Foreign students fear "Britain is closed for business"

The immigration cap is deterring foreign students from applying, says Universites UK head Steve Smit

I recently spent an enjoyable afternoon interviewing the head of Universities UK, Steve Smith, about the future of higher education. You can read the interview in full here but below are some of the highlights.

The immigration cap is deterring foreign students

As a result of the coalition's cap on immigration, Smith told me, other countries fear that Britain is "closed for business".

"On every single international visit I've been on this year it's been the only issue that's been discussed," he said. "I did a big conference at the British Council in Hong Kong, I was with Clegg in Brazil. In both those meetings the question was: "Is Britain closed for business?"... Although we won, the damage inflicted by what was said was significant."

George Osborne boasted in his Budget speech that Britain was now "open for business". Not all of his intended audience, it seems, agreed with him.

Cable has abandoned higher education policy to Willetts

Unusually, the government's recent white paper on higher education was presented to the House of Commons by David Willetts, the universities minister, rather than Vince Cable, the Secretary of State for Business and the man officially responsible for policy in this area. . Even the Speaker was caught out, mistakenly calling Cable to the dispatch box before Willetts's statement.

Has the Business Secretary subcontracted universities policy to his deputy? "Frankly, it is indeed Willetts that we do all the discussions with," Smith told me. "Our reading of it is that he [Cable], in essence, leaves Willetts to deal with the universities situation."

The government will bail out bankrupt universities

Under the Willetts model, money will follow the student, meaning that some universities dramatically expand, while others shrink. Is it conceivable, I asked Smith, that some institutions will go bankrupt? "To be candid, ministers from all parties talk about the rigours of the market, my experience is that they never live up to it in practice." In some communities, he pointed out, the university is one of the largest, if not the largest, net contributors to the economy.

"I don't think they'll let institutions go bankrupt because I think they'll work out what it would mean for the local economy." Like the banks, the universities, it appears, are too big to fail.

The Scottish problem: "an anomaly that can't stand"

Unlike their English counterparts, Scottish students continue to enjoy free higher education, courtesy of Alex Salmond's SNP administration. However, while Scottish universities are legally obliged to also offer free entrance to European Union students a loophole means that they are able to charge English students fees of up to £9,000 a year. Does Smith think the UK government should intervene?

"That announcement shocked me," he said. "They [the SNP] had made such principled statements in the past about how iniquitous fees were and then they announced that they were going to allow institutions to charge £9,000." He added: "I suspect the government will do something ... It does seem very odd to me that someone can come from France and get the same terms as someone in Scotland but if they come from England they pay £9,000. That seems to me an anomaly that can't stand in the long-run."

George Eaton is political editor of the New Statesman.

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David Cameron’s starter homes: poor policy, but good politics

David Cameron's electoral coalition of buy-to-let retirees and dual-earner couples remains intact: for now.

The only working age demographic to do better under the Coalition was dual-earner couples – without children. They were the main beneficiaries of the threshold raise – which may “take the poorest out of tax” in theory but in practice hands a sizeable tax cut to peope earning above average. They will reap the fruits of the government’s Help to Buy ISAs. And, not having children, they were insulated from cuts to child tax credits, reductions in public services, and the rising cost of childcare. (Childcare costs now mean a couple on average income, working full-time, find that the extra earnings from both remaining in work are wiped out by the costs of care)

And they were a vital part of the Conservatives’ electoral coalition. Voters who lived in new housing estates on the edges of seats like Amber Valley and throughout the Midlands overwhelmingly backed the Conservatives.

That’s the political backdrop to David Cameron’s announcement later today to change planning to unlock new housing units – what the government dubs “Starter Homes”. The government will redefine “affordable housing”  to up to £250,000 outside of London and £450,000 and under within it, while reducing the ability of councils to insist on certain types of buildings. He’ll describe it as part of the drive to make the next ten years “the turnaround decade”: years in which people will feel more in control of their lives, more affluent, and more successful.

The end result: a proliferation of one and two bedroom flats and homes, available to the highly-paid: and to that vital component of Cameron’s coalition: the dual-earner, childless couple, particularly in the Midlands, where the housing market is not yet in a state of crisis. (And it's not bad for that other pillar of the Conservative majority: well-heeled pensioners using buy-to-let as a pension plan.)

The policy may well be junk-rated but the politics has a triple A rating: along with affluent retirees, if the Conservatives can keep those dual-earner couples in the Tory column, they will remain in office for the forseeable future.

Just one problem, really: what happens if they decide they want room for kids? Cameron’s “turnaround decade” might end up in entirely the wrong sort of turnaround for Conservative prospects.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.