Unrevised

Members present

Lord Krebs (Chairman)

Lord Dixon-Smith

Baroness Hilton of Eggardon

Baroness Manningham-Buller

Lord O’Neill of Clackmannan

Lord Patel

Baroness Perry of Southwark

Lord Peston

Lord Rees of Ludlow

Earl of Selborne

Baroness Sharp of Guildford

Lord Willis of Knaresborough

________________

Examination of Witnesses

Martin Williams, Director, Office for Life Sciences, International Education Industrial Strategy, Department for Business, Innovation and Skills, Dr Joanne Hodges, Deputy Director, Science and Society, Department for Business, Innovation and Skills, and Andrew Ray, Deputy Director, Higher Education Analysis, Department for Business, Innovation and Skills

Q1 The Chairman: Good morning. I would like to welcome our panel of witnesses, from the Department for Business, Innovation and Skills, in the first stage of this new inquiry that we are carrying out into international STEM students and the impacts of changes in immigration policy to the recruitment into UK universities.

I would like to invite our witnesses very briefly to introduce themselves for the record. In so doing, I thank BIS officials for coming to give evidence to us. I note that we had also hoped that Home Office officials would come to give evidence, but Home Office officials were unable to do so. They refused to come and give evidence in spite of repeated requests. So we are very grateful to you for giving us your time and experience. Without further ado, I would like to invite Dr Hodges to introduce herself.

Dr Hodges: Dr Joanne Hodges, Head of the Science and Society Team in BIS, which carries responsibility for policy on student and academic visas and migration.

Martin Williams: Good morning. I am Martin Williams. I am a director in BIS responsible for the international education strategy.

Andrew Ray: I am Andrew Ray, and I lead on higher education analysis in BIS.

Q2 The Chairman: Thank you very much. Perhaps I could kick off with an opening question. We are aware that you have sent us some very helpful tables based on HESA data—Higher Education Statistics Agency—but we hope very much that you can talk us through the tables. What we would like to understand, as a factual basis for our further investigation, is how the numbers and demographics of international STEM students in the UK have changed since the introduction of policy reforms on immigration earlier in this Parliament. Clearly you have laid out the information there. We would also like to know if you have done any analysis or have any way of analysing what the cause/effect relationships are. There are some quite substantial changes, which you will no doubt explain to us. We would be very interested to hear your interpretation of why those changes have taken place since 2010-11. Who would like to kick off?

Martin Williams: Let me invite Mr Ray to start off with taking you through the tables, since he supplied them.

Andrew Ray: Thank you. Perhaps I should say at the outset that we are very happy to supply more detail to the Committee than we have done here, and to answer any specific questions that you might have in the evidence that we provide later on. What we have done is to look at Higher Education Statistics Agency data up to 2012-13, which is the most recent year for which we have full data. That data was published in January. I have provided two sets of four tables. The first set relates to subjects studied. The second set relates to the country of origin of the students. I focused here on entrants but we could have provided enrolments so it is the flow of students into higher education as opposed to the stock each year.

If you could look at table 1 to begin with, that is the total number of entrants and gives you the main picture. At the bottom we show the total entrants. You can see that in 2009-10 and 2010-11 there were increases. Since then—the last two years, which are the years that have corresponded to the changes in policy on migration—the numbers have been broadly flat. What we have given you here, which has not been published, is the breakdown for STEM and non-STEM, those two broad categories. You can see that, particularly in 2011-12, there was a slightly larger reduction in STEM than in non-STEM. There was another reduction in 2012-13, but the difference between STEM and non-STEM was less pronounced then. I realise that STEM and non-STEM are very broad categories. Even the sub-categories of this table are quite broad, so obviously we could go further into these numbers.

The figures vary according to these subjects. The first three in the table are those where we have the most students coming from abroad in STEM; that is, engineering and technology, computer science and subjects allied to medicine. Those saw quite significant falls in 2011-12. The computer science and subjects allied to medicine figures also fell in 2012-13, but the engineering and technology figure did not fall. So that is quite interesting. Not all of these figures fell, so I particularly draw your attention to mathematical sciences, which showed quite healthy increases in those two years—9% and 7% increases.

The Chairman: I do not want to interrupt your flow, because it is extremely helpful to us, but could I check—just to be clear in our minds—that these figures are the percentage changes year on year? So, taking computer science, there was a 25% drop in 2011-12, followed by a further 11% on top of that in 2012-13?

Andrew Ray: That is right, in the number of entrants going in.

The Chairman: So, to get the total drop over two years-plus since the policy was changed, you have to do a cumulative percentage drop of those two numbers?

Andrew Ray: That is right. So you compare the third column to the last column of the numbers and you can see the reductions there.

The Chairman: Yes.

Andrew Ray: Those are the main points on the entrants. I think what I would say is that the undergraduate figures, which are in table 2, and the taught postgraduate figures, which are in table 3, show a broadly similar pattern to what we have just looked at.

