Under plans unveiled in today’s long-awaited immigration white paper, Keir Starmer’s government said money from the levy – which is being illustratively modelled at around 6% of the income institutions make from international student fees – would be reabsorbed back into the higher education and skills system.
While these proposals are not yet set in stone, with more detail to be released in the Autumn budget later this year, the move has drawn ire from international education stakeholders, who warn that it could further squeeze an already stretched sector to breaking point.
Research from the Office for Students (OfS) released last week revealed that a whopping 43% of English institutions have forecast a deficit for 2024/25, making the mooted levy the latest in a series of financial blows for higher education providers.
Chief executive of the Russell Group Tim Bradshaw said the proposals would be a “serious concern” for institutions already forced to make difficult financial decisions.
“It seems the levy is only intended for England, so this sets up a further divergence in HE rules and funding levels across the UK that will need careful analysis,” he warned.
Meanwhile, the Higher Education Policy Institute (HEPI) director Nick Hillman acknowledged that any levy on international student income would be “deeply controversial”. “A levy will be seen by many as a tax on a very successful UK export sector,” he said.
A levy will be seen by many as a tax on a very successful UK export sector
Nick Hillman, HEPI
Chief executive of Universities UK Vivienne Stern pointed out that the current environment for higher education institutions is “very challenging” and urged the government to “think carefully” about the impact raising a levy would have on the sector, as well as the UK’s attractiveness as a study destination.
“Universities know they need to be more efficient and are driving the reform agenda. We need government to get serious about working with the sector to address the financial sustainability of universities,” she said, calling for increased per-student funding and a stabilisation of international demand for programs in the UK.
The newly appointed director of City St George’s Finsbury Institute, Diana Beech, noted that raising a levy on international student fee income could be positive if it helps to “pump more money back into the system”.
But with the sector under increasing financial strain, she said any such move should “strengthen our higher education offer in practice, not further undermine it by destabilising university finances when they can least afford it”.
Graduate Route
In the white paper, the government also pledged to shorten the Graduate Route to 18 months – down from two years – in a move stakeholders are worried could dampen international interest in UK institutions.
While leaders are grateful that the Graduate Route is here to stay, especially as competing study destinations introduce de facto caps on international student numbers and tighten restrictions, they have called the decision a “blow” to the sector.
Hillman conceded that reducing the visa route was “admittedly not as bad” as getting rid of it altogether. But he warned that employers making use of the Graduate Route wanted to see an increase to three or four years as opposed to its planned reduction “as new employees take months to become productive members of the workforce”.
Meanwhile, Beech said that – although the reduction was a “blow” – the Graduate Route could have fared worse during the government’s review.
“The UK still has a positive message to sell to the world – namely that international students are valued and welcome and will not be subject to provider-level caps or country-specific quotas as is the case in other competitor destinations,” she said.
Other stakeholders have expressed concerns that the reduced Graduate Route could make the UK a less attractive study destination for prospective international students.
In particular, the decision could affect Indian students’ choice to study in the UK, stressed National Indian Students and Alumni Union UK (NISAU UK).
“For 70% of Indian students, a strong post-study work offer is the single most important factor in deciding where to study abroad,” the student representative group said. “The ability to gain significant international work experience is critical.”
But it said that any negative impact could be offset with “proactive, student-focussed communications”.
Bradshaw said that the move would make the UK “less competitive internationally” – although he pointed out that the new rules will not apply to PhD students, who can stay in the country for up to three years after they graduate.
“It’s now crucial that we continue to make international students feel welcome and valued, and provide a stable policy environment to give the sector confidence in recruiting globally,” he said.
It’s now crucial that we continue to make international students feel welcome and valued, and provide a stable policy environment to give the sector confidence in recruiting globally
Tim Bradshaw, Russell Group
And London Higher, which represents higher education institutions in the UK capital, cautioned that reducing the Graduate Route by six months would “put the UK at a competitive disadvantage”.
“The Graduate Route visa is a significant factor for prospective international students when choosing their destination for study,” it said. “This shorter timeframe makes hiring international graduates less attractive to employers and sends a damaging signal to prospective students worldwide.”
Despite speculation last week that the white paper would outline plans to tie the Graduate Route to professional roles only, the document does not specify that staying in the country after graduation will depend on securing specific jobs.
However, it does say that the government is “setting out reforms… [that] strengthen the requirements to work and contribute for those graduates who stay on after their courses have been completed”. However, exactly what these reforms will be remains to be seen.
Elsewhere, new plans to strengthen English language requirements – including for students’ or skilled workers’ adult dependants – has caught the sector’s attention.
Short-term study visas, too – mainly used for people coming to the UK for English language programs for a period of up to 11 months – were highlighted in the white paper as not having to report on students’ compliance.
The government is concerned that students wanting to come to the UK via this route have a relatively higher visa refusal rate and pledged to review the English language testing sector’s accreditation bodies.
English UK chief executive Jodie Gray told The PIE News that the short-term visa route had “long been a cornerstone of our industry”.
“We appreciate the value shown to the ELT sector in the immigration white paper but note concerns over the high refusal rate under this route in 2024,” she added.
“We look forward to working with the Home Office, with our members and with our accreditation partner, the British Council, to help ensure that only genuine English language students apply and study under this route.”
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