The MAC review of the graduate route

Ahead of last autumn’s appalling migration figures, Number 10 had decided that however bad the numbers were, they wouldn’t announce any policy measures in response.

But when the numbers came out and it emerged that migration was running at such a pace that 1 in 60 people in the country had arrived in the last twelve months alone, and that net migration was adding a city the size of Birmingham to the population every two years… the government reluctantly allowed Robert Jenrick to develop a package of measures. 

One of the announcements was that the Migration Advisory Committee (MAC) would do a “rapid review” of the graduate route, something which was the subject of a scathing MAC report last year.

But the launch of the review was far from ‘rapid.’  After being announced on 4 December, months later in March the MAC had still not been commissioned, and the review had not even started. I asked various parliamentary questions about why not. Eventually it was commissioned.

It was clear from the off that this was a way of pushing the issue into the long grass.

There has been the most enormous push from DFE and HMT plus lavish spending on PR and commissioned think tank reports by the University sector to avoid any reform. Our (massively expanded) university sector now has pretty substantial resources, as a quick glance at Vice Chancellors’ salaries reveals.

So I was not surprised to find that the report is rather a whitewash – it could not be anything else given its narrow terms of reference and the government’s pretty clear preference not to do anything, and the MAC make it clear where they are responding to the government’s own framing.

But we still do learn some interesting stuff from it, and I will list some snippets below.

The story so far

Regular readers will know that since the launch of the graduate visa, student visas have massively increased. It has not affected numbers from developed countries, but has been one cause of a huge expansion in numbers coming from developing countries. This is likely because of the opportunity to work in the UK with no minimum salary requirements is much more valuable to people from poorer countries (this is not a criticism of them, just a description of the incentives here).

As Alan Manning has pointed out: “universities are not just selling education but also, in part, work permits. A scheme that gave work rights for stays in UK hotels would be out of the question, but in the context of universities an equivalent scheme is regarded as common sense by many.”

What the MAC said before

It is in one sense surprising that the report is so Panglossian about the graduate route, in so far as the MAC have been so scathing before, and indeed recommended that it was not created, immediately before Boris created it.

As the MAC pointed out last year:

In our 2018 report, we recommended against the introduction of a separate graduate visa, due to concerns that it would lead to an increase in low-wage migration and universities marketing themselves on post-study employment potential rather than educational quality. As we put it at the time:

“If students had unrestricted rights to work in the UK for two years after graduation there would potentially be demand for degrees (especially short Master’s degrees) based not just on the value of the qualification and the opportunity to obtain a graduate level job and settle in the UK, but for the temporary right to work in the UK that studying brings. A post- study work regime could become a pre-work study regime.”

They noted that the growth in international students:

“has been fastest in less selective and lower cost universities.”

And that:

“This data suggests that the graduate route may not be attracting the global talent anticipated, with many students likely entering low-wage roles”

And:

“If the objective is to attract talented students who will subsequently work in high-skilled graduate jobs, then we are sceptical that it adds much to the Skilled Worker route which was already available to switch into after graduation, and we expect that at least a significant fraction of the graduate route will comprise low-wage workers. For these migrants, it is in many ways a bespoke youth mobility scheme”

What the MAC are saying now

Time and time again, today’s report makes clear how heavily it has been steered by the government’s own essay question, and in particular, the government’s restated goal to get 600,000 overseas student enrolments.

This completely arbitrary target, plucked out of the air in the dying days of the May administration, was achieved in 2020/21, way ahead of the proposed 2030 target date.

But though it lacks any particular rationale, it continues to warp policy.  The MAC say:

“In assessing the route, we have been guided by what the government has said… We found no evidence of any significant abuse of the Graduate route. By abuse we mean deliberate non-compliance with immigration rules.” …

They note that if there are restrictions:

the government will likely fail to achieve the target set in the International Education Strategy. We have assumed that this strategy remains government policy as it was highlighted to us in the commissioning letter.

That 600k target is the tail that is wagging the dog here.

They note with what sounds like frustration that:

“The commissioning letter for our review also makes clear the objective to attract “the brightest and best” to the UK, in line with the International Education Strategy. However, this term does not have a commonly understood definition. There was no definition of the term in our commissioning letter, nor was there a clear definition provided during our discussions with UK government ministers and officials. Given the compressed timescales to which we were asked to work for this review, we have not sought to establish our own definition. This lack of clarity makes it difficult to judge the performance of the route against this objective.

Best and Brightest?

