Tag: levy

  • Data: who’ll be worst affected by England’s international fee levy?

    Data: who’ll be worst affected by England’s international fee levy?

    Long-awaited details of the mooted levy on international students at English universities – due to take effect in 2028 – were released with Rachel Reeves’ Budget earlier this week to a largely negative reaction from international education stakeholders.

    Instead of the expected 6% tax on international student income suggested in the immigration white paper, the Treasury is instead consulting on a £925-per-international-student flat fee.

    However, under the proposals, each provider will receive an allowance covering their first 220 international students each year – meaning that many small or specialist institutions will be spared the tax.

    But larger institutions with higher numbers of international students will bear the brunt of the levy.

    HESA data from the 2023/24 academic year – the most recently available figures – gives an indication of which providers could be worst hit by the levy, although enrolment numbers may have changed since then and could shift dramatically before the policy finally comes into effect.

    London is the region set to be most impacted by the levy, with England’s capital welcoming the most international students. Meanwhile, the North East had the fewest.

    Here’s our round up of the top five institutions that risk losing out the most.

    University College London (UCL)

    Of the 614,000 international students at English institutions in the 2023/24 academic year, UCL was home to the largest amount, at 27,695.

    Under the proposals, if UCL had the same number of international students under the levy, it would be liable to pay over £25 million.

    The University of Manchester

    Coming in second is the University of Manchester, which had 19,475 international students in 2023/24. This would mean it would have to pay almost £18m under the levy proposals.

    The University of Hertfordshire

    In third place is the University of Hertfordshire, with 19,235 international students in 2023/24 – a levy amount of just over £17.5m.

    Kings College London

    Up next is Kings College London, with 15,850 international students, meaning it would be taxed a little under £14.5m

    The University of Leeds

    Another large metropolitan university set to be hit hard by the levy is the University of Leeds, with 15,605 international students. If enrolments numbers stay the same into 2028, it could face costs of over £14.2m.

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  • England’s international fee levy under fire after details revealed

    England’s international fee levy under fire after details revealed

    Critics of the policy – now subject to consultation – say the levy will only heap more pressure onto an already creaking higher education network. At present, only England’s universities will be subject to the charge, as the Office for Students, which will manage the charge, only regulates English institutions.

    Official modelling predicts that the change, set to come in from August 2025, will cost universities an annual £330 million. However, under the proposals, each provider will receive an annual allowance to cover their first 220 international students – a move that’s made smaller and specialist institutions breathe a sigh of relief.

    But for larger universities with high numbers of international students, the picture isn’t so rosy.

    Gary Davies, pro vice-chancellor of London Metropolitan University, told The PIE News the levy would have a detrimental effect on his institution despite being brought in as a flat fee.

    “For us the levy means a cut in funding for the very students the levy proposes to support. It will impact what we can offer in relation to student hardship, careers advice, scholarships for underrepresented students,” he said.

    Diana Beech, director of the Finsbury Institute at City St George’s, said the details of the policy had been “buried in the Treasury’s Red Book” – largely dodging coverage by the mainstream media.

    “This begs the question: why undermine one of the UK’s strongest export sectors without even gaining political credit for it – whether that’s by framing the levy as a tough stance on immigration or as a much-needed boost for disadvantaged students,” she asked.

    “By going about this policy in such a hush-hush way, the levy will simply tax legitimate, highly skilled migration under the radar and heap further pressure on universities already in financial distress. Worse still, fixing it as a flat £925 fee per student risks hitting those institutions least able to absorb the cost, given the lack of price elasticity outside the elite end of the sector.”

    Why undermine one of the UK’s strongest export sectors without even gaining political credit for it?
    Diana Beech, City St George’s

    University Alliance CEO Vanessa Wilson warned the levy risked “denting [the] success story” of UK international education – even if the cash raised would go towards a goo cause like domestic maintenance grants.”

    Wilson said the move would hit universities hard, and pressed for a full assessment of the levy’s effects on higher education institutions before its proposed implementation in 2028.

    “Alongside this, the government must explore further ways to soften the blow for professional and technical universities, such as cutting costly regulation and reviewing their participation in the Teachers’ Pension Scheme, which some universities are legally obliged to offer at increasingly expensive contribution rates,” she added. 

    Malcolm Press, president of Universities UK, pointed out that the UK’s international fees are already high. As a result of the proposed levy, he predicted, English universities would either have to reduce cross-subsidies that support teaching and research, or raise international fees further – which could drive down international student numbers and therefore force institutions to reduce domestic places.