The research postgraduates in table 4 show a different pattern. Perhaps it is worth focusing on research postgraduates in table 4. Obviously the numbers here are generally smaller, so there is likely to be more variation in these numbers. But, overall, the figures for international students have been rising over the period both for STEM and non-STEM. However, the increases are actually greater for the STEM subjects. So I think that there is a different story here for research postgraduates than for undergraduates and taught postgraduate courses.

Perhaps I may go on and start to bring in the country analysis. In tables 5, 6, 7 and 8 we have the equivalent tables showing you the STEM and non-STEM entrants by country. These are the 10 countries that send most students to the UK. I think the findings here are quite well known in some ways already. We have seen quite significant growth in China and Hong Kong in particular, while in India and Pakistan in particular we have seen some reductions. Those reductions have been throughout STEM and non-STEM. If you think about Indian students, the subjects that Indian students are most likely to take are the three subjects that I referred to at the top of the STEM table 4. 15% of Indian students coming here take engineering and technology courses. In computer science courses, 12% of students take those; and subjects allied to medicine, 11% of Indian students take those. So what I think you are seeing here is an India effect that is particularly affecting those subjects within the STEM results.

The Chairman: Thank you very much. That was extremely helpful and very clear.

Q3 Lord Rees of Ludlow: Can you say how big these figures are compared to the EU number of students—a rough ratio?

Andrew Ray: We have 172,000 entrants here who are international students. The EU figures are around 50,000. I do not have the exact numbers here but that is the scale of it.

Lord Rees of Ludlow: These figures are much more than the EU?

Andrew Ray: Yes.

The Chairman: Martin Williams, you wanted to—

Martin Williams: I was going to say that we could of course supply you with the EU figures if that was helpful—the published HESA data.

The Chairman: Yes, that would be helpful. Do any of the rest of you wish to add to what Andrew has told us?

Martin Williams: No, I think the picture that the data gives you is fairly clear and Andrew has summarised it nicely. One could go on to speculate, of course, on the causes for that, which you are interested in, Chairman, but perhaps I should let you interrogate the figures first before getting on to that.

The Chairman: Yes.

Q4 Lord Willis of Knaresborough: First of all, I thank you enormously for this. It is incredibly helpful to have that level of data and we appreciate it. One area that I am particularly interested in is computer science, because we have seen a significant drop in UK students doing computer science. Yet we have seen quite an extraordinary drop in the number of students, not only at undergraduate level but at master’s and postgraduate level as well. Is it possible to let us know which countries those students are coming from? The cross-reference between subjects and what they study is not on these tables. Do you have that information?

Andrew Ray: I do not have it here today but certainly we can do that.

Lord Willis of Knaresborough: It would be useful to have that cross-reference between subjects.

Andrew Ray: Would it be for computer science or should we do it for all subjects?

The Chairman: I do not want to give you too much work to do but it would be useful to have this matrix of country by subject. You sort of alluded to it by saying that you thought that there was largely an India effect here, because a significant proportion of Indian students were studying computer science. It would be useful to have it teased out in a little more detail across the subjects.

Andrew Ray: Okay.

Baroness Sharp of Guildford: This is the Indian subcontinent, because there is also Pakistan. Looking at postgraduates, in 2011-12 there was a 30% drop from Saudi Arabia, but then an 8% increase in postgraduates in 2012-13. Whereas, if you look at the postgraduate research, perhaps that 37% drop was passed through, because in 2011-12 postgraduate research was 5% down from Saudi Arabia and then 21% down this last year.

Q5 Baroness Perry of Southwark: Do you have any information from the British Council officers or the embassies abroad as to where the students that we have “lost” are going instead—for example Canadian students, where we have had a drop, where are they going? Are they going down to the States? Indian students, are they going to America or Australia? Do we have any clue?

Martin Williams: Let me give you a general response and see if Dr Hodges wants to add to it. The first is that we cannot give you a definitive answer to that, I think. It is a counterfactual question really.

Baroness Perry of Southwark: No, I realise that, but I know the British Council do keep international flow figures, do they not?

Martin Williams: They do, although it is still quite difficult to assess. You would need to go back to the countries themselves to get their data and see how detailed it is broken down between the different countries to which they are sending students. Sorry, my words are getting muddled but you see what I mean. The countries that are importing the students would need to give us the data on where those students are coming from.

Anecdotally, there is certainly a tale that more students are seeking to go to America. As far as Indian students are concerned, America has always been their number one destination of choice. There was an indication of a slight fall in Indian students going to America in 2009-10 and 2010-11. It is not quite clear why. What we do know is that American universities are perhaps now recruiting internationally more aggressively, perhaps because of falls in domestic funding. We also know, of course, that flows of Indian students to Australia were considerably disrupted in 2008-09 and 2009-10, as a result of partly domestic policy in Australia, partly because of some well publicised and unfortunate cases of violence against Indian students in Australia. The Indian market does appear to be quite a volatile one, if I can put it like that. So I think that the number of Indian students going to Australia has been increasing, but it has been increasing from a temporary dip. Joanne, is there any more you want to say from the British Council point of view?

