How the immigration cap is strangling our universities

The restrictions on foreign students are costing the UK £3bn a year.

When even the Daily Telegraph says that the government's immigration policy is too restrictive, you know that something's gone badly wrong. The cause of the Telegraph's ire is the coalition's disastrous decision to include students in the immigration cap, a policy that is costing us £2bn-£3bn a year. It notes: "[E]ven with the new curbs, ministers can probably only meet the migration target by depriving universities of thousands of genuine students, many of whom would go on to make a glittering contribution to this country."

The latest immigration figures showed that the number of visas issued to international students fell by 21% in the year to June 2012. Normally the news that one of our biggest export industries has declined by a fifth in a year would be cause for alarm, but ministers hailed it as proof that they were making progress towards their goal of dramatically reducing net migration. Immigration minister Damian Green said he was hopeful that "the fall we've now started seeing in these figures up to the end of last year will continue in the months and years ahead." In other words, the government is hoping that the university sector will decline at the fastest rate possible.

Such masochistic policy is, of course, the inevitable result of Cameron's populist (and unachievable) pledge to reduce net migration to "tens of thousands" a year, a level not seen since the days of the Major government. With the government unable to restrict EU immigration (unless it leaves the club altogether), its only option is to squeeze non-EU migration as hard as it can and that means closing the door to thousands of would-be students. In today's FT, Richard Lambert, the Chancellor of Warwick University and the former head of the CBI, writes of how "The UK Border Agency is putting intense pressure on several institutions, including well-run ones, where vice-chancellors claim they are having to account for their international students’ whereabouts almost in real time."

There's still little chance of Cameron meeting his target, but at least he'll be able to boast that the numbers are "moving in the right direction" (even as our shrinking economy is further enfeebled). Yet since most student migration is short-term (they study, then leave), reduced immigration now means reduced emigration later, so the impact on net migration is negligible. Is the government really strangling one of our most successful sectors so that it can temporarily claim that immigration is coming down? The answer is yes.

David Cameron talks to UK border agency officials in their control room during a visit to Heathrow terminal 5. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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As long as the Tories fail to solve the housing crisis, they will struggle to win

The fall in the number of homeowners leaves the Conservatives unable to sell capitalism to those with no capital. 

For the Conservatives, rising home ownership was once a reliable route to government. Former Labour voters still speak of their gratitude to Margaret Thatcher for the Right to Buy scheme. But as home ownership has plummeted, the Tories have struggled to sell capitalism to a generation without capital. 

In Britain, ownership has fallen to 63.5 per cent, the lowest rate since 1987 and the fourth-worst in the EU. The number of private renters now exceeds 11 million (a larger number than in the social sector). The same policies that initially promoted ownership acted to reverse it. A third of Right to Buy properties fell into the hands of private landlords. High rents left tenants unable to save for a deposit.

Rather than expanding supply, the Tories have focused on subsidising demand (since 2010, housebuilding has fallen to its lowest level since 1923). At a cabinet meeting in 2013, shortly after the launch of the government’s Help to Buy scheme, George Osborne declared: “Hopefully we will get a little housing boom and everyone will be happy as property values go up”. The then-chancellor’s remark epitomised his focus on homeowners. Conservative policy was consciously designed to enrich the propertied.

A new report from the Resolution Foundation, Home Affront: housing across the generations, shows the consequences of such short-termism. Based on recent trends, less than half of millennials will buy a home before the age of 45 compared to over 70 per cent of baby boomers. Four out of every ten 30-year-olds now live in private rented accommodation (often of substandard quality) in contrast to one in ten 50 years ago. And while the average family spent just 6 per cent of their income on housing costs in the early 1960s, this has trebled to 18 per cent. 

When Theresa May launched her Conservative leadership campaign, she vowed to break with David Cameron’s approach. "Unless we deal with the housing deficit, we will see house prices keep on rising," she warned. "The divide between those who inherit wealth and those who don’t will become more pronounced. And more and more of the country’s money will go into expensive housing instead of more productive investments that generate more economic growth."

The government has since banned letting agent fees and announced an additional £1.4bn for affordable housing – a sector entirely neglected by Cameron and Osborne (see graph below). Social housing, they believed, merely created more Labour voters. "They genuinely saw housing as a petri dish for voters," Nick Clegg later recalled. "It was unbelievable." 

But though housebuilding has risen to its highest levels since 2008, with 164,960 new homes started in the year to June 2017 and 153,000 completed, this remains far short of the 250,000 required merely to meet existing demand (let alone make up the deficit). In 2016/17, the government funded just 944 homes for social rent (down from 36,000 in 2010). 

In a little-noticed speech yesterday, Sajid Javid promised a "top-to-bottom" review of social housing following the Grenfell fire. But unless this includes a substantial increase in public funding, the housing crisis will endure. 

For the Conservatives, this would pose a great enough challenge in normal times. But the political energy absorbed by Brexit, and the £15bn a year it is forecast to cost the UK, makes it still greater.

At the 2017 general election, homeowners voted for the Tories over Labour by 55 per cent to 30 per cent (mortgage holders by 43-40). By contrast, private renters backed Labour by 54 per cent to 31 per cent. As long as the latter multiply in number, while the former fall, the Tories will struggle to build a majority-winning coalition. 

George Eaton is political editor of the New Statesman.