they are illegal immigrants and potential criminals. It seems to me, as someone who has visited detention centres for immigrants, to be a policy of deliberate harassment and disruption, which has appalling consequences for all the normal processes of education.

I recognise, of course, that it has been essential to disqualify colleges which cannot demonstrate the necessary standard and that regular inspection is needed. However, this does not justify the level of harassment which is currently suffered by some colleges; nor does it mean, as has been said, that justice is turned upside down, so that all colleges are guilty until they can be proved innocent.

There is a related issue of great concern to private colleges, which is the age-old right of students to work part-time during their course, which is currently only given to students in the public sector. If a private college is shown to have genuine students, why should it be treated any differently from colleges in the public sector?

Another problem is the way that colleges are being compromised and used as agents of UKBA. Reporting illegal students is obviously a joint responsibility of UKBA and the college, but too often this essential partnership breaks down when the college is unwilling to pursue students or the UKBA demands information. All this does a lot of harm to the integrity and reputation of the college. I hope the Minister can take back these concerns and I thank the noble Lord, Lord Lucas, for our extra minute.

4.07 pm

Lord Stevenson of Balmacara: I thank the noble Lord, Lord MacGregor, for securing this debate and for framing so well the issues that we are discussing today. Indeed, like many other noble Lords who have already said this, I agree almost entirely with everything he said. He went a little further on the shortcomings of UKBA than I perhaps would have dared—maybe he has special rights and privileges from where he sits—but I certainly recognise the sentiment behind what he was trying to get across.

As the noble Lord said, it is really interesting that five Select Committee chairs have written to the Prime Minister and gone public about the fact that they feel so strongly on this. I hope the Minister will consider the point that it must be very rare to participate in a debate—and after all, this is a Conservative Party debate—where every single speaker excoriates government policy. I will wipe the smile from my face as I go through the motions of going forward.

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This is clearly an important topic which is of interest to a very large number of Peers from right across the House who have managed the ridiculous time constraints of the debate with consummate skill. Just as a mosaic can sometimes make as strong an impact as a whole painting or sculpture, so have the 24 short interventions that we have heard today combined to make a very powerful case about the damage that the Government are doing to our precious higher education system. What has been said here this afternoon will be picked up and relayed right across the country and right across the globe. I will say a few general things about immigration and then pick up the main points made in the debate, as well as leaving some questions for the Minister to answer.

Britain has long been, and must remain, an optimistic, outward-looking and confident nation. When more people travel and trade across borders than ever before, no country can pull up the drawbridge. Our economy and culture have benefitted immensely from those who have come here through the generations. We should be proud of being British, and we should rejoice in the confident British diversity that occurs daily right across the country, and which London showed off for us in Olympic year. However, there is no doubt that the pace and scale of migration has created pressure on resources and strains on the solidarity of communities. The fact that the costs and benefits of recent migration were not evenly shared, particularly as a result of low-skilled migration, needs to be recognised.

What this country needs, and what my right honourable friend the leader of the Opposition has called for recently, is a proper debate about the different kinds of immigration we need and can sustain, and the development of evidence-led policies which can get the necessary controls and limits right. Such a debate would also identify the policies which help growth in the UK while at the same time enhancing our culture and society. This is where the Government are failing. As we have heard, focusing on the chimera of cutting the level of net migration leads to the sort of unfair and self-defeating policy measures which we have seen since 2010. Why are they unfair and self-defeating? Well, they are unfair and self-defeating because the Government’s net migration target bizarrely makes it a sign of success if more Brits move abroad. I ask the Minister: what sort of success does that represent?

More importantly, such an approach does not cope with questions about the different kinds of immigration there are, or recognise their different impacts both for the immigrant and for our country. Who would disagree that we must continue to be a safe haven for people genuinely escaping violence or tyranny? In fact, 70% of people in the British Social Attitudes survey agree Britain should offer asylum for those fleeing persecution. Who would disagree that we should recognise the exceptional cases of those who have risked their lives to help British interests and face continued threats now? Cases which come to mind include Afghan interpreters who helped British troops and now face threats from the Taliban as the troops pull out, and the Gurkhas.