Dr Hodges: The information we have from the British Council is more about what we are currently doing to try to attract more Indian students to come to the UK, which will probably crop up later in this discussion. In terms of comparisons across the board, we tend to use the OECD Education at a Glance data, which comes out in September of each year. I think the latest version only goes as far as 2011-12.

Andrew Ray: 2010-11.

Baroness Perry of Southwark: I know that the British Council, in the days when I was doing the national job for education exports, used to produce very good figures of where our top competitors were, with some kind of rebuttal things about, “Okay, maybe it is cheaper in Australia, but these are the things we can offer”. It would be helpful to know what sales job we are doing to try to discourage young STEM people from going to other countries rather than coming here.

Lord Peston: Could you clarify one thing for me? Are we talking, for want of a better expression, about genuine higher educational institutions? Perhaps you will remember that in the 1960s and 1970s this country was full of racketeers who invented spurious places which all tried to look—this is my economics connection—as if they were part of the LSE. We have largely wiped that out, have we not—so these are genuine institutions that we are talking about?

Martin Williams: This is an important point. HESA collects data on publicly funded higher education institutions. There will be some students who are coming to institutions here that do not receive public funding. They may be entirely reputable institutions or entirely reputable higher education institutions, but they will not be picked up in the HESA data. I think that is correct, is it not, Andrew?

Andrew Ray: That is right, yes—the University of Buckingham and publicly funded institutions.

Baroness Perry of Southwark: BPP, or something like that?

Andrew Ray: Those are not included at the moment.

Lord O'Neill of Clackmannan: Do you keep track of the expansion of higher education in, say, India? Has there been a significant expansion in terms of a supply of places, which might have meant that some of the students who could have come here and who are, say, financially on the margins, decided to stay in India?

Martin Williams: I think there are various questions here. I certainly do not have a good figure—and I am not sure if good figures exist—for higher education in India as a whole. It is a very, very big country and has a very wide range of institutions. I am not sure that data exists that I would feel happy offering to the Committee that said definitively, “This is the supply of places in India”, in the same way as one could for the United Kingdom.

What I would say is that, of course, if we talk about UK-India relations and, indeed, for other developed countries, the rise in transnational education in India has been considerable. It is possible to take a UK degree and many other degrees, in India without leaving India, and those numbers are increasing. As we pointed out in the International Education Strategy, more students are studying for UK higher education degrees outside the United Kingdom than inside it. There are more than 0.5 million. India is an attractive market for transnational education. I suspect that it will continue to be so and may well grow if, for example, the MOOC phenomenon—Massive Open Online Courses—takes off in a big way. There are some signs that India is the sort of country where it might.

Q6 The Chairman: Could I come back to where I think Lord O’Neill’s question began to approach the matter, which is what inferences you draw about cause and effect relationships? Clearly, what we are interested in is the trends that switched between 2010-11 and 2011-12. As your table shows quite clearly with regard to India, there was a substantial change. While one correlation does not prove causation, it is tempting to infer that there might be something. I wonder if you would be prepared to offer us thoughts on why that might particularly apply to India. If indeed one speculates there is a link, why has it affected India more than China or some of the other countries in the table?

Martin Williams: Let me tentatively and cautiously see what I can say in response, Chairman. I think with India—just to put in some of the caveats first—the rupee, for example, has been rather low against the pound over this period, and that may have contributed to the costs of Indian students going to the United Kingdom. Of course other countries have been marketing themselves. I mentioned America. One could also mention that Singapore and Malaysia are seeking to become hubs in Southeast Asia to attract international students.

Having said that, I think it would probably be disingenuous to suggest that an impression has not been gained in India that something is happening in the UK that makes them less attracted to coming here, even though, as you are aware, there is no limit on the number of legitimate students who can come to the UK from India. If one were speculating, one might say—and there seems to be some evidence—that the post-study work arrangements as they previously were appeared to be quite attractive to Indian and Asian subcontinent students. Those arrangements might be less attractive or less important to Chinese students. This is pure speculation. I have no good research grounds for that, but you invited me to speculate and I felt I owed it to the Committee at least to give some speculation.

The Chairman: That is very helpful.

Martin Williams: Perhaps my colleagues would like to contribute.

The Chairman: We will come back to the post-study work issue a bit later. But likewise, if one looks at what is happening with China and Hong Kong, on the other hand, that looks relatively positive, in the sense that the numbers have gone up. But of course one has to ask: would they have gone up even further had there not been changes in the immigration policy? We know that China, with a rapidly growing middle class and rapidly rising wealth, is looking outwards in a way that it was not perhaps five or six years ago. I do not know whether there is any thought about how the trend in recruitment of Chinese students in this country, whether from the mainland or from Hong Kong, compares with what has happened in other competitor countries.