    The irony of the levy – which will be used to fund maintenance grants for disadvantaged British students – actually reducing places for home students has been raised before. An analysis by the think tank Public First predicted the levy could shrink domestic places by 135,000.

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  • Making grants and the levy work

    Making grants and the levy work

    Opinions vary about the desirability of the levy on international student fees, and the value of the promised return of targeted maintenance grants.

    Rightly so. The announcement and the descriptions of policies within, were political in nature. They were made at a party conference rather than a ministerial statement or consultation document – they were designed to please some, challenge others, and above all to start a debate.

    And as such, all these opinions are valuable. The government will listen to representations, seek commentary and challenge, and eventually start to spell out some more of the detail and implementation.

    Implementation couldn’t care less about opinions or political expediency. Implementation is a matter of whether something can actually be done, and how.

    My number one priority

    Let’s take the simplistic approach, and call the income the government gets from the levy something around £620m (more on that later).

    In the grand scheme of things that’s not a huge amount of money – we paid out more than £8bn on maintenance loans in 2023-24. However, the much-maligned magic money twig (the OfS’ funding for student access and success) is currently just £273m, and it is ostensibly doing part of the same job as the proposed grants – helping non-traditional students access and succeed in higher education. Of course, it mostly goes on hardship grants these days, which is neither what it is designed for nor any meaningful remedy for a student maintenance system that is not fit for purpose. But that makes the parallel even clearer.

    Any extra money going to students, in this economy and with this level of unwillingness to do anything truly radical about student hardship, is welcome. But the kicker is that it is not enough to be from a deprived background to get the new money – you also need to be studying the right subjects. As we’ve already noted, these are the same “priority subjects” as have been set within the Lifelong Learning Entitlement: vaguely STEMish, but with no medicine but added architecture and economics.

    You survived all you been through

    At the end of every cycle UCAS published data on acceptances using a fine-grained (CAH level 3) subject lens, separated by level of deprivation – which in England means the IMD quintile. From this we learn that in the most recent data (2024 cycle) just under 42 per cent of all England domiciled accepted applicants from IMD quintile 1 (the most deprived group) were accepted onto a “priority subject”.

    [Full screen]

    This is a substantially higher proportion than in any other IMD quintile – it is also a substantially higher number: 39,870. We don’t get quite the same level of subject fidelity for offers and applications, but it appears that quintile 1 applicants are also much more likely to apply to priority subjects than any other group, and slightly more likely to receive an offer.

    In other words, as far as we can tell with the available data, there is not really a problem recruiting disadvantaged young people onto courses in subjects that the government is currently keen on.

    It is possible ministers may be thinking that adding the grants into the mix would drive these already encouraging numbers up even higher (and away from mere dilettante whims like, er, studying medicine, law, or biology). This would appear to ignore a rather expensive and lengthy experiment that has demonstrated that financial concerns (in the form, back then, of the sticker price) do not actually affect applicant behavior all that much, and when applicant behaviour is already trending in the way you might hope there’s maybe not a lot needs to be done.

    But if you assume that the entire annual levy covers a single year of grants for everyone in IMD quintile 1 in a priority subject – and let’s use the exact numbers here – we get 39,870 students sharing £620.52m: £15,560 each.

    That is baking in a bunch of assumptions around the way the levy is implemented, the way grant allocations are determined (is IMD, an area based measure, really the best way to allocate individual grants?), and even whether the entire levy is to be spent directly on grants and nothing else. But if these rather optimistic assumptions are right, we’re slightly above the current maximum loan (£13,762), and beginning to approach the government’s National Living Wage for those aged 18 to 20 (currently just under £18k). It’s not quite enough to live as a student for a year without working at all, but it would mean someone without any other means of support might not have to “work every hour god sends.”

    I’ll let you be my levy

    Let’s say you are an international student looking to study an integrated (4-5 year) Masters’ course in biomedical engineering at the University of Leicester. You’d be charged £25,100 a year (plus £6,275 if you do a year overseas, or £3,765 if you do a year in industry). As you are resident outside of the UK, you’d pay a deposit of £3,000 up front to secure your place. These figures will vary vastly depending on your choice of course and provider, but that gives you an idea of a ballpark figure.

