How do you export universities? By bringing students here

Cameron isn't just throttling our "cultural" exports — he is throttling our <em>actual</em> exports.

Polly Toynbee has a piece in today's Guardian headlined "With this student visa policy, Cameron is throttling our cultural exports". She writes:

Remember when trade was to be our great escape? Government forecasts said net trade (exports minus imports) would rise by 2.4%, as we stole a march on our neighbours. Since then sterling has dropped by a quarter, its biggest fall since 1945. But devaluation has brought no export bonanza, with net trade falling. Yet 70% of government cuts are still to come and David Cameron promises "further and faster" deficit cutting…

So what else can we sell? Two exports rich and ripe for growth are our universities and arts, as valuable to life here as for the wealth they earn abroad. Yet the government actively stymies both, obstructing those two sectors where Britain has – but may easily lose – an international competitive trading edge.

Attracting foreign students to prestigious universities should be a booming export trade. Five chairs of parliamentary committees joined in an unprecedented joint call for visas for non-EU students to be excluded from the Home Office's cap on net immigration figures, a cap blocking an £8bn industry. Genuine university students should count as temporary visitors, valuable in cash and culture for our trading future. But this week the abrupt government answer was no. Immigration policy trumps all else.

It's a good piece, but her headline writers do her a disservice. Cameron isn't just throttling our "cultural" exports — he is throttling our actual exports.

The services sector is easily the most important in the national economy. The ONS gives it a weight of 770 out of 1000 when calculating GDP, implying that the sector contains roughly 77 per cent of the entire economy.

But the thing about services is that they can't really be exported the same way traditional goods are. Sometimes, that makes life easier; for instance, I'm in the service sector, and "exporting" the fruits of my labour is as simple as someone in another country opening up newstatesman.com.

But frequently, exporting services requires people to move. And that's the case for our university sector. We can export that expertise in the style of the University of Nottingham, and open up hugely expensive campuses overseas. Or we can just let people come to Britain. They pays their money, they gets their education.

It's not a small market, either. A BIS paper highlighted by Jonathan Portes estimates that, in 2008/9, the value of the sector was almost £8bn. As Portes writes:

That’s not just tuition fees, nor does it just benefit the education sector. If an Indian student buys a Marks and Spencer’s ready meal in Sheffield, that’s a UK export to India: real money, generating jobs and growth, and improving the trade balance.

Toynbee's right that Cameron is attacking our culture capital, and that that will have pernicious effects in the future. But he's also attacking our actual capital. And that's having pernicious effects now.

Students at London Metropolitan University protest the Government's decision to remove its right to grant visas. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Theresa May gambles that the EU will blink first

In her Brexit speech, the Prime Minister raised the stakes by declaring that "no deal for Britain is better than a bad deal for Britain". 

It was at Lancaster House in 1988 that Margaret Thatcher delivered a speech heralding British membership of the single market. Twenty eight years later, at the same venue, Theresa May confirmed the UK’s retreat.

As had been clear ever since her Brexit speech in October, May recognises that her primary objective of controlling immigration is incompatible with continued membership. Inside the single market, she noted, the UK would still have to accept free movement and the rulings of the European Court of Justice (ECJ). “It would to all intents and purposes mean not leaving the EU at all,” May surmised.

The Prime Minister also confirmed, as anticipated, that the UK would no longer remain a full member of the Customs Union. “We want to get out into the wider world, to trade and do business all around the globe,” May declared.

But she also recognises that a substantial proportion of this will continue to be with Europe (the destination for half of current UK exports). Her ambition, she declared, was “a new, comprehensive, bold and ambitious Free Trade Agreement”. May added that she wanted either “a completely new customs agreement” or associate membership of the Customs Union.

Though the Prime Minister has long ruled out free movement and the acceptance of ECJ jurisdiction, she has not pledged to end budget contributions. But in her speech she diminished this potential concession, warning that the days when the UK provided “vast” amounts were over.

Having signalled what she wanted to take from the EU, what did May have to give? She struck a notably more conciliatory tone, emphasising that it was “overwhelmingly and compellingly in Britain’s national interest that the EU should succeed”. The day after Donald Trump gleefully predicted the institution’s demise, her words were in marked contrast to those of the president-elect.

In an age of Isis and Russian revanchism, May also emphasised the UK’s “unique intelligence capabilities” which would help to keep “people in Europe safe from terrorism”. She added: “At a time when there is growing concern about European security, Britain’s servicemen and women, based in European countries including Estonia, Poland and Romania, will continue to do their duty. We are leaving the European Union, but we are not leaving Europe.”

The EU’s defining political objective is to ensure that others do not follow the UK out of the club. The rise of nationalists such as Marine Le Pen, Alternative für Deutschland and the Dutch Partij voor de Vrijheid (Party for Freedom) has made Europe less, rather than more, amenable to British demands. In this hazardous climate, the UK cannot be seen to enjoy a cost-free Brexit.

May’s wager is that the price will not be excessive. She warned that a “punitive deal that punishes Britain” would be “an act of calamitous self-harm”. But as Greece can testify, economic self-interest does not always trump politics.

Unlike David Cameron, however, who merely stated that he “ruled nothing out” during his EU renegotiation, May signalled that she was prepared to walk away. “No deal for Britain is better than a bad deal for Britain,” she declared. Such an outcome would prove economically calamitous for the UK, forcing it to accept punitively high tariffs. But in this face-off, May’s gamble is that Brussels will blink first.

George Eaton is political editor of the New Statesman.