Martin Williams: I do not think I can offer any comment on that. The rise in Chinese students has been notable. I think that some universities—but here one would have to ask Universities UK and individual institutions—would be cautious about overexpansion and overdependence on any individual country, so they might want to draw a distinction between the number of students from any country that they could theoretically attract and the number of students that they wanted in any given year—some idea about controlled expansion. But again I am theorising; I have no real data. I am speculating on a counterfactual.

Q7 Lord Dixon-Smith: It is not going to be a red herring because one of the things that I have heard about—and I have certainly known about for quite a long time—is people living at home in foreign countries who, because of the ease of modern communication through computers, are studying at British institutions even though they might be living in Australia, for example. I wonder how you treat those in these figures, if you are able to pick them up at all. Perhaps you cannot. But I think that that is something that we are going to face as an increasingly common phenomenon.

The Chairman: It is an expansion of the point that Mr Williams raised about MOOCs.

Martin Williams: Yes. In terms of the actual content of the figures, I should perhaps ask Andrew to—

Andrew Ray: Mr Williams was talking earlier about transnational education, which is how we describe that. HESA do produce separate statistics on transnational education. So these figures that I am showing you do not include those. Those are students entering UK institutions.

Lord Dixon-Smith: Thank you. It would be interesting, if there is any information available in this field, if we could be supplied with it at some point.

The Chairman: Yes, if you have anything. I do not know how many UK universities, for example, have MOOC-type courses. I know some do.

Martin Williams: One says MOOC, but many things are covered by this label. From memory, there are about 20 UK institutions enrolled on the Open University FutureLearn platform, which is perhaps the best known UK MOOC. There are certainly two that I am aware of, and possibly more now, enrolled with Coursera, which is one of the major United States MOOCs. Of course most UK institutions—in fact the large majority—will offer some form of distance learning, so there is the capacity to study there without actually being in the country, whether or not that is via a MOOC or via a traditional online distance learning arrangement. You are then into quite difficult definitional questions about when is a MOOC not a MOOC. But as far as distance learning is concerned, as Mr Ray said, HESA collect the data. I suspect it is a bit difficult to count in detail because there is such a wide variety, but we will certainly give you what we can.

The Chairman: If you could that would be helpful to us.

Q8 Lord Willis of Knaresborough: Perhaps we could move away from MOOCs for a short time; we were getting very excited there. For us to understand what is happening here we really have to know what the global picture is in terms of students who are studying away from their home countries. Is there any way, particularly with these top 10 or 12 countries, of getting a sense of how large the overseas population is in terms of students? Without having some global figures, it is very difficult to know what is happening. Can we get a handle on that?

Martin Williams: We could try, but I fear the handle we get might be slightly out of date. But Andrew will tell us what we can do.

Andrew Ray: Yes, we referred to it earlier—the OECD’s Education at a Glance collects these figures and they show the global share. The UK is second to the USA in terms of international students at 13%. The USA has 16.5% of the international student market from the countries that the OECD collects data from. You can look at a variety of countries and you can look at trends over time but the data only goes up to 2010-11, which is fine for looking at trends over the last decade. But if you are interested in these particular last two years, from the migration policy perspective, unfortunately we will have to wait until the summer to see the first year of that showing up in the data.

Lord Willis of Knaresborough: In terms of those countries where there is a significant decrease, particularly in STEM students—and this is from the Indian subcontinent in the main—do we not have good enough relations with, say, the Indian High Commission or the Pakistan High Commission to be able to get current figures? Surely they are interested, too, if in fact we are not being as attractive to their students, in actually seeing: (a) have the number of students increased; and (b) where are they actually going to?

Andrew Ray: Yes, I think we have some intelligence on this, but we have not put it all together in a kind of evaluation looking at the flows from these countries to the different competitors. We have piecemeal evidence but I do not think it gives you a complete picture.

Dr Hodges: Not consistently across the board. We have some data from UNESCO’s Institute of Statistics, which gives trends of Indian students for 2006 to 2011, which shows strong growth in students going to the United States. In 2006 their second destination of choice was Australia and the third was the United Kingdom. We actually overtook Australia in 2009, and in 2011 38,000 students came from India to the UK and 14,000 to Australia. But we do not have anything more up to date than that at this point.

We could speak to our network of science and innovation staff in embassies and High Commissions abroad and see if they can come up with some more up-to-date data. We can ask that question.

Lord Willis of Knaresborough: It would be very useful if you could, because clearly it is this last couple of years where we have seen this perceived impact on immigration policy, where we want to do that. That would be very helpful.

Can I just move on? In answer to recent parliamentary questions, it is clear that BIS feels that we are doing a pretty good job in attracting students. We have a good offer. We are internationally competitive. We have some of the best institutions. We have no cap on numbers. So why do you think then that there is this perception that students do not want to come here particularly from those key countries?

