Demand for degrees outstrips supply

Nearly 20 years after the British government took the controversial step of entering the fee-paying global higher education market, it seems the gamble has paid off.

In 1980, there were 100,000 international students in Britain. There are now twice that number despite an initial six-year recruitment crisis after full-cost fees were introduced. The international higher education business is estimated to be worth Pounds 1.5 billion to the UK, with the value divided between fee income and local economic activity.

Higher education leaders are aware, however, that there is no room for complacency. Australia, the US, France and other countries are gearing up to take a bigger slice of the market. Two years ago, the British Council told the government it needed a more coherent policy for overseas higher education.

The report is expected to argue that funding and marketing efforts must be maintained at their present level if Britain is to hold its own in old and new higher education markets. Global economic turmoil took its toll on recruitment of overseas students to Britain last year, a British Council survey of 60 of the largest institutions found.

There was a 12 per cent drop in recruitment across undergraduate and postgraduate levels, with the highest reductions from Malaysia (44 per cent), Korea (23 per cent), Thailand (29 per cent), Singapore (19 per cent) and Indonesia (19 per cent). Figures based on Higher Education Statistics Agency data show that in 1997-98 Malaysia was still the biggest source of overseas students, with 16,791 in Britain that year. There were 9,698 students from the US - 20 per cent more than three years before.

Hong Kong accounted for 7,208 students, but numbers had already dropped over the previous three years by 33 per cent. Numbers from Singapore had dropped by 6 per cent to 5,971, but grown by 65 per cent from Japan to 5,326. India was was an emerging market, with 72 per cent growth to 2,934 and recruitment from China was up 21 per cent to 2,858. Mexico was also up 16 per cent to 982.