Tag Archives: exporting

Making money from Education

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At this time of year, the DfE publishes data about the success of the education sector in generating income from exports. The income can be as a result of students from overseas – traditionally excluding EU students – coming to study in schools; colleges; universities or language schools. Set alongside that is the physical export of goods and services to customers in the education sector overseas. The latest data release covers 2020 and must, therefore, be considered an abnormal year because for much of that year the covid pandemic severely affected opportunities for income generation. UK revenue from education related exports and TNE activity 2020 – GOV.UK (www.gov.uk)

 The recorded income for education exports in 2020 was some £25.6 billion pounds; up from £25.4 billion in 2019. To put those figures in some form of context, it was estimated that the Track and trace system for tracking covid possibly cost the government and taxpayers more than £30 billion over two years according to many reports on the web.

Higher education was the largest earners, responsible for £19.5 billion of export revenue. In comparison, Further Education, which consists of non-EU students only, accounted for £0.2 billion. The flow of overseas students into the further education sector these days probably doesn’t even warrant being called a trickle.

The income generated from Education Products and Services and Trans National Export activity was broadly similar, at around £2.1 billion and £2.3 billion worth of revenue generated, respectively. English Language Training and Independent Schools generated £0.5 billionand £1.0 billion, respectively. While the contribution from language training has been either static or declining in recent years, down from £2.23 billion in 2010 at current prices, income across the private school sector dipped from it record level of £1.05 billion in 2019, to £1.01 billion in 2020, presumably because of covid affecting the number of new registrations. On the other hand, TNE activity continued to increase, from £2.19 billion in 2019 to £2.28 billion in 2020.

Over the period between 2010 to 2020, the share of Higher Education to the total revenue from UK education related exports and TNE activity has increased by 16.3 percentage points from 60.0%to76.3%.

UK TNE activity increased by 2.2 percentage points over the same period from 6.7% to 8.9%. The share of English Language Training (ELT) and Further Education (non-EU students only) have both fallen by 12.2 and 5.2 percentage points, respectively: the ELT share dropping from 14.0% to 1.8% and the Further Education share dropping from 5.8% to 0.6%.

In 2020, international (EU and non-EU) Higher Education students at UK universities generated an estimated £18.0 billion in exports through living expenditure and tuition fees (£15.9 billion in 2019), which accounts for around 70.2% of the total value of education exports and TNE activity (62.6% in 2019). Overseas students are now clearly a vital part of the income stream for UK higher education institutions and have helped to cross-subsidise home students where fee levels have not kept pace with increases in costs.

The remaining £1.5 billion of exports revenue generated from Higher Education is made of research contracts and other exports income. 

With the development of national programmes, such as the new Oak Academy, there must be scope to increase ethe income from experts within the education sector. Should overseas students decide to seek university places in other English-speaking countries and avoid UK universities, this might be of great concern to that sector and its funding.

DfE announces a bit of history

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Last week, the DfE published the annual results of revenue related exports and transactional education activity in 2018. That now seems like a different world. https://www.gov.uk/government/statistics/uk-revenue-from-education-related-exports-and-transnational-education-activity-2018

Still, 2018 was a good year for education experts, with even the Further Education sector reversing the downturn of previous years and experiencing upturns in both fee income and income from living costs: albeit only by small amounts. Still, this was the first upturn in FE exports since 2010, the year when I think the data for the time series was first established.

Overall, across all areas, there was a 10% increase in export activity and a slight fall of 0.8% in transactional education activity in 2018

Higher Education once again earned the lion’s share of the income, accounting for 69% of all exports and transactional education activity in2018.  This was higher education’s largest percentage share, and some 9% more than their share in2010.

Further Education and English Language Training have been the main losers of market share since 2010, although both recorded upturns is 2018. ELT increased its market share by one percent to eight per cent. However, FE still saw its market share remain at one percent in 2018.

Independent schools market share reduced from five to four per cent at the end of 2018, back to their share in 2010. However, this was largely due to the strong showing from the higher education sector during 2018.

Transactional education activity, where the exports are delivered overseas through ventures such as satellite campuses and overseas consultancy lost ground in 2018, falling back to only 9% of total activity.

Among sub-sectors, equipment sales were strong in 2018, but educational publishing failed to maintain the growth witnessed in 2017. Most of the higher education student growth was, perhaps not surprisingly, in the non-EU student sector of the market. The latter remained stable. What will happen to this income stream in 2021 and future years will be interesting to observe, but it might be 2025 before data are published that reveal any trend post Brexit.

These figures may well be the penultimate in a run of good years for exports. There is little reason to believe that 2019 will not have produced further growth, although EU higher education income might have slowed down. Come the 2020 data, the results might be different. Will new income from distance learning have been sufficient to offset losses elsewhere resulting for the covid pandemic affecting the second half of the year?

