Business education, one of the UK’s high-profile exports, is facing extraordinary pressures as the failing economy and changes in work visa regulations have caused numbers to fall on the country’s top MBA programmes.

On average, enrolment in 2011 on the 16 full-time UK MBA programmes participating in the Financial Times 2012 rankings, to be published next Monday, were down by about 10 per cent on the previous year, with a steeper decline of roughly 15 per cent in domestic students.

The longer-term picture could be even more dramatic, says John Colley, director of MBA programmes at Nottingham University Business School. He estimates that over the past three years the number of qualified applicants to accredited UK business schools – the top end of the market – has fallen by about 35 per cent.

That assertion is borne out by the Association of MBAs, the accreditation body, which reports that between 2008 and 2010, the last year for which figures were compiled, the number of students enrolled on the 43 AMBA-
accredited schools in the UK dropped from 9,429 to 8,082.

Even the top UK schools have been affected. At the Judge school at the University of Cambridge, ranked number two in the UK in the FT 2011 MBA rankings, application numbers started to fall from January 2011, says Conrad Chua, head of MBA recruitment and admissions. He is bracing himself for further declines this year.

At London Business School, ranked number one by the FT, applications from the US and India are expected to fall this year, says Stephen Chadwick, full-time MBA programme director.

Recent fears expressed vociferously by schools that the withdrawal of the automatic right for MBA graduates to work in the UK for two years after graduation would damage the business, appear justified.

“Overseas students like the option of working here for a spell for the experience before they go back,” says Mr Colley. “The new visa restrictions are killing that.”

Many of the UK’s established business schools believe the UK government is throwing the baby out with the bathwater with the new regime.

David Simmons, executive director of the Cranfield MBA, says: “People do not come here to become economic migrants but as part of their career planning.”

Though many MBA graduates can get suitable jobs in the UK after graduation, this is not the perception in the market, says Lindsay Duke, postgraduate recruitment manager at Durham Business School. “I think the message out there is that the UK is closed to students.”

The economic implications could be substantial. Research from the UK’s Association of Business Schools has found that schools generate £2bn in direct income for the UK economy, though no figures are available specifically for full-time MBA programmes.

The problem has been compounded by the lack of funding. Last January NatWest dropped its postgraduate loan scheme. Then HSBC cut the number of business schools it supported to just two: London Business School and Judge.

Many of the UK’s strongest schools are now looking at more innovative forms of loans, such as community education bonds, in which alumni invest in their successors by putting money into the bond. London-based Prodigy Finance, set up by Insead alumni, has pioneered this kind of funding and signed its first public deal in the UK in December, with the University of Oxford’s Saïd school.

Other UK schools are investigating the scheme, says Cameron Stevens, chief executive. “We’re probably at the lowest point for students getting funding in quite a while. That must be related to applications.”

There is growing concern, however, that the fall in numbers may be more than a blip as the focus for MBAs shifts to faster-growing economies.

“While we [the US and UK] were used to having the business education market cornered, we don't any more,” says Brigitte Nicoulaud, director of MBA programmes at Aston Business School in Birmingham. “My view is that we are looking at the EMBA as the flagship programme [in Europe] . . . and that the full-time MBA will drop considerably.”

Mr Colley agrees: “I think we are in a more competitive market. I think the model is changing.” And he fears not all schools will survive. “I think there will be casualties eventually.”

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