Martin Williams: I think you are right. I think the Government would say—not just BIS—that it has a competitive offer based on the answers that Ministers provided you with. I think the Government would also say that there are parts of the Asian subcontinent where that offer is not being effectively communicated, for a number of reasons. First of all, of course, we are in a competitive market and if there are perceived difficulties within the UK these difficulties will get played back by the media in the countries concerned, in India. They will also get played back by Australian media, US universities. There are plenty of people who have an interest in saying the UK’s offer is a poor one, just as perhaps UK universities might point out the downside in some of the other countries’ offers and have done so in the past.

The Government is clear that it is seeking very hard to push, particularly in India, the message that we are open for business. The Prime Minister visited and made the points. My Secretary of State, and David Willetts, have visited and made these points. Mark Walport, the Government Chief Scientist, has visited and made these points. The British Council has quite an elaborate campaign at present, precisely to get the messages over in India to Indian students. Dr Hodges intends to say more about what they are doing.

Of course, students do have a choice. The offer is growing internationally—as I mentioned, the Singapores and the Malaysias of the world. It is certain that more and more countries are trying to attract international students. We would expect there to be some effect certainly on market share, even if the total cake was growing.

Perhaps you could say a little more about what the British Council is doing in India.

Dr Hodges: Of course. They are using the GREAT campaign as a basis. The campaign is around “Education is GREAT Britain”, and they are running exhibitions and seminars in various cities across India. Not just in Delhi, Bangalore or Chennai, the really big cities, but the smaller cities as well: Nagpur, Jamshedpur, and Chandigarh, holding seminars to invite people to come along and find out what the offer is.

In November they launched some GREAT scholarships for 370 Indian students to come to study in the UK, at a cost of £1 million a year. Both of these things have received a lot of press coverage in India. They have also produced a GREAT Career Guide for Indian students, setting out what their options are once they come to study in the UK and for staying on in the UK. So there has been quite a major programme of activity across India to promote the UK as a destination.

Q9 Lord Willis of Knaresborough: As a non-Government official, do you think that when in fact students in India and Pakistan are faced with, for instance, going to Canada and getting their medical treatment free, and now being told, “If you come to the UK you are going to have to pay upfront a premium for medical treatment”, that that sends a good message in terms of making it attractive for students to come?

Martin Williams: I think that all students primarily decide where they study on the basis of the course they want to go to, the institution they want to go to, and the country they want to go to. Considering the amount of costs that anyone who studies abroad has to incur, probably the medical cost question is subsidiary to the key one of: is this institution offering a course that I want at a quality that I want? I think that is the main driver as to where students go. But of course all students will be persuaded by different things. It would be rash to say that no student would ever be influenced by medical costs, if I might say.

Lord Willis of Knaresborough: There is no doubt that, as a whole, BIS’s central plan is to try to increase the UK’s competitiveness. Higher education is a fundamental plank of that, not only in itself but also in terms of what it actually produces. As officials, I wonder whether you are worried that saying to students, “We are going to fingerprint you to make sure you are who you are” will send out a wrong message, and whether BIS is unhappy with that.

Martin Williams: I think BIS would want to project a favourable image of the UK and a favourable image of the many strengths of the UK offer as consistently as possible.

Lord Willis of Knaresborough: In other words, that is not helpful.

Martin Williams: No, I did not say that. I think that BIS would also clearly want—as the Government in general would want—to be sure that the students who were coming to the UK were legitimate students coming to study at legitimate institutes, because I think anything else would do damage to the UK’s international brand image. I think that questions about whether a particular measure is or is not justified in the round would have to be addressed to my Ministers.

Q10 Baroness Sharp of Guildford: Following up on what you were saying, how far do you think universities in Hong Kong and Singapore have risen up the league tables very rapidly? Are they taking Indian and Pakistani students? Do we know whether that is so? As for the attraction of English for the Chinese, in India English is the language of higher education, so the attraction of coming to England to learn English is not really there for the Indian and Pakistani students in quite the same way as it is for the Chinese students. We retain that as an element of competitive advantage. But, as I said, both Singapore and Hong Kong have risen up the league tables very rapidly and I wonder whether they are attracting students from other parts of Southeast Asia

Martin Williams: I know Singapore is trying to. I do not have data about whether or not it is succeeding, but I would be surprised if it were not attracting some. As you say, they have high-quality universities and there are some obvious geographical advantages for some students. I know Malaysia has ambitions in that field. I could not tell you about Hong Kong. One could inquire. As a general principle, all universities all over the world—if they can—are interested in attracting international students. Clearly the money is of some significance but I think they all want to grow their research and the quality of their student experience, and internationalisation is an important part of that.

Earl of Selborne: It is very helpful to hear from Dr Hodges of the excellent work that the British Council in India is doing to promote entrants into higher education institutions in this country. I think a lot of us have a great respect for what the British Council is able to do in this respect, but could you tell us whether the resources available to the British Council over the last four years—which is what we are looking at here on the annual changes—for this sort of endeavour in India have increased or decreased?

Dr Hodges: I am afraid I do not have the answer to that question, but we could certainly provide it in written evidence.

Earl of Selborne: That would be very helpful.

