Business leaders have called on Rachel Reeves to scrap a proposed levy on university fees for international students, warning it could have major consequences for growth and global competitiveness.
In their open letter shared with The Independent, business groups slammed what they call “a university tax” and warned that the planned 6 per cent rise on fees will have “unintended consequences” for the UK.
The note piles further pressure on the chancellor ahead of the Budget and comes after ministers brought forward a raft of measures earlier this year designed to tighten up rules around student visas.
The letter, signed by 15 groups including UK Music, Business LDN and Tech UK, claims that international students contribute tens of billions to the economy every year, “supporting local businesses and fuelling regional regeneration”.
“A reduction in international student numbers could also indirectly affect domestic student opportunities as income from international fees helps subsidise the cost of home students,” the letter said.
They added: “We therefore urge the government to pause the implementation of the levy, undertake a full risk assessment and to consult fully with the higher education and business sectors on a sustainable funding model that protects opportunities for disadvantaged students without undermining one of the UK’s most successful export markets.”
The government’s immigration white paper, published in May, said ministers would explore introducing a levy on higher education income from international students, and ministers are looking at 6 per cent.
After the white paper was published – which also said the government would reduce graduate visas to 18 months – sector leaders warned the plans could deter international students from coming to the UK and exacerbate financial challenges for universities.
Henri Murison, chief executive of the Northern Powerhouse Partnership, one of the signatories of the letter, said that international students are “central” to the economies of cities like Sheffield, Manchester, Leeds and Newcastle.
“They support local businesses, create jobs, and help sustain our universities, which are key to city regions productivity growth,” he said.
“The proposed levy risks pulling the rug out from under one of the few areas where the northern growth corridor currently outperforms its competitors globally.”
John Dickie, chief executive of Business LDN which represents firms including Deloitte and Uber, said that scrapping the levy would “support growth and the UK’s international competitiveness”.
“Overseas students make a significant contribution to the economy so we should be rolling out the welcome mat for the most talented people from across the globe rather than pushing them away,” he said.
Research from policy consultancy PublicFirst released in September estimated nine out of 12 regions in the UK would face a wider loss of more than £100 million in the first year of a levy because of the likely loss in international students.
The impact would be largest in London, at £480 million, followed by Scotland (£197 million) and then the South East (£163 million).
Of the 50 most impacted constituencies, 37 are held by Labour, researchers said.
A government spokesperson said: “The International Student Levy will fund the reintroduction of targeted maintenance grants to break down the barriers to opportunity for disadvantaged students.
“We have also taken tough decisions to put universities on firmer financial footing. We are increasing tuition fees annually in line with inflation and have refocused the Office for Students to monitor the financial health of the sector.
“We are taking action to open up access to universities, restoring them as engines of aspiration, opportunity and growth. We will set out further details in the Autumn Budget.”
