Lords blame policy for drop in STEM foreign students
The science and technology committee report calls on the UK government to rethink its immigration policy, which it says is "contradictory".
And it warns that the decline is putting university courses of vital importance to the UK - the STEM subjects of science, technology, engineering and maths - under threat.
International students on STEM courses fell from 58,815 in 2010-11 to 52,905 in 2012-13, a drop of more than 10%. In particular, the number of Indian students on STEM courses fell by 38% in 2011-12 and a further 28% in 2012-13.
The decline is particularly acute among students on postgraduate taught courses in STEM subjects - the number of new students fell by 13% in 2010-11 and a further 3% the following year.
The Lords report, entitled International Science, Technology, Engineering and Mathematics (STEM) Students, says the government is simultaneously committed to reducing net migration while attracting increasing numbers of international students - 15% to 20% over the next five years.
"This contradiction could be resolved if the government removed students, who comprise a majority of non-EU immigrants, from the net migration figures," the report says.
In making this recommendation it is in line with six other Lords and Commons select committees, most recently the Lords select committee on 'soft power' and the UK's international influence.
The science and technology committee report adds that international students make a huge contribution to the academic, intellectual and cultural vibrancy of UK universities, also enriching the experience for domestic students.
"International students also contribute very significantly to university finances, often partly subsidising courses for domestic students. Some courses, particularly taught masters, are made viable by international student enrolments, and a fall in international student numbers poses a real threat.
"In terms of the labour market, UK Plc is missing out on highly skilled workers."
Immigration rules to blame
Evidence given to the Lords over the course of the inquiry "strongly suggested" that the government's immigration rules were a contributory factor in the fall in student numbers.
Complicated rules, a constantly shifting immigration policy, expensive visas and insufficient time to seek work after study all contribute to making the UK appear unwelcoming, the report says.
Lord John Krebs, chair of the committee, a leading zoologist and principal of Jesus College, Oxford, said: "When we really need to send the message that international STEM students will get a warm welcome in the UK, they're getting the cold shoulder and heading elsewhere.
"We've seen over the last few years how international student numbers have fallen dramatically, in particular from India. As a result we're missing out on the talent, the economic and cultural contribution that international students bring when they come here to study, and our competitors are reaping the rewards."
He added that the "overwhelming evidence" led the committee to conclude that changes to the immigration rules have played a direct part in putting overseas students off from choosing the UK.
"The rules are seen as too complex and subject to endless changes, the visa costs are not competitive, and the rules relating to work after study are so limiting that prospective students are heading to the US, Australia, Canada and elsewhere."
In particular, Lord Krebs said, the government should abandon new rules on working after study. "Allowing just four months for a student to find work after graduation is more or less tantamount to telling overseas students they'd be better off going to study elsewhere," he said.
The report concludes: "The government maintains that they emphatically welcome international students; unfortunately key elements of policy and perception are working against this admirable aim.
"The view within government that current policies are working well is disconnected from the concerns we frequently heard."
The government's response was in part that because the decline among some formerly strong sending countries had been partially offset by an increase from others - for example China and Hong Kong - the fall in the numbers of STEM students is not driven by immigration policy.
Government officials went on to blame "misrepresentation" of its policy by the media in sending countries.
The committee also expressed anxiety at the high cost of a UK student visa for university study (Tier 4), which is currently US$520 (GBP310).
It is exceeded only by the cost of an Australian visa (US$532) and is significantly greater than a US visa (US$360), or visas for other competitor countries such as Denmark (US$315), New Zealand (US$236), Sweden (US$161) and Canada (US$124).
The committee was told that some universities were adopting "extreme measures" to retain their "highly trusted sponsor" status - London Metropolitan University lost income worth up to US$33 million after it was stripped of this function in 2012.