Perhaps now is the time to remove overseas students from the immigration statistics, at least for those on first degree courses, even if not for sub-degree and postgraduate level courses where monitoring might be more challenging?

Still, let’s congratulate a successful export drive in 2018, and hope that covid and Brexit between them create new opportunities rather than decimate an otherwise successful sector of the British economy, since these are UK numbers and not just for England.

A Minister for Education Trade?

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Following on from the general election last Thursday, the period of Purdah has come to an end and the routine of government has re-started. This includes the publication of a whole swath of education statistics.

One set of statistics published during Purdah was the annual update on the United Kingdom’s annual revenue from education related exports and transnational education activity. Post Breixt, this part of the service sector is going to continue to be an important part of our economy. The data published related to the calendar year 2017, so almost two years ago. The statistics can be found at https://www.gov.uk/government/statistics/uk-revenue-from-education-related-exports-and-tne-activity-2017

As in the past, the higher education sector dominates the data, accounting for two thirds of the revenue. Changes at the overall percentage level tend to be slow, but it is clear that the further education sector now contributes little by way of expert revenue, recorded in these statistics as accounting for just one per cent of revenue. In, 2010, it accounted for six per cent. After the issue of bogus college that harmed this sector, there does seem to be room to explore whether there might new avenues of export generated revenue around the area of teaching and learning in the skills sector that could be led by the further education sector.

English Language training has been the other sector in decline in terms of export revenue; down from 14% of revenue in 2010 to 7% in 2017. In cash terms this is a decline from £2,230 to £1,570 (both to the nearest £10 million). However, there has been continued limited growth in this sector from transnational revenue earned overseas.

The independent school sector in the United Kingdom has increased its revenue, as has these schools contribution to transnational education. This is presumably due to the number of overseas campuses now in operation by schools. However, this sector only contributes some five per cent to total revenue.  Even so, this is five per cent that might have disappeared has the outcome of the general election been different.

Amongst education products and services, growth between 2016 and 2107 was steady, with equipment sales showing the strongest growth year on year, and a 20% growth over two years.

In terms of higher education, the bulk of fee income originates from students arriving from outside the EU, so this should not be at risk after the United Kingdom exists the EU in 2020. Whether EU income changes as a result of our exiting the EU won’t be obvious in this dataset until probably 2022 or even 2025 when existing EU students have completed their courses. However, any changes in research funding will most likely become apparent much sooner. In these figures, research income is not differentiated between EU and non-EU sources, so it is not possible to calculate the likely outcomes from the UK’s departure from the EU.

Education is an important and growing part of the United Kingdom’s expert drive, and I am sure that the new government will recognise this fact and want to ensure that as much as possible of the growth is directed to areas away from London towards parts of the United Kingdom that can benefit from this economic activity in their localities. Perhaps there should now be a Minister for Education Trade in the new government?

Money for education

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The DfE has published its annual retrospective look at the amount of money generated by education as an export industry. This implies either goods or services sold overseas or alternatively consumed and paid for here by non-residents. Now that the DfE includes both further and higher education the data can no doubt be more easily collated by one government department, although with the help of others along the way.

The latest set of data refers to 2016, although the technical note doesn’t seem to define what is covered. For fees, I assume it is the academic year 2016/17, but possibly for some other products and services, the calendar year 2016? The technical document can be found at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/773029/Education_Exports_2016_-_Technical_Document.pdf

This blog has commented upon the figures released for previous years and the trends seem largely the same; decline in language training income and from the further education sector, balanced by higher income form higher education fees still being reported and increases in equipment, publishing and awarding body sales.

Overall, HE accounts for two thirds of the income stream, so any slowdown in the world economy and post-Brexit departure or non-arrival of EU students will impact on the figures and hurt some universities in cash terms. There is also a sizeable research income attracted from overseas that may be impacted by Brexit, especially if some research teams move elsewhere.

Further education accounted for 6% of revenues in 2010, but by 2016 this was down to just two per cent. During the same period, English Language Training share of revenue fell from 14% to just eight per cent. High education increased its share during this period from 60% to 67%.

The total income from education exports increased between 2010 and 2016 from £15.88bn to £19.93bn.

With more UK schools opening campuses across the world, a proportion of their income will no doubt continue to find its way into future year’s figures once local spending has been accounted for. How far such growth can be set off against the loss of teachers from the labour market in England to help staff this export drive is an interesting debate that no doubt someone within government has had at some point. However, this transnational education activity has shown significant growth, especially in the schools sector, albeit from a relatively low base in 2010.

Some teachers returning from overseas may well bring back more cash than they had when they left to teach overseas, but such additional wealth for the country wouldn’t be captured in this data.

There is no doubt that education is a potential export growth area for the United Kingdom as a whole. New markets will be needed, especially post Brexit it there is a significant slowdown in revenues generated by higher education.

 

Are Education exports slowing?

