David Gauke is a former Justice Secretary, and was an independent candidate in South-West Hertfordshire at the 2019 general election.
Here we go again: the Government is confronted with a policy issue that exposes the contradictions within its own political coalition.
Is it a party of competent economic management, ambitious to create a dynamic and outward-looking nation, and willing to confront the inevitable trade-offs in policy-making? Or a party for those who think that social change is unsettling, that the elite are conspiring against the common man and, in particular, that immigration needs to be reduced?
This was essentially the Brexit fault-line. Remainers focused on the economic case for staying in the EU; Leavers argued that we had to depart from the EU if we wanted to control immigration. (It is true to say that some Leavers were more interested in the principle of being able to control immigration than any particular desire to reduce the total numbers, but that is not argument that appears to wash with many Leave voters.)
That same debate is now being replicated in the context of overseas students and, specifically, graduate visas. In broad terms, it can be characterised along the following lines.
On one side is the vast majority of economic and business opinion. They argue that overseas students provide an economic boost to the country at large, strengthen the university sector, increase our soft power, and ultimately benefit our workforce. At a more fundamental level, it is a position driven by the belief that the UK should be open to the modern world – embracing globalisation, seeking to attract foreign talent, and expanding the graduate population.
On the other side are those sceptical about large numbers of overseas students. They are happy to take a few overseas students but only the very brightest and very best. “Lee Kuan Yew was educated at Cambridge… but these many hundreds of thousands coming in aren’t all Lee Kuan Yews,” noted Jacob Rees Mogg; one idea doing the rounds is that the graduate visa route should only be open to those at our elite universities.
On the raw politics, the proposed clampdown on overseas students is designed to appeal to those who prioritise lower net immigration and those suspicious of the expansion of higher education (two groups that are likely to overlap). We used to manage without so many people coming into the country, it is argued, and without so many people going to university.
Why can’t we go back to those days? If those who favour large numbers of overseas students favour a vision of the UK that is open, those that do not favour a vision that is much more closed.
At this point, it is worth looking at the details of this specific issue. The graduate visa route enables overseas students who are already here to stay and work for two years after graduating.
The Government asked the Migration Advisory Committee (MAC) to look at how this was operating in the context of the objectives that were set out in 2021, when the route was launched. These objectives were: to make a more attractive offer to international students; to increase the number of international students coming to study in the UK; to keep that talent after graduation; and to increase Britain’s education exports.
The MAC reported last week and concluded that the route was broadly meeting those objectives and, therefore, should stay in place. Its report did, however, contain data that has been seized upon by critics of the graduate visa as evidence that this is not a route used to attract the “best and the brightest”.
In the first tax year in which someone with a graduate visa works for more than a month, 41 per cent earn less than £15,000. But if a graduate starts work in September and the tax year runs to early April, this number is not altogether surprising. Over twelve months the average pay is £21,000, which is less than the £26,000 domestic graduates earn on average 15 months after graduation.
But it should also be noted that the annualised value of pay for some on the graduate visa route for the final three months of employment in the first year after graduation is £24,260. As the MAC report puts it: “the findings broadly suggest that graduate visa holders who are working earn a similar amount to domestic graduates, and their earnings typically increase with time on the route”.
It has also been noted that many of those with a graduate visa switch to a skilled work visa to take a non-graduate job working in the social care sector.
Is this such a terrible thing? After years of paying tuition fees that subsidise domestic students and the Immigration Health Surcharge, usually not being a great burden on public services (students generally are not), graduates then switch to important roles which we struggle to fill (and allow migrants to come here directly to perform).
It is true that the typical beneficiary of the graduate visa does not turn out to be Lee Kuan Yew, but they still make a net contribution to the economy.
The most informed and articulate critic of the graduate visa route is Neil O’Brien. He argues that the introduction of the graduate visa route by Boris Johnson in 2021 has resulted in a less selective system than what preceded it, and most of those who make use of it go to less prestigious universities.
This is true. But let us imagine what would happen if the scheme was scrapped.
Many universities are already in financial difficulties, not helped by tuition fees having been frozen for a decade and having lost 25 per cent of their value in real terms. A substantial reduction in overseas students may make some of them financially unviable. It is already the case that the number of international students paying deposits to study at UK universities has plummeted, due to speculation of the graduate visa route being scrapped and a tightening of the rules on dependents.
Tough, say the critics. “Our immigration policy doesn’t exist to prop up our university sector (which ranges from excellent to mediocre)”, says Simon Clarke, MP for Middlesbrough South and East Cleveland.
But presumably he would be horrified if Teesside University were to close, which would do great damage to the economy in his constituency, as well as places like Darlington and Stockton. Increasing the number of international students has helped levelling up; reversing the policy will damage it.
Rishi Sunak now faces a choice. He can prioritise lowering immigration and scrap the graduate visa route. But in doing so, he would reduce the number of graduates in our workforce which, in turn, would damage our economy, and, in particular, imperil the finances of universities. He would also be making a statement about what type of country he wants us to be, deciding to make us a more closed nation.
It all feels very familiar. And if there is one lesson to be learnt from recent years, a decision to make us a more closed economy wins support from some in the short term but is soon followed by regret when the economic consequences are felt. Sunak should use the MAC report as justification for keeping the graduate visa in place.
