Universities are the worst place to talk positively about Brexit – in one YouGov poll 9 out of 10 academic staff apparently thought Brexit will have a negative impact on the higher education sector, while only 8% of the respondents admitted to having voted Leave. How should we read this? That university folk are particularly clever and understand the consequences of Brexit better than their fellow citizens? Or are they in a bit of a bubble, thinking too narrowly about the status quo?

Academics like to think they are very different from the grubby world of commerce, but many of their concerns – as expressed by, for instance, Universities UK are very similar to those faced by businesses up and down the country. They include loss of customers – in this case students – and consequent income; reduced access to funding for research and development; increased difficulties in recruiting staff and fewer opportunities for international cooperation generally.

Looking at the evidence, some fears seem overblown. Loss of student income, for example. Currently there are about 132,000 non-UK European Union students in the UK, around 5.6 % of all students. This compares with non-EU overseas students, who account for 13.6% of all students but a markedly higher chunk of total fee income.

If EU students face higher international student fees after Brexit, and no access to student loans, their numbers will probably fall quite sharply, perhaps by up to a half. However, a Higher Education Policy Institute report suggests that the sector as a whole may actually gain financially as the fall in EU recruitment would be offset by higher international (non-EU) fees from those who continue to come to the UK, while more non-EU students would be attracted because of the substantial fall in the value of the pound consequent on Brexit.

A related concern is student mobility during courses under the Erasmus+ scheme. Much is made of this opportunity, but it is not taken up by huge numbers of students. The UK sends about 15,000 Erasmus+ students abroad each year (mostly studying language and business studies), but receives 27,000. Interestingly, of those UK students spending time overseas during their studies, only just over a half go to EU countries. Even without Erasmus funding, more British students spend time in the USA than Germany, in Australia than in Italy, in Canada than in the Netherlands, or in China than in Ireland.

A fall in the numbers moving between the UK and the rest of the EU is not inevitable. You don’t have to be an EU member to participate in Erasmus+ and, for a contribution, it should be possible to maintain access to the scheme.

The same goes for research funding, clearly a big issue for some institutions. We are one of the largest recipients of research funding in the EU, receiving substantially greater amounts of EU funding for research and development than our share of funding contributions would suggest.

The UK was in fact the second largest recipient in absolute terms after Germany in the most recent Framework Programme (FP7). Most of this money (70%) goes to universities, the rest to other research bodies and businesses.

But although the proportion of UK university research income that EU funding represents has been increasing, it is still less than 10% of total research funding for the sector. Moreover this funding comes with strings: it is tied to EU rather than UK objectives, and it sometimes fails to cover full costs, thus requiring matching funds. Some researchers also complain about the level of bureaucracy, while the emphasis on securing European partners limits wider research potential.

The European Union is unlikely to dry up completely as a source of funding. You don’t have to be an EU member to bid for research support: 16 non-member countries including Norway, Turkey, Israel and Switzerland, already access EU funds and it seems likely that this will also be true of the UK post-Brexit.

Another concern has been the loss of talented research staff who have come to the UK from the rest of the EU. The House of Commons Education Committee worries that a March 2017 poll showed that 53% of non-UK nationals were ‘actively looking to leave the UK’, while 88% said that they were more likely to leave in the medium to long term as a result of the alleged ‘hostile climate’ since the Referendum.

Whether this sort of evidence really means very much is a moot point. In any case, assuming the government reaches some sort of agreement about the status of existing non-UK residents, much of this concern may dissipate. It does raise an interesting question, however. Until now, non-UK EU nationals have enjoyed a privileged access to UK university jobs. Currently we have around 34,000 such academics, constituting about 16% of the UK’s total academic workforce.

Many are of a very high standard. However the rest of the world – including such major academic powers as the USA, Canada, Australia, New Zealand, China and Japan, which between them account for the lion’s share of world citations – only accounts for 24,500 UK-based academics.  This suggests that the rest of the EU is over-represented amongst UK academics.

In some ways there is an analogy with the effects of customs unions on trade patterns. Economists point out that such unions, while promoting trade creation, also give rise to trade diversion. We buy German fridges rather than Japanese fridges, because tariffs make Japanese fridges artificially more expensive.  In a similar way, EU free movement makes it easier to appoint Italian academics to UK jobs than it is to appoint Canadians, while research policy incentivises research partnerships with Spain rather than China.

 

…to be continued.

 

Editorial and Research Fellow

Len Shackleton is an Editorial and Research Fellow at the IEA and Professor of Economics at the University of Buckingham. He was previously Dean of the Royal Docks Business School at the University of East London and prior to that was Dean of the Westminster Business School. He has also taught at Queen Mary, University of London and worked as an economist in the Civil Service. His research interests are primarily in the economics of labour markets. He has worked with many think tanks, most closely with the Institute of Economic Affairs, where he is an Economics Fellow. He edits the journal Economic Affairs, which is co-published by the IEA and the University of Buckingham.

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