The Chairman: Before I turn to Baroness Sharp again, I would like to go back to the very beginning to the first table that you introduced. One of the points you made is that—if you go to the very bottom—since 2011-12 the numbers have been roughly flatlining. It went from 174, 173 to 171. What has happened is there has been a decrease in STEM from 58 to 52, compensated by a slight increase in non-STEM. Mr Ray, I think I heard you say earlier on that you thought this was largely an Indian subcontinent effect because those students chose to study STEM subjects. Is that the explanation as to why non-STEM seems to be doing quite well relative to STEM?

Andrew Ray: Yes, it is an important underlying cause because, as I said, the Indian students take the three at the top of the table, in terms of the numbers that are going into STEM subjects. Clearly you do have to look at these different subjects and think that they may have different causal factors going on, but for me looking at these numbers they are much less consistent than the figures on countries.

As we have explored, we do not have a precise causal link here. We have talked about things like exchange rates and other factors that may be affecting the Indian students. In terms of the numbers, I think that is a significant impact on these figures when you are looking at it for STEM and non-STEM as these big broad overarching categories. Clearly, within engineering and technology there are sub-categories that might be of interest that we have said we could look at.

The Chairman: Yes. Thank you.

Q11 Baroness Sharp of Guildford: On the changes in the tier 4 and tier 2, I wonder how far the changes in tier 2 have actually made it difficult for STEM students, in particular, to pursue employment in the UK after completing their studies in higher education. How important do you think international STEM students are for the shortage in various skill areas?

Martin Williams: There are two questions there so let me try to separate them out. In terms of the ability of the STEM students specifically to work afterwards, insofar as there is a differential effect—STEM and non-STEM—it should slightly benefit the STEM over the non-STEM. That is simply because, as you know, the rules for the right to work afterwards are that you are able to get a job with a salary of around £20,000. To give a very broad generalisation, STEM graduates on the whole attract higher salaries than non-STEM graduates. So if that is a criterion that is linked to salary then it will slightly favour the STEM over the non-STEM in very broad categories. Of course for the previous arrangements I have no data. I do not think anyone would have any data as to whether or not the STEM students were more likely to get higher paid jobs than lower paid jobs or that more jobs would have been open to them.

In terms of the general skill shortage of the country, personally I think the Government’s position would be that we would never expect any student coming to the UK to remain afterwards. One never plans one’s economy on the basis that a certain number would stay. Most students who come to the UK to study in due course wish to return to their own country. I think that has always been the case and that goes for most students who study abroad anywhere. They may not wish to go back absolutely immediately in an ideal world, but very few of them will see their long-term future as being in the UK. I am not sure it would be right for the Government to make its skills forecasts on the basis of an assumption that a certain number of students will stay. We would not want to stop them staying if they meet the criteria, but I would not say that there are particular skills or occupations where we would say, “Of course we are dependent upon STEM students staying”. Clearly, there is a separate question about the rights of employers to bring international workers over, quite apart from students, to fill shortage occupations. I think that is a separate debate.

Baroness Sharp of Guildford: Yes. Is there any survey data that indicates how far the two-year extension, if you did a postgraduate degree, was one of the sources of attraction for foreign students to come to this country for postgraduate courses?

Martin Williams: There is a survey that UKCISA—UK Council for International Student Advice—did I think in 2011, which indicated some interest in the then post-study work regime as an attraction for students. These are students in the round, not particularly STEM students, and students may have been attracted for all manner of different reasons. Joanne, do you want to expand on that?

Dr Hodges: Yes. There have been a variety of surveys by different organisations in the last three years. In a UUK survey in 2011, 46% of respondents cited the possibility of post-study work as a factor they considered when applying to the UK. A NUS survey in 2012 cited that the highest scoring criterion for coming to the UK was the quality of education in the UK. The second was improving job prospects globally, but third was the possibility of working in the UK after their studies. Then there was a UKCISA survey in December 2011 where those respondents said that, of the recent changes to visa rules, the abolition of the post-study work route had had the greatest negative impact on students’ decisions to study in the UK.

The Chairman: Various Members of the Committee wish to come in.

Q12 Baroness Manningham-Buller: Mr Williams, I understood your point that no Government, in thinking about skills, should count on these students staying and that many will want to go home. But could one not put that round the other way and say that, with the substantial skills shortage in these areas, we should positively seek to get them to stay? That does not mean to say that you assume that they will be with you forever, but the figures that we have on the skills shortage in STEM subjects in the UK, which employers need, suggests to me that we should be much more positive in attracting them. Do you have a comment on that?

Martin Williams: I think the Government position would be that the offer of unlimited numbers staying, as many as you may attract at graduate salary levels, was an attraction to keep the people who were particularly competitive in the labour market. Also, of course the Government recently introduced provisions that allowed all PhDs, STEM and non-STEM, a year’s worth of looking around for a graduate level job. Effectively, a PSW—Post-Study Work—regime for PhDs. There is of course the exceptional talent provision within the migration rules, where 1,000 places are reserved for MBA students.