As we have heard this afternoon, the impact of the student visa policy is economically illiterate and culturally bankrupt. Bringing more talented students from China,

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India or Brazil to learn at Britain’s universities not only brings in substantial investment in the short term but helps Britain to build cultural and economic links with the future leaders of the fastest-growing economies on earth. In total, foreign students bring in £8 billion a year, and BIS estimates that this figure could double by 2025—but, of course, only if current numbers are maintained.

The sorry truth is that the Government’s target for net migration cannot possibly be met without a further massive drop in the number of people coming to study in Britain. According to the Migration Advisory Committee, 87,600 fewer non-EU students would have to enter the UK by 2015 if the Government are to meet their target.

An immigration policy based solely on getting net migration numbers down means that legitimate international students and our universities are taking a significant hit—one that we can ill afford. So, can the Minister let us know—what is the target that he has in mind for the reduction in the number of international students that the Government are seeking to achieve by 2015? How do the Government expect this figure to be achieved?

It would also be helpful if the Minister could explain if there is anything else going on here apart from a simple number-cutting exercise. What is it exactly that the Government fear about university-sponsored students attending courses here? There are so many myths flying around that it is worth reminding ourselves that students on HE courses are not likely to be a burden on public service as their visa conditions specify that they should have no recourse to public funds. They usually live on campus; they are generally healthy; and most do not have dependants.

A 2010 Home Office study showed that only 3% of a cohort of non-EU students that they had followed since 2004 had settled permanently in the UK. In some courses, such as medicine and dentistry, non-EU students actually contribute to public services during their training. When one takes all this into account, the Government's current student visa policy does not stack up.

Britain has a long and proud history of being the destination of choice for potential students from around the globe. Our universities are highly regarded, and the UK provides a rich, diverse and safe environment in which to study. Higher education should be front and centre of an active government strategy to generate growth. If we are going to keep up with our competitor countries we need to be bringing more talented students from around the world to learn at Britain's top universities. It not only brings in substantial investment in the short term; it helps build the soft power that people have talked about.

The five Lords and Commons Select Committees which have recommended a change to the Government's approach to including international students within the net migration target are right. In their joint letter, they variously quote from recent reports which are unanimous in calling for a change. I would like to

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quote just one, from the Select Committee on Science and Technology in your Lordships’ House. The committee says:

“Given the significant contribution that overseas students make to the economy and that the majority leave the UK following their studies and do not therefore contribute significantly to net migration, we recommend that the Government make a distinction in the immigration statistics between HE students and other immigrants and uses only the latter category to calculate net migration for policy-making purposes”.

I could not have put it better myself.

At the heart of this issue is a clear failure to provide joined-up government, with the Home Office and BIS pursuing different policy objectives and using different business models. BIS has launched an education strategy to promote the UK’s education exports. As the noble Lord, Lord Rana, said, the Skills Minister Matthew Hancock recently visited India to drum up business. However, the Home Secretary has just announced that there are going to be over 100,000 more out-of-country interviews of prospective international students conducted by agents of UKBA each year, many of them targeting India.

The Government’s confused policy in this area and their destructive approach to student visa approvals are already having a negative impact all round the world. In an NUS survey of more than 900 international students, 40% said that they would not advise a friend or relative from their home country to come to the UK to study.

Finally, in April 2011, the Prime Minister made a speech on immigration. He said that,

“some say is that our policies on student visas will damage our universities … let me make clear: this government will do nothing to harm Britain’s status as a magnet for the world’s best students. That’s why with us, if you’re good at your subject, can speak English and have been offered a place on a course at a trusted institution, you will be able to get a visa to study here. Put another way, Britain’s universities are free to market themselves globally saying: ‘You can come and study here at some of the finest institutions anywhere in the world, and you can stay and work in a graduate job after you leave’. That makes our country a hugely attractive destination for genuine students who genuinely want to study abroad”.