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Last August I wrote a piece on this blog about UK Education’s contribution to the export drive under the title ‘Buy British Education’. This followed a research report from the DfE. https://johnohowson.wordpress.com/2017/08/04/buy-british-education/

Recently, the DfE has updated the figures to include those for 2015. https://www.gov.uk/government/statistics/uk-revenue-from-education-related-exports-and-tne-activity-2015 This remains a good news story for UKplc. Our higher education sector accounts for two thirds of the revenue stream in 2015, up from 60% in 2010. Further Education, presumably following the crackdown on colleges and visa infringements, has seen a two thirds drop in income to around £320 million. It had been looking in 2010 as if the FE sector would break the Billion pound barrier.

Happily, the independent school sector has increased income by 44% between 2010 and 2015, and brought in some £900 million in 2015.How they might be affected if further sanctions on are imposed on Russia is an interesting question. Despite a fall in income generated between 2010 and 2015, Language schools still brought in nearly £700 million more than independent schools.

As I predicted last summer, publishing is now being affected as the marketplace adaptation to new technologies gathers pace. Although income has increased by six per cent between 20-10 and 2015, that figure looks derisory compared with achievements elsewhere.  Qualification Awarding Bodies did exceptionally well, increasing revenue by 73% over the period between 2010 and 2015, and brought in £250 million that year.

Taken overall, total education exports and transnational educational activity that earned revenue for the UK saw a 22% growth in revenue between 2010 and 2015 to reach £19,330,000,000.

Of course, all the income flows aren’t in one direction and it would be interesting to assess how much net contribution education makes to UKplc after cash flows in the other direction are taken into account. During the period 2010-2015 that great British institution, the TES, was bought by an American Group and if were it making profits they would presumably be flowing overseas along with some of the company’s contribution to its debt pile.

TeachVac, the company where I am chairman, hope to start making a modest contribution to these export figures through www.teachvacglobal.com our recruitment site for international schools. As it is based in England, our income can be regarded as part of the export drive.

However, there are some worrying signs behinds the headline numbers. The DfE point out in the latest Bulletin that between 2014 and 2015 total education exports and TNE activity grew by 3.0%, 1.7 percentage points lower than the rate of growth seen between 2013 and 2014. This reflects the slightly lower growth rate in total education related exports which grew at 2.4% between 2014 and 2015, compared to 4.4% in the previous year.

We must now await the outcome of the UK’s departure from the EU to see whether or not it affects income, especially fee and research income received from overseas by our universities. Perhaps, if overseas students had been excluded from the immigration figures, some who voted leave might have felt differently about the referendum: or perhaps not.

Buy British education

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At the end of July the DfE published a research report into ‘the UK revenue from education related exports and transnational education activity 2010-2014’ https://www.gov.uk/government/publications/education-related-exports-and-transnational-education-activity The higher education sector is by far and away the largest contributor to revenue in this sector, increasing from 60% to 66% of the total income during this period.

Non-EU student income across the higher education sector increased by around 30% in current prices from £6.56 billion to £8.55 billion between 2010 and 2014. Income from research and other contracts rose by around 56% in current prices from £0.77 billion to £1.19 billion over the same period. Interestingly, income from both the further education sector and from English Language training fell during this period. The latter, it is said, because courses were shorter in length, thus providing lower fee income. The FE sector now accounts for just two per cent of overseas income. Some of the reduction may have as a result of the crackdown on private colleges and potential visa applications from those that after entry didn’t actually become students.

Independent schools witnessed a 28% growth in income from their UK based operations. They will also have benefitted from the return to the UK of any profits from their overseas campuses established in recent years. The transnational income for the schools sector increased by some 47%, based upon an estimate of the trend data. The local spending associated with this type of activity is excluded from the figures when calculating the transnational revenue figure.

Education publishing, the most mature of the product sectors selling education overseas, saw only an eight per cent growth during the period 2010 to 2014, whereas education related equipment sales increased in revenue terms by 20%, based on the estimate of trend data and education-related broadcasting by nearly a third at 31%. Publishing may find it hard to grown in the future, especially if students continue to switch from paper to on-line sources for information and learning materials. Books generally carry a much high profit margin than resources in new technologies in the same way that print advertising is more profitable than on-line for many publishers.

After BREXIT, the value of EU sales will be added to those generated in the rest of the world. This should pride a one-off change even if registrations from EU students and sales to schools and students in EU countries actually fall post 2019.

Education exporting is an area where both the Business Department and the DfE need to work closely together to encourage exports of educational goods and services and to support both education trade bodies and individual exporters. Fortunately, there is plenty of demand, as is shown on the government’s exporting web site.  However, the range of countries is quite narrow and excludes large sections of the world, especially in the Americas.

There are new potential sources of income such as those from on-line courses increasingly provided by both universities and private sector trainers. This could provide some companies with a lucrative new form of income that allows them to export without ever leaving the comfort of their home base.