Government plans could worsen financial challenges at universities, experts warn

The Government’s plans for immigration could deter international students from coming to the UK and exacerbate the financial challenges faced by British universities, sector leaders have warned.

Under the White Paper proposals, graduate visas will be reduced to 18 months, and a new levy on income that universities generate from international students could be introduced.

It also proposes strengthening the requirements that sponsoring institutions must meet in order to recruit international students.

The White Paper said there have been problems involving “misuse and exploitation of student visas”, and “too many graduates” who stay in the UK after their studies are not moving into graduate level jobs.

University leaders have been warning of significant financial concerns caused by a drop in the number of international students – who can be charged higher tuition fees – following restrictions introduced by the former Conservative government, as well as frozen tuition fees paid by domestic students.

Last week, an analysis by the Office for Students (OfS), the higher education regulator, projected that more than two in five (43%) universities and colleges in England were expected to be in deficit this year.

Vivienne Stern, chief executive of Universities UK (UUK), said: “Following years of frozen fees, inadequate research funding and a rapid downturn in international students, the current operating environment is very challenging.

“We would urge Government to think carefully about the impact that a levy on international student fees will have on universities and the attractiveness of the UK as a study destination.”

The White Paper noted that overseas students at UK universities generated around £20.65 billion in exports through living expenditure and tuition fees in 2021, and it said “it is right that these benefits are shared”.

The Government will explore introducing a levy on higher education provider income from international students to be reinvested into the higher education and skills system, it added.

Under the proposals, the graduate visa route, which allows overseas students to live and work in the UK for up to two years after their studies, will remain in place but it will be reduced to 18 months.

Jo Grady, general secretary of the University and College Union (UCU), said: “This anti-growth white paper is straight out of the Reform playbook.

“With higher education already under severe financial pressure, any further restrictions which deter international students from coming to the UK could lead to universities going under.”

She added: “The Home Office needs to stop imposing arbitrary restrictions that prevent international students and staff from coming to the UK, driving economic growth and enriching local communities.

“Its failure to do so will harm universities, the country and our global standing.”

Vanessa Wilson, chief executive of University Alliance, said: “The proposals to introduce a levy on international student fee income are underbaked.

“It is not clear how this levy would be used, or how it would be protected for skills, and there are serious risks inherent in deliberately cutting into the main source of income for universities – some of the UK’s largest employers – when there are very few other levers they can pull to remain financially sustainable.”

Current proposals are understood to be looking at a 6% levy on universities’ income on international students.

Nick Hillman, director of the Higher Education Policy Institute (Hepi) think tank, called the proposed levy on international students “deeply controversial”.

He said: “A levy will be seen by many as a tax on a very successful UK export sector.

“There will also be concerns that some of the money raised will be siphoned off by the Treasury – just as has happened with the Apprenticeship Levy.”

Mr Hillman added: “Some of the other ideas on students and graduates included in the white paper are also problematic.

“Reducing the Graduate Route visa from two years to 18 months is, admittedly, not as bad as abolishing it.

“But employers who recruit international students using the Graduate Route wanted to see an increase to three or four years, rather than a reduction, as new employees take months to become productive members of the workforce.”

Rosalind Gill, head of policy at the National Centre for Universities and Business (NCUB), said: “To drive long-term economic growth, the UK must foster a robust, diverse, and globally connected university sector, alongside creating an environment for innovative companies to flourish.

“The Immigration Bill poses major risks to this vision.

“Its further restrictions on Graduate Visas, and a new international student levy, will jeopardise the sustainability and global connectivity of UK universities.”

Rain Newton-Smith, chief executive of the Confederation of British Industry (CBI), said: “Policy changes that risk making the UK a less attractive place to study or increase costs confronting universities will have knock-on impacts for the competitive strength of UK higher education as a growth export, and young people’s ability to access degree-level education at home.

“These trade-offs need to be considered if the Government is serious about developing domestic talent and driving growth.”