International Student Levy Will Hurt Growth Agenda, Warns Russell Group
The proposed levy on international student income would see universities taxed for each overseas student they recruit (Alamy)
4 min read
The Head of the Russell Group universities has warned that the government policy of making it more expensive to recruit students from overseas will undermine its growth agenda.
The proposed levy on international student income, announced as part of the government’s Immigration White Paper in May, would see universities taxed for each overseas student they enrol.
Under the changes, which are part of a wider Labour effort to reduce net migration, a six per cent levy would be placed on tuition fees paid by international students, with the money collected to fund “the higher education and skills system”. The Department for Education is currently modelling what such a levy would look like, with more details expected at the Autumn Budget.
The move, which would come on top of new restrictions on student visas, has prompted concern from Labour MPs representing student-heavy constituencies.
Dr Tim Bradshaw, who heads the Russell Group, said that if ministers want the higher education sector to contribute to economic growth, then "taking the money off the universities is not the way to do it".
He told PoliticsHome: “If the government wants the universities to genuinely contribute to economic growth, to widening access participation, to civic improvement and engagement, to national priorities…like nuclear skills and things like that. Then taking the money off the universities is not the way to do it.”
If a levy is implemented, then universities face having to decide whether to absorb the costs or charge international students a higher rate to offset the impact.
There are concerns among higher education figures that the money raised by the government could be prioritised for skills, meaning universities would miss out. It would also come at a time when many universities are already making cuts to staff and courses in response to financial pressures.
The Russell Group recently estimated that the proposed levy would cost its 20 English universities more than £315m a year. According to Bradshaw, that figure is now likely to be closer to £370m, which he described as a "huge amount of money”.
In an interview with PoliticsHome, he said that this figure would be significantly greater than the £250m that universities invest in widening access, which Education Secretary Bridget Phillipson has made a key priority for the higher education sector.
“What we're talking about is a tax on universities which would cost £100m more than we're putting into widening access and participation...
“We're already putting a vast amount of money into widening access and participation activities to make sure that we can give students opportunities, work with schools and bring up cold spots in cities.”
He added: “That's exactly the sort of thing that we're spending money on to try and improve the lives of people around the country, and yet the government's now thinking about taking away more than that amount of money off our universities."
The group chief said that the levy could result in universities spending less money on improving access and social mobility, which would be "really tough".
“All businesses had to face a national insurance increase. But then this is another tax on top of that. It just feels like there's a mixed lack of join-up in what the government wants, what it's willing to fund and take money away from universities for.”
Bradshaw's concerns are shared by Malcolm Press, the new president of Universities UK, who told PoliticsHome he's not convinced what benefits a levy would bring.
"There's no mechanism for collecting it. There's no mechanism for deploying it, and we need to engage in serious dialogue with the government to understand what the purpose is and what value it could bring.
"Because at the moment, I can see how it could cause damage to the sector, but I'm not clear on how it could deliver benefits," he said.
A government spokesperson told PoliticsHome: “The proposal that the government will explore the introduction of a levy on HE provider income from international students, would see the funds reinvested in our higher education and skills system, ensuring that revenue is more widely shared and their contributions felt throughout our communities.
“To put universities on a secure financial footing through our Plan for Change, we have increased tuition fees for the academic year 2025-26 in line with forecast inflation and refocused the Office for Students to monitor the financial health of the sector.
“No decisions have been made on the size of the levy, or its implementation and we will set out more details in due course.”
