How much value do international students add to the UK economy?

31 August 2012

"Higher education [is] a £12.5bn per year export industry for the UK".

National Union of Students (NUS)

"[The NUS] figure was based on 2008/9 but a study by Migration Watch UK released today shows that the true level of benefit to the UK's foreign exchange earnings in that year was more like £4.3 billion."

Migration Watch UK, 30 August 2012

The UK Border Agency's recent decision to strip London Metropolitan University of its license to take in students from outside the EU is only the controversial tip of an iceberg of debate over overseas students' entry into the UK.

The number of foreign students has been identified as potential loophole for illegal immigration and has led to calls for more a manageable intake, to make it easier to spot those who are not genuinely coming to study.

In this context, the NUS and Migration Watch UK have been exchanging differing figures purporting to how much value international students add to the UK economy and how much we would therefore stand to lose if a cap were to be introduced.

What is the debate actually about?

In order to understand the figures being argued over, we first need to define what it is that we're measuring.

"Education" is a tradeable sector, which means the UK imports and exports education-related activities. Foreign students pay fees and spend money while they are studying here, which adds value to the UK economy.

The sector isn't limited to teaching and training in institutions either, but also includes the money generated from research, educational consultancy and educational equipment provision.

The NUS Figure

The NUS brought in its figure of £12.5 billion in response to the UK Border Agency's decision regarding London Metropolitan University — claiming it represents the yearly value of one part of the UK education export industry — the higher education sector.

The source of this figure can be found in the British Council's April 2010 publication "Making it Happen: The Prime Minister's Initiative for International Education".

The report was written as part of the Prime Minister's Initiative for International Education, a programme aimed at encouraging overseas applicants to UK education institutions.

Without explaining its methodology, the report estimates the yearly value of UK education and training exports at over £12.5 billion.

Without a breakdown of the calculation, we cannot be entirely sure what areas of the UK education export industry the estimation in pointing towards.

However, as the report also includes an £8.5 billion estimation for "international students overall", of which international Higher Education student's tutition fees and spending is only one group accounted for, it seems likely that the figure of £12.5 billion was not an meant to be applied to the Higher Education export industry only.

More Recent Study

Turning to Migration Watch UK's study, it focuses its attention on a more recent BIS report, "Estimating the Value to the UK of Education Exports", published in June 2011.

This BIS report in question also investigated the current value of UK education exports, as well as forecasting its future value.

Using statistics from 2008/09, the report estimates the total value of the UK's education exports at £14.1 billion for that year, even higher than the NUS figure.

To reach this value, the researchers looked at the output of a number of different arms of the educational exports sector: Higher Education (transnational, tuition fees and other spending); Further Education (tuition fees and other spending); activities of English Language schools; teaching and board at Independent primary and secondary schools; overseas service of examination and professional bodies; education-related publishing, consultancy and equipment.

The value specifically of Higher Education for 2008/09 was estimated at £7.9 billion. Although this figure is much smaller than the NUS's estimate, it is still rather more bloated than Migration Watch UK's more modest valuation.

So how does Migration Watch UK get to £4.3 billion?

Migration Watch UK's figure

Migration Watch UK's trimmer figure is reached by peeling off the value of those parts of BIS's calculations which would not be affected by a cap on the number of student visas that can be issued.

While they agree that overall, the Higher Education sector is worth around the £7.9 billion proposed by BIS, they point out that this includes the value added by EU students who would not be affected by a visa cap.

The £7.9 billion estimate is broken down by BIS into several constituent parts, as the table below shows:

According to this, £210.8 million is brought in through fees paid by overseas students studying for UK qualifications in another country; called here transnational education. As this is study outside the UK, this wouldn't be affected by a visa cap, so Migration Watch have deducted this figure from the grand total.

Likewise, the income gained through overseas investment in the UK Higher Education sector by research grants, licensing intellectual property, consulting, facilities and equipment and international charitable donations, would not be directly affected by such a cap (although it might be indirectly affected).

What would be at risk from the cap would be the estimated £6.8 billion earned from the tutition fees and spending of international students.

Migration Watch further cuts into this figure by factoring out the estimated proportion brought in by EU students, using BIS's own methodology.

Once the "drain" non-EU students have on the economy (through their awarded scholarships and employment earnings) are also factored into the equation, Migration Watch estimates the value of the tuition fees and spending of non-EU Higher Education students at £4.3 billion in 2008/9.

To reach a more up to date estimate for 2010/11, they account for inflation and an increase in non-EU students, and propose a figure of £5.76 billion.


The value attached to the UK education export industry depends on how many of the various educational goods and services offered by the UK you include, as well as the type of student you consider.

The NUS's figure comes from a 2010 report, which estimated the total yearly income to the UK economy from the entirety of the education sector, and not just Higher Education exports.

Migration Watch UK's much smaller figure is an estimation of the value of the specific part of the UK education export industry that could be affected by a cap on student visas. It shouldn't therefore be understood as a valuation of the entire sector, but rather a look at the potential implications of the proposed visa capping policy.

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