International graduates remaining in UK for work contribute £3.2bn in tax, analysis finds

Eleanor Busby
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Just one year group of international graduates who stayed in the UK to work after their studies contributed £3.2bn in tax, new analysis has suggested.

International graduates who find employment in the UK typically do so in sectors that suffer from acute skills shortages, the Higher Education Policy Institute (HEPI) think tank found.

The analysis comes after the Migration Advisory Committee (MAC) - a non-departmental public body associated with the Home Office - failed to recommend a post-study work visa scheme as it said a “proper evaluation” of foreign students who stay and work in UK was needed.

The joint report, with Kaplan International Pathways, a specialist service for international students, found that international graduates plug skills shortages rather than displace domestic graduates.

Graduates from other European Union (EU) countries who stay in the UK to work contribute £1.2bn and graduates from the rest of the world contribute £2bn in tax and National Insurance payments, the report states.

The study only looks at international students who started at UK universities in 2016-17.

Researchers argue that the economic contribution would be even higher if restrictions on post-study work had not been introduced in 2012. These limits have cost the Treasury £150m a year, the report says.

“Universities firmly believe the government’s biggest mistake in higher education has been to discourage international students from coming here. A hostile environment has been in place for nearly a decade," said Nick Hillman, director of HEPI. “It is a testament to the strengths of our higher education sector that the number of international students has not fallen, but it is an absolute tragedy that we have been unable to keep up with the pace of growth in other countries.”

Last year, the MAC claimed there was still “a lack of evidence” to show international students who stay in the UK to work make a positive contribution, Mr Hillman added.

“We can now disprove this too. Just one cohort of international students who stay in the UK to work contribute over £3bn to the UK Exchequer – and it would be even more if policymakers had not reduced post-study work rights in 2012,” he said. “A new approach is overdue.”

University leaders have been calling for a new visa that allows international students to work in the UK for up to two years after they graduate.

In 2012, the government scrapped the post-study visa - which allowed international students to work in the UK for two years after finishing university - as part of a crackdown on abuse.

International students in the UK have just four months following the end of their studies to find a job with a tier 2 sponsor. The number of overseas students remaining in the UK to work following their studies has fallen significantly since the closure of the visa.

Alistair Jarvis, chief executive of Universities UK, said: “[International students] play a vital role in combating skills shortages in key sectors – including science, engineering and nursing careers.

“International students want to come and study in the UK, seeing the value of the high quality education our universities offer, but we are slipping behind our global competitors – Australia, New Zealand and Canada. The UK’s immigration system should reflect the extent to which we value international students’ contribution.

"While the government’s new International Education Strategy marks a step in the right direction, more should be done to send a welcoming message to international students."

Paul Cottrell, acting general secretary of the University and College Union (UCU), said: “It is a testament to our higher education sector that, despite ministers’ best efforts to create a hostile environments, we remain a popular destination.

“The government needs to look at how we ensure the UK remains a leading choice for international students or we risk jeopardising our proud standing on the world stage.”

The Department for Education and Home Office have both been approached for comment.