The discrepancy is obvious. I think it was expressed best by the noble Lord, Lord Cormack, who said that it would be better that the “odd rogue” gets in and stays rather than a system which excludes future Nobel Prize winners or Prime Ministers. It was not Churchill—sorry, it is not even Keynes—but he is surely right.

4.16 pm

The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach): My Lords, I thought today’s debate would be interesting—and not just for the content—but it has been challenging, particularly given the time pressure that noble Lords were under to make their points. I genuinely regret that oratory has had to take second place in this rapid-fire debate. But I do not think that has diminished the effectiveness of the debate. Certainly noble Lords have been able to express their views plainly. I am here to respond to them.

I am very grateful to my noble friend Lord MacGregor of Pulham Market for enabling this important issue to be debated. I hope that I am going to be able to present where we are—because I think there is a strong

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collective sense about this particular topic in your Lordships’ House—and explain what the Government’s position is.

I hope also that given the very large number of speakers in a relatively short time—I will be acknowledging some of the speakers but I will not be able to acknowledge them all—noble Lords will permit me to write a commentary after the debate, send it to all noble Lords who have spoken and place a copy in the Library. Given the seriousness of the issue we are discussing, I think that would be an appropriate way of handling it, and I hope that noble Lords will agree. I will use the limited time I have to express the Government’s position and to make it plain that there is a lot more that we—the Government and Parliament—have in common on this issue than might be supposed.

It has been a vigorous debate. I wrote down that “many” noble Lords made, to a lesser or greater extent, some criticism of the Government’s position. As we went along, I changed that to “most”.

Noble Lords: All.

Lord Taylor of Holbeach: Perhaps I ought to say “all”. But we have in common a sense of regard for the universities of this country. I acknowledge these concerns. I would like to present the Government’s policy, because there are in this area some misapprehensions, which have been manifest to me today, and I hope that noble Lords will understand that I wish to put them right.

The starting position is that the Government recognise the important contribution that international students make to the UK’s economy and society. Many noble Lords referred to this. The noble Lords, Lord Wilson and Lord Bilimoria, and many others did so. Talented overseas students help make our education system one of the best in the world. They contribute to making it one of the best in the world. Only the United States has more universities ranked in the global top 100. My noble friend Lord Phillips of Sudbury said this, as did many others.

The Government want to promote our education system to spread British influence around the world. We want to attract and retain the brightest and best students who can drive growth in our economy. These points were made by noble Lords and are being made by the Government. We want our renowned institutions, our universities, to thrive. I beseech noble Lords to separate our shared objective, which I hope that I have demonstrated, from the rhetoric. We want to see our universities prosper and act as a focus for extending Britain’s influence around the world, stimulating both academic life and our economy at home.

That is why we have not placed a cap on the number of international students who can come and study in the UK. There is no cap. The noble Lord, Lord Stevenson, should know that there is no policy on numbers. The noble Lord, Lord Hannay, talked about a policy biting on numbers. There is no policy on numbers. There is no limit on numbers. Providing that a student is going to a reputable institution—a topic to which we might turn later—has the right qualifications, enough money and adequate English, they can come to the UK and there is no annual limit on numbers.

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The changes that we have made are reasonable ones to ensure that basic minimum standards are met. The Government take every opportunity to make it clear that talented students are welcome here. I think that noble Lords will support that sentiment, too.

At the same time, the Government have had to take action to address the abuse of the student visa route. I remind noble Lords of the problems that the Government inherited with this particular visa provision. Under the previous system, too many private colleges were selling visas and not education. These arrangements failed to control immigration and protect legitimate students from poor-quality sponsors. The National Audit Office estimated that in 2009 up to 50,000 students may have come to the UK to work, not to study. Student visa extensions were running at more than 100,000 a year. Some serial students were renewing their leave again and again without tangible progression in their studies. A Home Office study in 2010 found that up to 26% of those studying at private colleges may not have been complying with the terms of their visas.