    If you secured your place via an agent, you may have paid a fee up front to them. Your chosen university would also pay a fee to the agent for each successful application – these vary hugely, but let’s say it is 20 per cent of your first year of fees. In some cases, your university would also pay a direct fee to the agent, over and above their percentage of fee income. Combined, these can get pretty intense – far into the millions for providers that use agents, with some pushing £30m

    If you don’t quite meet some of the academic or English language requirements for your course, you may be accepted onto an international foundation year – often offered by another provider, either on behalf of your university or as a stand alone course. There will be fees for this too.

    Of course, before you are accepted onto your course, you’ll need a Tier 4 Student Visa. For all but a handful of countries, you’ll need evidence (the example given by the Foreign Office is a bank statement) that you currently have enough money to cover your fees for your first year plus nine months of living costs. Your visa will cost £524, plus you need to pay a healthcare surcharge (each year) of £776 each year.

    Let’s imagine for a moment that you never made a name for yourself

    If you are looking to design a levy, the first decision that you make will be what constitutes international fee income. Should it be the sticker price – as promoted to students? Should it, for example, include the fees an institution pays to an international agent? Should it include fees that the student pays to another institution for a co-branded international foundation year? Should you factor in that students are already paying a levy of sorts to cover the cost of issuing a visa or of providing access to the NHS? Should it include accommodation fees (or additional course fees) when these are paid directly to the provider?

    Or should a provider pay a proportion of everything it declares as (and auditors agree that is) international student fee income? At what point – when the fee is paid, when the course starts, when it is declared? And is there not a case to look at a levy on agents fees – there is big money to be made by agents, and unlike with providers no counter arguments about the student experience?

    The modelling I’ve done so far is deliberately simplistic – 6 per cent (or whatever is decided on) of declared fee income in the most recent HESA Finance Data. That’s a valid answer, but it is limited – it is not the same effect as you would get if a university had to pay 6 per cent of every international student’s fee at one of the points above. The Home Office modelling noted that in some cases fees themselves may rise to cover the levy, which may have a knock on effect on recruitment – and that in other cases providers themselves would swallow the cost.

    If you think about it like that – and also bear in mind the Public First angle on the types of students more likely to be dissuaded by higher fees – it is difficult not to see the regressive nature of the levy: well-off providers, who recruit well-heeled middle class students from countries where salaries are high, will pay more but will be able to pass the costs on to students. Providers newer to international recruitment, at the price sensitive end of the market, will lose out either way, and will have to work out whether the recruitment drop of a 6 per cent fee hike is worth more than 6 per cent of their current income.

    Such a funny thing for me to try to explain

    What if we don’t take the accountant’s way out? What if we calculate a levy based on what individual students actually pay?

    As noted above we don’t know – either generally or individually – what international students pay as fees. We also don’t really know how many students are currently paying them – HESA student data turns up after a quite considerable lag, and not all undergraduates (and no postgraduates!) show up in UCAS data.

    The closest we get to international student numbers, at all levels, in-year has historically been OfS’ HESES collection (which it uses to allocate OfS grant funding). I say historically because, from 2025-26 the information on domicile (previously used “for planning purposes”) will no longer be collected.

    If you want a levy based on what students actually pay, you need a new data collection covering the students involved and how much they have paid that year (perhaps separated out into qualifying and non-qualifying payments – with all of the early iteration problems that such things bring. Data Futures may eventually get there, but not for a good few years yet.

    Designing a new data collection is not for the faint of heart – we scrapped an entire section of the Higher Education (Freedom of Speech) Act (the bit dealing with income from overseas) primarily because it is a million times easier to torturously audit other data than to collect something new. It would be expensive, both centrally and for individual providers – and it would be commercially sensitive (not all international students pay the same fee for the same course at the same university).

    Know we’re jumping the gun

    At every point in this article, I’ve tried to get across just how broad brush the current details of this policy are. As my colleague Michael notes elsewhere, there is not even clarity that these two halves of an announcement are a part of the same policy, or that it is possible to irrevocably link an income stream with an outgoing like this in the public accounts.

    It is a political announcement, and as such leaping straight to implementation slightly misses the point – like with the “scrapping” of the “fifty per cent participation target” it might well be that how it lands is more important than how it works.

    But as I’ve also tried to show, implementation has no time for political expediency. Real decisions need to be taken, and the current configuration of the sector, of the application cycle, and of the various data collections need to be taken into account. And there’s a need to consider whether the behavioural changes you are trying to make would undermine the funding flows that you are intending will do so – the more parts to a policy the more unintended consequences there could be.