There is certainly a recognition that the UK would wish to be attractive to students who wished to remain on graduation. Whether or not one could strike a different balance in the offer one made would be one that Ministers would have to decide upon.

Lord Rees of Ludlow: Just to follow up, the United States obviously does benefit from lots of its students that stay on, and I would have thought our health service would be in a bad way if we did not have people that stayed on. I noted a very impassioned op-ed by James Dyson in the FT yesterday, which you may have seen, where he was saying that we ought to give all these people visas and encourage them to stay and otherwise we are losing out badly. Do you have any comment on that? There does seem to be a pressure to try to keep these people if we can.

Martin Williams: All I would say is that the Government has to balance the point you made: do we wish people to be available to fill skill vacancies? I think that is primarily an employment question. As for balancing that against the question of, “Does one want large numbers of international students on graduating to be taking lower paid jobs?”, it depends on what one is talking about, because if they are taking higher paid jobs, by definition they will benefit from the current arrangements. That is a question we could take different views on. I would have to defer, obviously, to Ministers to decide what the right balance is to strike in the national interest there.

Q13 Lord Patel: Dr Hodges partly answered the question when she described the survey results of why undergraduate and students wish to come to this country. But part of my question relates to what Lord Willis asked earlier on. The perception is that the immigration rules have affected students coming to institutes of higher education. The Secretary of State for BIS commented last night on the Chinese visa situation. In the seminars that you run in India, have you asked that question of students: why do you not come here and are the immigration rules affecting you at all?

Dr Hodges: I am afraid I do not have any detail of what the seminars actually cover, but I can certainly ask for more detail of that from our High Commission to provide you with that.

Lord Patel: Okay.

Dr Hodges: If I may, I would like to clarify a bit about what the alternative routes are for staying on to work after graduation, in addition to being able to transfer to a tier 2 visa. As Martin said, there is no limit on the number of students who can transfer to a tier 2 visa if they earn sufficient salary [1]. There is also the graduate entrepreneur route, which was introduced at the time that the initial changes were made. That had 1,000 places on it for anyone wanting to stay on and set up their own company. That route was doubled in size last year, with the addition of 1,000 places for MBA graduates who wanted to set up their own company. Then also, as Martin said, all completing PhD students can stay on to either find work or set up their own company. There is the provision under tier 5—the Government authorised exchange—for students to stay on to undertake either temporary employment or further training after their studies, as long as it is related to what they originally studied. So there is a range of routes and the perception is slightly out of step with the reality and there is a job of communication there.

Martin Williams: Thank you for correcting some of that. I slightly misled in my reference to exceptional talent.

Lord Peston: I got a bit lost. Can I give you a made-up example? An Indian student comes here, say, to Imperial College, London, and gets a very good MSC in computer science and knows that the teachers at Imperial would write very good references for him or her. Does that student have any right to get a job here? “Any right” is the term I am using.

Martin Williams: If they are offered a job [2] at a salary of above £20,300 they have the right to take that job and to get a tier 2 visa.

Lord Peston: There is no cap for that?

Martin Williams: No cap to that.

Lord Peston: No cap to that, so that we would then get the benefits of what we have taught them? They would be working in our economic system?

Martin Williams: Yes.

Lord Peston: Although, as you rightly said, on the whole they will want to go home in due course.

Martin Williams: Absolutely.

Lord Peston: Where I got lost is: are there equivalent people with similar descriptions who have no right?

Martin Williams: There is no one who has no right if they can get a job at the salary level. For that route, in theory, there are an infinite number of students who could remain if they got jobs at more than £20,300.

Lord Peston: If I interpreted that as saying that our system—whatever you argue about immigration generally—welcomes these people, would that be a correct inference on my part?

Martin Williams: Yes.

Lord Peston: It is Government policy to say, “If they want to stay in any of these subjects, and they can get a good enough job, of course we would like them to come and work in our economy”?

Martin Williams: Yes. That would be absolutely fair.

Lord Peston: You are absolutely certain that is the case?

Martin Williams: I am just looking at my colleagues to confirm. Yes, I think to be strictly certain you should confirm that with the Home Office, but I am as certain as I can be that that is the Government’s policy.

Lord Peston: My final question is: what is all the fuss about then? I am no supporter of the Government, so I like there to be a fuss if you know what I mean. But you are saying there are no grounds for any fuss.

Martin Williams: I am saying that there are certainly not as much grounds for fuss as some would say, certainly. Perhaps I should leave it at that.

The Chairman: Thank you.

