How badly would cuts to international student visas hurt UK city economies?

Coventry is one of the cities that would be hit hardest by student visa cuts. Image: cmglee/Wikimedia Commons.

News that the government is looking to halve international student visas will no doubt be a concern for the higher education sector, and to those worried about the UK’s poor export performance. But it’s also likely to have big implications for a number of cities across the country.

Any restriction on visas, if applied tomorrow, would apply only to those students outside of the EU. However, this may change when the UK exits the EU, and so in the following analysis we look at all international students to look at the wider effect it might have.

In 2014-15, there were around 440,000 students from abroad studying in the UK – one-fifth of all students at UK higher education institutions (not including the Open University). Chinese students made up by far the largest share of these students, accounting for 20 per cent of all international students. To put this into perspective, Indian students made up the second biggest group of foreign students, accounted for 4 per cent in total.

Of course, these students were not evenly distributed across the UK, with London unsurprisingly the most popular destination, attracting a quarter of international students. However, as a share, Coventry had the largest number of foreign students – the table below shows that almost a third of those studying in the city were from outside of the UK. As was the case in most cities, China was the most common country of origin, with a quarter of all foreign students in Coventry being Chinese. Ipswich, on the other hand, had the lowest share, with just 2 per cent of students from abroad.

Source: HESA Admissions. Note: Cities with campuses of fewer than 500 students were excluded from the analysis.

Cuts to student visas could have big implications for cities such as Coventry, Exeter and Sunderland. Universities UK estimated that foreign students were worth a total of £10.7bn to the UK economy in 2011-12, through fees and money spent by the students in their time here.

Taking this figure and applying it to the location of foreign students would mean that they were worth £380m to the Coventry economy, £123m the Exeter economy and £83m to the Sunderland one. In Coventry this was equivalent to over 6 per cent of its total output in 2011-12.

The current political climate means that talking about visa restrictions is popular with the electorate. But such decisions will have an economic impact too, and may well hurt the very places the government is attempting to help through its place-based industrial strategy. And this, surely, would be counterproductive.

You can see more analysis on migration and student and new graduate mobility in the Centre for Cities’ Great British Brain Drain report.


Paul Swinney is senior economist at the Centre for Cities. This article was originally published on the think tank’s blog.

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What do new business rates pilots tell us about government’s appetite for devolution?

Sheffield Town Hall, 1897. Image: Hulton Archive/Getty.

There have been big question marks about any future devolution of business rates ever since the last general election stopped the legislation in its tracks.

Not only did it not make its way to the statute book before the pre-election cut off, it was nowhere to be seen in the Queen’s Speech, suggesting the Government had gone cold on the idea. (This scenario was complicated further recently by the introduction of a private members’ bill on business rates by Conservative MP Peter Bone, details of which remain scarce.)

However, regardless of the situation with legislation, the government’s announcement in recent days of a pilot phase of reforms suggests that business rates devolution will go ahead after all. DCLG has invited local authorities to take part in a pilot scheme which will allow volunteer authorities to retain 100 per cent of the business rates growth they generate locally. (It also notes that a further three pilots are currently in operation as they were set up under the last government.)

There are two interesting things in this announcement that give some insight on how the government would like to push the reform forward.

The first is that only authorities that come forward with their neighbours with a proposal to pool all business rates raised into one pot across a wider geography will be considered. This suggests that pooling is likely to be strongly encouraged under the new system, even more considering that the initial position was to give power to the Secretary of State to form pools unilaterally.

The second is that pooled authorities are given free rein to propose their own local arrangements. This includes determining, where applicable, a tier split (i.e. rates distribution between districts and counties), a plan for distributing additional growth across the pool, and how this will be managed between authorities.

It’s the second which is most interesting. Although current pools already have the ability to decide for some of their arrangements, it’s fair to say that the Theresa May-led government has been much less bullish on devolution than George Osborne in particular was, with policies having a much greater ‘top down’ feel to them (for example, the Industrial Strategy) rather than a move towards giving places the tools they need to support economic growth in their areas. So the decision to allow local authorities to come up with proposed arrangements feels like a change in approach from the centre.


Of course, the point of a pilot is to test different arrangements, and the outcomes of this experiment will be used to shape any future reform of the business rates system. Given the complexity of the system and the multitude of options for reform, this seems like a sensible approach to take. But it remains to be seen whether the complex reform of a national system can be led from the bottom up. In effect, making sure this local governance is driven by common growth objectives, rather than individual authorities’ interests, will be essential.

Nonetheless, the government’s reaffirmation of its commitment to business rates to devolution and its willingness to test new approaches is welcome. Given that the UK is one of the most centralised countries in the western world, moves to allow local authorities to keep at least some of the tax revenue that is generated in their area is a step forward in giving places more autonomy over how they spend their money. That interest in changing this appears to have been whetted once more is encouraging.

There are, however, a number of other issues with the current business rates system which need to be ironed out. Centre for Cities is currently working on a briefing of the business rates system, building on our previous work in this area, and we’ll be making suggestions as to how the system can be improved.

Hugo Bessis is a researcher for the Centre for Cities, on whose blog this article originally appeared.

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