Ahead of government decision on Graduate visas, report reveals benefit to UK economy and education sector

10 May 2024

The Home Secretary has commissioned the Migration Advisory Committee (MAC) to conduct a rapid review of the Graduate route visa by 14 May 2024, to find out whether the useful immigration option for international students graduating in the UK is being “abused.”

A Graduate visa gives eligible applicants studying in higher education in Britain on a student visa an option to stay and work without the need for sponsorship in the UK for two years (three years for a PhD of other doctoral qualification).

A Graduate visa cannot be extended, but if they want to stay and work in the UK, those on the route may be able to switch to another visa, for example, a Skilled Worker visa if they have an employer willing to sponsor them and pay the appropriate salary threshold.

The Home Secretary and some other Conservative colleagues have expressed concerns that work rather than education may draw some international students to the UK since 2022 when the Graduate visa extended the time international students have to find work in the UK after graduating.

However, to stay in the UK after a two-year Graduate visa most students would have to be sponsored by an employer as a Skilled Worker. Though obviously it is easier to find a suitable job in the UK with some local experience under your belt, doing a degree is a rather long-winded and expensive option as anyone eligible can be sponsored as a Skilled Worker without having to be in the UK or studying here.

As the Migration Advisory Committee were given just ten weeks to review this immigration route, amid other recent and rather rushed immigration legislation to reduce legal immigration, Chair of the MAC, Professor Brian Bell, noted: “the timescales for this review are much shorter than a normal commission. As such, this will substantially limit the quality and quantity of evidence that we can provide.”

To improve the available economic evidence for the review, the Higher Education Policy Institute (HEPI), Kaplan, and the National Union of Students (NUS) asked economists at London Economics to estimate the impact of the Graduate route.

Net benefits of the Graduate visa

Their report, sent to the MAC, found that for the first 2022-2023 cohort of Graduate visa holders, the gross benefits to the UK in higher tax revenue from was £588 million, the total net benefit to the UK treasury £70 million (or £1,240 per international graduate).

The report concluded that this is an underestimate of the total benefit, as it did not include taxes paid by dependants, or the money spent by international students attracted by the Graduate visa in the economy in general and higher education institutions in particular – which greatly subsidises the education of domestic students and helps make British universities renowned global institutions for academia and scientific research.

Earlier research commissioned by HEPI, Kaplan and Universities UK showed just one cohort of international students contributed a net of £37.4 billion to the UK before graduation.

Graduates are able to fill many skills shortages for UK employers without the new higher minimum salary thresholds which make it difficult to sponsor hires for junior posts.

Recent legislation removing postgraduates’ right to bring dependent family to the UK with them unless they are research postgrads was blamed for a 44% drop in January enrolments.

The report warned that the ban on dependants, plus recent increases in application fees and health surcharges, are already reducing the UK’s higher education sector’s ability to attract international students and warned of the dangers to the sector of measures to further discourage international students, as well as the destabilising impact on international students who have already made the big move to come to the UK for their degrees, and the UK’s global reputation.

What is going to happen to the UK’s Graduate visa?

The short turn-around for the MAC ahead of the next election and other measures to make immigration to the UK harder and more expensive have led many to speculate that Conservative ministers have already made their mind up about the Graduate route.

According to Times Higher Education, the UK Government has been considering options such as reducing Graduate visas to just six months, adding extra conditions such as minimum salaries graduates would have to earn, or scrapping the route altogether.

According to President of University College London, Michael Spence, the government’s own analysis shows the visa is “set to bring in £12.9 billion of additional tax revenue compared to £6.8 billion of extra fiscal costs between 2021-22 and 2030-31”.

“If we want to grow the economy and encourage global leadership and innovation, we need to continue to attract the brightest and the best,” Dr Spence told Times Higher Education, adding that it would be an “act of extraordinary national self-harm to curb the graduate route”.

Making the UK even more unattractive for international students “would set back so many important government policy priorities”, including ambitions to become a science superpower and to “level up” neglected regions, warned former Universities Minister Lord Johnson of Marylebone.

“It’s hard to think of a policy more self-defeating. And all for what? To lower immigration statistics which international students shouldn’t be part of anyway.”

Since the Graduate route was established, a total of 175,872 visas have been granted.

If you are at all concerned, or to discuss the UK immigration routes mentioned, or any others, please do contact us on 0207 033 9527 or enquiries@vanessaganguin.com.