It does our shared cause no good if we cannot build a sustainable role for our universities in educating international students, and it does us no good if Governments ignore that sort of assessment.

Lord Howarth of Newport: Will the Minister also confirm that the Home Office has found that only 2% of international students in higher education institutions are not compliant with the conditions of their visas?

Lord Taylor of Holbeach: That is why the Government have tackled the problem of private colleges being able to sponsor students. This does not apply to universities. I make it clear that there is no limit on the number of students that universities can sponsor.

The Government have overhauled the student visa regime to tackle bogus providers, which I think noble Lords will fully understand, and to drive up educational quality and standards. The fall in the number of student visas has come entirely from those sectors where abuse was most prevalent. As a result of our tighter controls, almost 600 colleges have been removed from the UK Border Agency’s register of providers. These measures have helped improve the reputation of UK education overseas and helped protect students from unscrupulous providers.

All colleges recruiting international students must now pass an inspection of their educational quality by an independent oversight body such as the QAA. Every institution must become a “highly trusted sponsor” and renew that status annually with the UK Border Agency. The Government have also introduced tougher requirements for students. These include higher standards of language competence and limits on the duration of student visas. Students extending their visas must now show that they are making genuine academic progress. We have removed the right to work from those attending private colleges. This was attracting too many students for the wrong reasons. The Government have also introduced a new power to allow UK Border Agency officials to refuse a visa when they are not satisfied that the applicant is a genuine student. These measures

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to tackle abuse have resulted in an overall fall in net migration, and the number of visas issued is at its lowest since 2005.

Despite this—and this is the key point to make in response what I think was the thrust of noble Lords’ arguments today—these reforms have protected our world-class universities. We have designed our system to favour our higher education institutions. Universities have been given some flexibility in how they test language skills. University students still have very generous working entitlements during their studies—20 hours a week during term time and full time, if they wish, during vacations. They can also undertake work placements amounting to 50% of their course. Postgraduate students at universities can bring dependants to the UK. There are also plenty of opportunities to stay on and work in the UK after study, and we are extending these further for the brightest and best—I hope to come back to that point a little later. When we announced these changes, Universities UK welcomed them as allowing,

“British universities to remain at the forefront of international student recruitment”.

As the Government have reduced the number of student visas overall, the latest Higher Education Statistics Agency figures show an increase of 1.5% in the number of international students at universities, at a time when UK entrants have fallen. Listening to the debate today, some noble Lords unfamiliar with the subject might have been left with the impression that the number of overseas students wishing to come to our universities was declining. In fact, the university sector now accounts for three-quarters of student visas—up by about half in the year to September 2011. I know the latest UCAS statistics are only partial, but the statistics released yesterday show that this year new applications to UK universities from non-EU nationals are up by nearly 10% compared with this time last year. We await the final numbers, but I am sure that noble Lords will acknowledge that this refutes the suggestion that this country no longer has an attractive offer to present to higher education undergraduates.

There has been much discussion today about changes in numbers coming to our universities to do particular courses or coming from particular countries. In fact, last year’s HESA statistics show that of the top 10 originating countries, seven showed increases. From China there was a 17% increase and from the US a 5% increase. UCAS, as I said, has received 10% more applications from Chinese students compared with this time last year, and there is a 19% rise in applications from Indian students. Therefore, nothing inherent in our reforms is deterring international students. We need to consider whether in certain countries there are particular factors in play. We should be positive in our confidence that we have got this matter right. Universities themselves—and, if I may say so, vice-chancellors, chancellors and all the distinguished academics here today—should take the opportunity to make it clear that Britain will always be open to bright international students.

We have also heard today—in particular this was explained by the noble Baroness, Lady Valentine—about the need to remove students from the measure of net

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migration. The independent Office for National Statistics is responsible for national statistics. In accordance with the internationally agreed definition in place since 1991, these statistics define a migrant as someone changing their normal place of residence for more than a year.