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  • Weekend Reading: How will universities respond to the 6 per cent international student levy?  

    Weekend Reading: How will universities respond to the 6 per cent international student levy?  

    Author:
    Vincenzo Raimo

    Published:

    This guest blog was kindly authored by Vincenzo Raimo, an independent international higher education consultant 

    The UK government’s proposed 6 per cent levy on international tuition fees has added yet another layer of complexity to the already fragile international student recruitment landscape. The levy is intended to fund the introduction of targeted maintenance grants for home students, but for universities it represents an additional cost that could reshape recruitment strategies and, in some cases, make international activity unviable. 

    Higher education providers will not all respond in the same way. Their choices will be shaped by their position in the market, their pricing power, and their cost of acquisition (CoA) – the real cost of recruiting through to enrolment of each international student. 

    In a previous blog I set out five institutional archetypes in international student recruitment: Prestige Players, Volume Hunters, Strategists, Opportunists, and Outsourcers. These archetypes can help us think through the likely responses to the levy, and where the risks and opportunities lie. 

    Levy Responses: From Resilience to Retreat 

    • Pass-throughs (High Brand, Low CoA): These are the strong Prestige Player institutions with the brand power to raise fees by 6 per cent (or more) without losing applicants. For them, the levy will likely be passed straight on to students. In fact, some may look back and wonder why they had not already increased fees earlier. The impact on recruitment will be minimal. 
    • Squeezed Prestige (High Brand, High CoA): Some universities occupy a less comfortable position. They may have strong brands, but their recruitment costs are high often due to heavy scholarship spending and dependence on expensive marketing and recruitment strategies. They can pass on some of the levy, but margins will erode. Expect this group to look carefully at their agent portfolios, renegotiate commission deals, and cut back on scholarships. Opportunists often sit here, swinging between good years and bad. 
    • Absorbers (Low Brand, Low CoA): A number of institutions will choose to absorb the levy, keeping international fees flat to remain competitive. Margins will tighten, but recruitment volumes are likely to remain stable. These are often Strategists or Outsourcers, who have already kept their CoA under control through efficiency or partnerships. They will see absorbing the levy as a necessary cost of staying in the game. 
    • Exits (Low Brand, High CoA): For some, the levy may be the final straw. Institutions already dependent on discounting and agent commissions who charge low international fees to chase volume, may no longer see international recruitment as viable. Volume Hunters are the most exposed here. Their models are built on fragile margins, and the levy risks pushing them into unsustainable territory. For some, exit will not mean giving up on international students altogether. But it may mean dramatically scaling back, consolidating markets, and retreating from high-risk geographies. 

    Alternative Paths 

    Alongside these responses, two further groups are worth highlighting. 

    • Innovators: Some universities will take the levy as a trigger to rethink their model entirely. Expect more to explore transnational education, offshore hubs, or pathway partnerships as a way of diversifying income and reducing exposure to UK-based fee inflation. Innovation may prove the most sustainable long-term response, if vice-chancellors and governing bodies have the stomach for it. 
    • Niche/Selective Recruiters: For specialist institutions – arts, theology, agriculture, or mission-driven providers – international student recruitment has never been about volume. For them, the levy is simply the cost of doing business. They will continue to recruit selectively, valuing diversity and global presence more than surplus. 

    What Does This Mean for the Sector? 

    The archetype framework helps us see that there is no single sector response. Institutions will react in line with their pricing power, cost base, and strategic orientation. Prestige Players may pass through the levy with little concern. Absorbers will hold their nerve and tighten margins. Volume Hunters, by contrast, risk being forced out of the game altogether. 

    For these institutions, scaling back international recruitment will not just be a strategic shift but a financial shock. The loss of international fee income raises an uncomfortable question of how they will fill the gap – whether by yet more cost cutting, chasing riskier sources of income, or considering more fundamental changes to their operating models.   

    The levy therefore brings the deeper issue into sharp focus: the sustainability of international student recruitment. Chasing volume is no longer enough. Institutions must use this moment to confront the costs of recruiting and support these students, rethink pricing, and reconsider the value they offer. Those that do so will be far better placed to build resilient, sustainable futures in international education.  

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  • Grants return, the levy stays

    Grants return, the levy stays

    Speaking at the Labour Party conference, Secretary of State for Education Bridget Phillipson announced the (limited) return of student maintenance grants by the end of this Parliament:

    I am announcing that this Labour government will introduce new targeted maintenance grants for students who need them most. Their time at college or university should be spent learning or training, not working every hour god sends.