In today’s report the MAC return to the question whether the route is really attracting the “best and brightest”, as promised. On at least one measure, their answer is still no:

“Approximately 10% of international postgraduate students in the UK who attended a university ranked between 1 and 200 (the highest ranked) globally went on to obtain a Graduate visa, whilst 30% of those who attended universities ranked 800+ went on to obtain a Graduate visa. …  

The majority of the growth since the Graduate route’s introduction is from non-Russell Group universities’ postgraduate courses (66% of all Graduate visas). This is the same group that has driven the growth in the number of Student visas in recent years.

Looking at a breakdown by global university ranking tells a similar story. If the government’s aim is to retain bright international students as outlined in the commissioning letter and by this they mean those who attend universities ranked the highest globally, then this data suggests that the Graduate route may not be attracting the global talent defined in this way.”

They do say you could use a different definition if you wanted.

But if I can add one of my own charts at this point, it is striking how concentrated the growth of student visas has been among less prestigious universities. The share of visas for the top institutions had been going up. Since the graduate route launched it has plummeted:

A small criticism

The MAC are only doing what the government have commissioned them to do. But I have two small criticisms about the report.

First, the report lays out statistics for both student migration, and those on the post-study Graduate route. That is very helpful. But, perhaps because of the nature of the government’s commission, they occasionally write as if the two are unrelated. In reality the existence of the ability to circumvent earnings requirements via the graduate route changes both the level and mix of student migration too. The two are joined at the hip.

Second, quite often the point of comparison used in the report is with first year graduates. But unlike having young people, migration is a policy choice, and often the more relevant comparison may be with the population as a whole.

Quibble over!

Known unknowns

For me, the most interesting bit of today’s MAC report is their brutal listing out of all the things the Home Office should really know, but somehow doesn’t. This appears at different points through the report:

• “We are unable to estimate how many Graduate visa holders leave the country before their visa expires, and the Home Office is currently unable to supply this data”

• “around 70% of those on the Graduate route have a pay record in the first 12 months of their visa. It is unclear whether the remaining 30% are unemployed, have left the country, are in unpaid work, are self-employed, or something else.”

• “We were unable to identify individuals moving into Family visas or other routes in the dataset we were provided with”

• “We were unable to access data which would allow us to look at the employment outcomes of dependants on the Graduate route and therefore it is not possible to assess their economic impact.”

• “It is not possible to provide analysis on the academic achievements of those who go onto the Graduate route as the Home Office do not collect data on this.”

Employment rates

The employment rate of people aged 20-64 in the UK is 79%.

Most on the graduate route are probably working, but the MAC say they are unable to compare employment on the graduate route to the normal employment rates:

Of the Graduate visa holders who started the route before April 20222, 79% match to an HMRC record (including paid employment through pay as you earn (PAYE), or self-employment measured by self-assessment). Their employment record may cover (partly or in full) a period outside the Graduate visa e.g., during a previous Student visa or a subsequent worker visa. As a result, the 79% match rate is not an estimate of the employment rate among Graduate visa holders. Another estimate of employment of Graduate visa holders is the share of the cohort who start the route before April 2022, who are PAYE employees and who work for at least 1 month during their first year after obtaining the Graduate visa. This figure is 68%. It is important to note that those for whom no HMRC record was found may have started to work for the first time after April 2023, may have left the country without exercising their right to live and work in the UK for the full 2 or 3 years, or may have been working in the UK but their records did not match. We are unable to estimate how many Graduate visa holders leave the country before their visa expires, and the Home Office is currently unable to supply this data.

Earnings

The MAC note that:

The route has no restrictions on the type of employment that Graduate visa holders can have, and therefore it is not required that Graduate visa holders always work in graduate roles.

And that:

The Graduate visa holders interviewed often reported that they were not in jobs which related to their course of study, preferred longer term career trajectory, or in jobs they wanted to be in.

Despite the limited timeframe the MAC managed to do some qualitative work and quote some people using the route:

“[Working in retail] is quite tricky in all aspects because I think I’m the oldest one. I have colleagues that are 16, they’re not pursuing a university degree… I feel like a failure.”

Filipino Graduate visa holder, research interview

… after the contract, then obviously when they see how awesome I am they would say, oh we have to keep you, we can’t let you go. But no, they did let me go, even before the 12 month [job contract] period.”

Nigerian Graduate visa holder, research interview

“There’s no opportunity for sponsorship in my current role but [my company] does do sponsorship, but it’s through specific roles. My manager has given me a few to apply to, and he said he’d put in a good word.”

Egyptian Graduate visa holder, research interview

They also have some quantitative data.

The MAC note that people on the graduate route earn more each month as time goes on. They also produce a histogram of average earnings over their first year for those who are working (this doesn’t include dependents).

Though the report is a whitewash, the new data (see data annex) in today's MAC report is explosive.

Working 40 hours a week on the minimum wage gets you just under £2k a month: but the great *majority* of people on the graduate visa earn LESS than that on average. It is a boon for dodgy employers.

