An influential group of MPs warned yesterday that Con-Dem attempts to look tough on immigration are simply denying foreign students access to British universities.
The business, innovation and skills committee called on the government to take students coming into the country out the net migration count to ensure they aren't hit by the Con-Dem's pledge to more than halve immigration over just four years.
Students account for roughly two-thirds of net migration but the committee said new Immigration Minister Mark Harper was "under no obligation" to treat students as permanent migrants.
"While we understand that the UN definition of migration includes overseas students the government is under no obligation to use that definition for the development of domestic policy," the committee said.
The committee said that removing overseas students from the government's migration targets "would allow universities to compete on a level playing field with their international competitors."
Around 250,000 people moved to Britain every year but Mr Harper's predecessor Damian Green had vowed to see that drop to "tens of thousands" by 2015.
The committee's report comes just days after the London Metropolitan University debacle which saw the institution stripped of the right to accept foreign students.
That news was announced on the same day as the latest immigration figures.
Committee chairman and Labour MP Adrian Bailey warned the coalition's plan to cut immigration was in "clear conflict" with the education sector's dependence on foreign fee-paying students, which has been fuelled further by the coalition's £449 million cut to university funding.
"Moreover, the way in which the policy has been implemented and measured is clearly having a detrimental impact on the UK's ability to expand our share of the overseas student market," Mr Bailey said.
The University and College Union's general secretary Sally Hunt said she was "finally" relieved to hear "sensible and measured voices."
"It is particularly encouraging that the committee tasked with overseeing higher education recognises the widespread benefits overseas students bring to the UK and the huge damage that is being done by the alarming message that they are not welcome here," she said.
The National Union of Students' president Liam Burns said the evidence in favour of a new policy was "now overwhelming."
It was high time the government stopped and listened, he said - "before further damage is done to both the UK's global standing and the prospect of economic recovery."
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