Q14 Lord Willis of Knaresborough: Two brief points. I think Lady Manningham-Buller was absolutely right when she drew your attention to the fact that in key areas such as, for instance, UK engineering, we need twice as many graduates by 2020. Given the state of the UK economy, in terms of major engineering projects, there is no way our universities are going to produce that. So I wonder if there is any discussion in the department as to whether, in fact, there needs to be a slight nuancing of this welcoming policy that Lord Peston has now got on the record, which is very laudable of him. Whether in fact it is going to be nuanced to say that, when students are applying to come to the UK or to do their degrees, particularly in key areas like engineering and computer science and medical science, in fact there is a very clear statement made that these people would be welcome then to stay on for a period of time that is not dependent on the salary. Perhaps I may tie that to my other question, that in 2011 the Government asked the Migration Advisory Committee to review this £20,000 salary and to look at competitive salaries. Did that ever report, and where does the figure of £20,300 come from? Given that we have had a recession over the last few years, is that a realistic figure for entry into the graduate market?

Martin Williams: Let me try to take the questions, perhaps in reverse order. On the Migration Advisory Committee I have to step back and say I think this is a question you would have to ask the Home Office Ministers. They are responsible for working with the Migration Advisory Committee and I think you should direct that question to them.

Lord Willis of Knaresborough: You apply their policy.

Martin Williams: The Government applies their policy but ultimately the Home Office decides the rules it sets for the awarding of visas. Visa policy is a matter for the Home Office. Whether or not the Government would regard it as right for someone to come in and study any discipline and then have the right to continue working in a pizza parlour, I just—

Lord Willis of Knaresborough: I do not think I said that. I am talking about key subjects in areas we have a desperate need for, which is in engineering where there is a clear need to double the work force by 2020, and computer science where we are desperately moving backwards in terms of that field. These are areas that BIS clearly say that, in order for us to be competitive as we move forward, we have to have these people. Do you put pressure on the Home Office to say, “We need to nuance the policy to say to students when they are applying, ‘This is a good place to come because if you get a good engineering or computer science degree you can have a job’”?

Martin Williams: We and the Home Office are united in the policy that I described earlier that, “If you secure a job at the right salary level”, which I will use as a shorthand for a good job, “then you are welcome to come. We will encourage you to come”. Perhaps I should just also mention the fact that clearly, if there is a need or demand in the economy for skills in a particular area, UK universities will be able to train the number of people they can train, whether or not those are international students or domestic students. We are seeking to grow and expand the capacity of UK universities to offer STEM degrees—and perhaps you will be hearing from the Higher Education Funding Council for England during the course of this inquiry. The Government has given more funding to HEFCE to support the growth of STEM degrees for all students, international and national—but clearly seeking to grow for the benefit of domestic students, because we do not wish, as previously said, to be dependent permanently on international students coming in and remaining.

The Chairman: One last question from Lord O’Neill.

Q15 Lord O'Neill of Clackmannan: There are two parts to it. First, could you give us information as to the impact on individual institutions of the drop in numbers? Obviously it will be more severe for some institutions than others, and perhaps the ones with the loudest voices have been making the biggest noises in respect of this. The other thing is that in terms of engineering graduates, including postgraduates, a salary of £20,000 is derisory compared to what they are normally offered by recruiters. The kind of people who are going into the construction projects and that sort of thing will be starting between £35,000 and £40,000. The figure of £20,000 is comfortably low. I would have said that should not really be a problem, certainly for STEM students who have the necessary skill set that is attractive to employers. They will get paid a lot more than that.

Martin Williams: I would defer to your views on the second point. On the first point, in terms of impact on individual institutions, BIS do not collect that. We would look to the Higher Education Funding Council for England to collect that or Universities UK. All I would say there is that, clearly, we talk to universities from time to time. I was at a Russell Group gathering last week when I saw a number of Vice-Chancellors socially. I mentioned that I was coming to this Committee today and what we were talking about. None of them implied to me that this was at the top of their list of worries at present.

This is simply an impressionistic comment. So, as I say, you would need to ask HEFCE, whose function it really is to look at and work with individual universities.

The Chairman: We are very close to the end but I think Baroness Sharp had a question.

Baroness Sharp of Guildford: It is a follow-up on this. Again, you may not be in a position to answer. We are particularly concerned with the postgraduate training here, and how far the drop in the numbers of students might affect the viability of some of the postgraduate courses, and whether you are aware of any courses, particularly in the STEM area, that might be under threat as a result of the drop in numbers.

Martin Williams: No. We asked HEFCE—and we have for a number of years—to monitor the overall health of strategically important and vulnerable subjects in the UK universities. Again, it is probably to them that you should direct the question. I would expect routinely that any university is creating and abandoning courses all the time as part of a normal churn, and I am glad to say we do not sit in Whitehall and say, “You can or you cannot close course X or course Y” for any of 150-odd higher education institutions.

The Chairman: I would like to draw the session to a close and to thank all three of you very much indeed. It has been an immensely helpful session to us. You have provided a lot of very transparent and well articulated information. You have also kindly agreed to provide some follow-up information. The Committee clerk will be in touch to pursue that with you. But thank you. You have given us a very good start to this short inquiry. As you know, you will receive a transcript and you will be free to make minor editorial corrections and, in due course, you will see a copy of our report. So thank you very much indeed.