I am not sure why its not in their main report, but the data annex to the report, it points out that 41% of Graduate visa holders with earnings "earned less than £15,000" a year. Given full time minimum wage work gets you c. £24k - this is not graduate work.

The MAC choose to compare the earnings of people on the graduate route only to people who just graduated from university.

But given this route is a policy choice, I think a more relevant comparison is with all earners. Here’s how much all full time workers earned (graduate and non-graduate) last year.

People on the graduate visa earn half as much as UK workers.

The MAC say "median annual earning for the 73% of Graduate visa holders who were in employment for at least one month in financial year ending 2023 was £17,815."

Compare this overall median earnings in 2023 of just under £30k - and earnings for full timers of just under £35k.

The median for full time workers was just under £3,000 a month, compared to a mode of £1,600 to £1,800 for people on the graduate route.

Some people on the graduate route are earning really well, and wouldn’t struggle to just go through a conventional route into genuinely skilled work. But others are really propping up the table - likely in low wage work and in the gig economy.

Study and stay?

What happens when your graduate visa runs out? Today’s MAC report takes a first look:

To understand the migrant pathway, we used Home Office management data that linked graduates backwards (to their Student visa) and forwards (to Skilled Worker or other visa) to follow their migration journey. Only those who began the Graduate route between July 2021 and December 2021 have seen their Graduate visa expire in our dataset and have therefore had to switch visas if they wish to remain in the UK. Home Office data show that 50%5 of these individuals switched into a work visa or Student visa, either prior to or when their Graduate visa expired.

People still occasionally call for “students to be taken out of the net migration figures”. This is an odd argument. If a student studies and leaves then they take themselves out of the net migration figures: they count as zero net migration. The main reason students show up in net migration figures now is that many don’t leave.

Today’s MAC report notes that a very large share of those who switch out of the student or graduate routes go to work as care workers - roughly half of those who switch directly to a work visa from study and 20% of those who switch from the graduate route. This is much higher than the general population.

Again, I would emphasise that the longer the graduate route exists for, the more it will colour the level and composition of student migration and create an incentive to come notionally to study, but in reality to do low wage work. We can only see the first six months so far, so it will not have had much effect yet as people will not have had much time to change their plans.

The MAC also notes that for some, the study and graduate routes are really a way into settlement in the UK:

“Almost half of student switchers work as Senior care workers or Care workers (49%), whilst in comparison many fewer Graduate route switchers work in these occupations (20%). However, this is still significantly higher than the domestic graduate population, where only 6% work in the entire ‘Caring, leisure and other service’ occupations. Those who switch from the Graduate route to the Skilled Worker route before 21 months on the visa are more likely to work as Care workers and Senior care workers (21%), compared to those who switch after 21 months on the visa (15%). This could potentially highlight a decision from a small portion of the Graduate route cohort (6%) to prioritise settlement (which requires switching into the Skilled Worker route) above their future career prospects.”

We won’t know for many years how many people will come as students and ultimately settle.

If we look at the cohort of students who came between 2007 and 2016 before the liberalisation we see that stay rates are (unsurprisingly) higher for students coming from the poorer countries, towards which student migration has now swung.

Looking at the largest countries of student origin, we see that even though there were more students from the US than Pakistan over the period, four times more students of Pakistani origin from that cohort were still in the UK in 2022 compared to Americans.

Only about 6% of students from the US were still here in with valid leave in 2022, but it was between a quarter and a third for countries like Pakistan, Nigeria, Bangladesh and Sri Lanka.

Though we will need longer to see for sure, a chart in the data annex to the MAC report makes it look like the Graduate visa may be boosting stay rates quite a bit.

Conclusion

I suspect the MAC report will be written up as giving the graduate visa a clean bill of health. The law is technically being complied with, mostly.

But whether this will really turn out to be a good way to run immigration policy is another question entirely.

Compared to what we were doing for most of the last decade it is clearly less selective. The share of visas going to our top, most research intensive universities is sharply down, when it was going up.

It is clear that a substantial proportion are going into low wage work - the majority of them, if we are comparing to all full time workers.

The MAC have followed the essay question set by the government - and fair enough. DFE stakeholders will be happy.

But if we want to keep our promises to the public, and get to a selective system that maximises the benefits, we should go back to what we agreed under the Lib-Dem / Conservative coalition government. Study visas should be available, but should be for study! Work visas should be available for those who will come to do high wage high skill work. The two things are different.

Instead, we are pursuing an arbitrary target, and the expansion of universities for their own sake. Vast debt-fuelled HE expansion been part of our economic model since the Blair era. But if that model was going to lead to an economic miracle, it sure is taking a long time to turn up.