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1 March 2013updated 26 Sep 2015 3:01pm

How do you export universities? By bringing students here

Cameron isn't just throttling our "cultural" exports — he is throttling our actual exports.

By Alex Hern

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.

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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.

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