Universities have investment chance amidst UK international education drive

Out-Law News | 16 Feb 2021 | 10:05 am | 3 min. read

Universities in the UK should explore opportunities to partner with overseas investors before new entrants to the market emerge, an expert in universities law has said.

Gayle Ditchburn of Pinsent Masons, the law firm behind Out-Law, said the move would help established institutions maintain and strengthen their position in a market that is likely to become more competitive as online learning continues to grow in popularity,  supported by improvements in technology.

Ditchburn also said the move would align with UK government plans to support the growth in the export of UK education across the world, as it has reaffirmed in an update to its international education strategy.

Ditchburn Gayle

Gayle Ditchburn

Partner

UK universities would be prudent to use this window of opportunity to consider opportunities to collaborate with overseas investors looking to scale up and export UK education to their core markets

The strategy was first published in March 2019 and signalled the government's intent to increase the value of the UK's education exports to £35 billion per year and the number of international students hosted in the UK to at least 600,000 per year by 2030. Those targets have been reaffirmed in the updated strategy. The latest available data, from 2018, suggests that the value of the UK's education exports at that stage was £23.3bn, while in the 2019/20 academic year the UK hosted approximately 560,000 international students.

The updated strategy reflects on the significant changes in the higher education sector since the strategy was initially published, from the impact of the Covid-19 pandemic to technological and pedagogical developments in how higher education is delivered, to Brexit's impact on immigration policy and how the UK will now seek to attract international students.

The government has said the impact of Covid-19 "has served to bolster the case for international co-operation and partnership", and that education exports can "support the recovery of the UK economy" as well as "help forge international relationships, strengthen the UK’s soft power and foster opportunities for collaboration and knowledge exchange".

To support its education export growth plans, the government last year appointed an international education champion, Sir Steve Smith, the former president of Universities UK, the body which represents 140 universities across England, Scotland, Wales and Northern Ireland. According to the updated strategy, Sir Steve's work in fostering international opportunities will be focused in "priority markets" – those being India, Indonesia, Saudi Arabia, Vietnam and Nigeria – as well as in "other important regional markets", which include Brazil, Mexico, Pakistan, Europe, China and Hong Kong. He said he will "work closely with overseas governments and officials to deepen government-to-government partnerships, helping to open new international opportunities for the sector and working to resolve market access barriers in priority markets".

Ditchburn said: "To achieve its ambition to increase education exports to £35 billion per year by 2030, a key role for government will be to work with the governments in both the identified priority overseas markets and other important regional markets to facilitate the recognition of online UK higher education and enable the required pace of growth. It is of interest that the international education champion’s role is noted as being not only to 'showcase our first-in-class education offer' to overseas partners and consumers but also to investors."

"Overseas demand for investment opportunities in UK higher education is at unprecedented levels with limited supply. The Higher Education and Research Act 2017 has opened up the market for new higher education providers but it will take a number of years for these to move through their investment cycles and become ripe for further investment or sale. UK universities would be prudent to use this window of opportunity to consider opportunities to collaborate with overseas investors looking to scale up and export UK education to their core markets," she said.

There are also new opportunities closer to home. A change in UK immigration policy implemented last year enables undergraduate or masters students to stay in the UK to work, or look for work, for two years after they have completed their degree in the UK – or for three years if the student has completed a PhD. Ditchburn said that this 'graduate route' will be vital to supporting growth in the number of international students studying in the UK.

"The graduate visa route is already showing signs as being a positive step towards increasing the numbers of international students coming to study in the UK in line with government’s aim to increase these to 600,000 per year by 2030," Ditchburn said. "The government’s pledge that due to the pandemic, international students studying by distance/blended learning will remain eligible to apply for the graduate route provided they arrive in the UK to complete one term’s face-to-face learning is also welcome news and further reinforces the importance for UK universities of investing in technologies and international partnerships to support such opportunities."