Lord Hannay of Chiswick: In the noble Lord’s latter sentences he was tilting at a man of straw. All of us who have been involved in this understood many months ago that it is not the way the statistics are marshalled that really matters but how the Government apply the policy. This policy has been set out again and again with the Home Secretary and Prime Minister saying that their objective is to get net migration down to the tens of thousands. That is what does the damage. Fixing a separate statistical approach will not do.

The other thing is that the noble Lord has given us a lot of figures. Can he comment on two points in them? First, he has not given any idea of the size of the market and its speed of growth. I think he will find that the market is growing very rapidly and Britain is losing market share. That is surely what matters in business. Secondly, he has not taken on the point that the figures at the moment are being flattered by students on three-year or four-year courses who came to this country before the chilling effect of the Government’s policy took place. I wonder whether he could deal with those points.

Lord Taylor of Holbeach: There is one basic policy—there is no limit on international students coming to this country. That is the fundamental and basic policy. I will not get involved, if the noble Lord will forgive me, in a discussion about statistics. I understand the weakness of arguments based on statistics. However, it is important to emphasise why the Office for National Statistics includes students in the net migration figures. It is because of the international definitions which govern these things. I emphasise to noble Lords that there is no limit on international students coming to this country.

Lord Judd: The noble Lord keeps saying that the Government have no limit, but there is a difference between the Government having a position and their making it effective. Has that been culturally absorbed by the UK Border Agency?

Lord Taylor of Holbeach: I would like to think that it has. I am more concerned whether it has been culturally absorbed by noble Lords. I am doing my best to emphasise to noble Lords that there is no limit on international students coming to this country.

Lord Giddens: My Lords—

Lord Taylor of Holbeach: Perhaps I may continue, because I, too, am time-limited and I will try to provide a comprehensive reply. I understand noble Lords’ interest in the matter, and I want to assist the House.

One key factor in why we need net migration figures and to note students’ presence in this country is because they are users of services. They form part of

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the requirements for public services, infrastructure and investment, and we need valid figures on which to base those. If we ignored them as part and parcel of those statistics, that could distort our view of the requirements in those areas. However, I note the arguments of noble Lords on this issue. I can say only that, at the end of the day, there are no limits on numbers.

The UK continues to have a great offer for international students at our world-renowned universities. Just yesterday, Universities UK stated:

“The UK remains one of the most popular destinations in the world for international students looking for a high-quality university experience”.

There is no limit on the number who can come, provided they meet language and academic requirements and can support themselves in the UK. As I said, there are generous work entitlements both during and after their study. Those securing a graduate-level job paying £20,000 a year can switch to a work route, and there are additional opportunities under our graduate entrepreneur scheme.

The Home Secretary recently announced further measures to encourage the brightest and best international students to stay and to contribute to economic growth. All completing PhD students will be allowed to remain in the UK for 12 months to find skilled work or to set up as an entrepreneur. We will add an extra 1,000 places to our graduate entrepreneur scheme.

Baroness Afshar: I beg the Minister’s pardon, but that is not what my students are experiencing. If it costs £10,000 to establish your right to complete your thesis, those good intentions are not reflected in reality.

Lord Taylor of Holbeach: That is not the experience. All the figures seem to show that graduate engagement post-PhD is an increasing area. Indeed, we are doing as much as we can to encourage it through our graduate entrepreneur scheme, as I said, for talented MBA graduates to stay to build businesses in this country. I hope that reassures the noble Baroness and the noble Lord, Lord Wilson, who was concerned about this.

The Government want to send a positive message—not, if the noble Baroness will forgive me for saying so, a negative one—about the prospect of graduate engagement post-degree in this country. The sector needs to take on the responsibility for promoting a positive message. We want to work with universities to protect not just the integrity of the immigration system but the reputation of the British education system around the world, just as my noble friend Lord Lucas said. He made a thoughtful speech and I am happy to organise a meeting for him.