    As further details emerged, it became clear that these would be specifically targeted to students from low-income households who were studying courses within the same list of “government priority” subject areas mentioned in plans for the lifelong learning entitlement. As a reminder these are:

    • computing
    • engineering
    • architecture, building & planning (excluding landscape gardening)
    • physics & astronomy
    • mathematical sciences
    • nursing & midwifery
    • allied health
    • chemistry
    • economics
    • health & social care

    These additional grants will be funded with income from the proposed levy on international student fees, of which little is known outside of the fact that the immigration white paper’s annex contained modelling of its effects were it to be set at six per cent of international student fee income. The international student levy will apply to England only.

    There will be further details on the way the new grants will work, and on the detail of the levy, in the Autumn Statement on 26 November. This is what we know so far – everything else is based on speculation.

    Eligibility

    A whole range of questions surround the announcement.

    How disadvantaged will a student have to be – and will it be based on family income in the same way that the current system is? Imagine if entitlement was set at below the current threshold for the maximum loan – disadvantaged enough to get the full loan, not enough for a grant.

    If it’s set anywhere near the current threshold – £25,000 residual family income since 2007 – there’s a lot of “disadvantage” going on above that figure. If it’s set above that figure, that will beg the question – why assume a parental contribution in the main loan part of the scheme?

    Will it be on top of, or simply displace some of the existing loan? If it’s the latter, that won’t help with day to day costs, and as the Augar review noted – those from the most disadvantaged backgrounds are least likely to pay back in full anyway, which would make the “grant” more of a debt-relief scam.

    The distribution in the apparent hypothecation will be fascinating. It does mean that international students studying at English universities will be funding grants for English domiciled students wherever they are studying. Will devolved nations now follow suit?

    If international student recruitment falls, will that mean that the amount of money available for disadvantaged student grants falls too or is the Treasury willing to agree a fixed amount for the grants that doesn’t change?

    Restricting grants to those on the lowest incomes does mean that the government intends to relieve student poverty for some but not others, based on course choice. Will that shift behaviour – on the part of students and universities – in problematic ways?

    With the LLE on the way, will grants be chunked up and down by credit? See Jim’s piece from the weekend on the problematic incentives that this would create.

    The hypothecation also raises real moral questions about international student hardship being exacerbated to fund home student hardship relief – if, as many will do, universities put fees up to cover the cost of the levy. The possibility of real resentment from international students, who already know they’re propping up the costs of lower and subsidised fees, is significant.

    For LLE modular tuition fee funding, under OfS quality proposals Bronze/Requires improvement universities will have to apply for their students to access it – they will need to demonstrate that there is a rationale for them doing IS-8 courses. Will that apply for these grants too?

    Phillipson’s speech also referenced work– students’ time at college or university should be “spent learning or training, not working every hour god sends”. By coincidence, Jim worked up some numbers on how much “work” the current loan scheme funds earlier. Whether we’ll get numbers from Phillipson on what she thinks “every hour god sends” means in practice, and how many hours she thinks students should be learning or training for, remains to be seen.

    We might also assume that the grant won’t be increased for those in London, and reduced for studying at home in the way that the maintenance loan is now. And if this is all we’re going to get in the way of student finance reform, all of the other myriad problems with the system may not get touched either.

    The levy

    There’s a certain redistributive logic in using tuition fee income from very prestigious universities to support learners at FE colleges or local providers, though it is unlikely that university senior managers will see it in quite those terms.

    A six per cent levy on international fee income in England for the 2023–24 financial year would have yielded around £620m, with half of that coming from the 20 English providers in the Russell Group. Of course, this doesn’t mean that half of all international students are at the Russell Group – it means that they are able to charge higher tuition fees to the international students they do recruit.

    [Full screen]

    Of course, the levy applies to all providers – and, as we saw back when the idea was first floated there are some outside of the Russell Group that see significant parts of their income come from international fees, and would see their overall financial sustainability adversely affected by the levy. In the main these tend to be smaller specialist providers, but there are some larger modern universities too. Some universities don’t even have undergraduate students, but will still see their fees top-sliced to fund undergraduate-level grants elsewhere.

    [Full screen]

    There has been a concerted lobbying effort by various university groups aimed at getting the government to abandon the levy plan – as it appears that this effort has failed you would expect the conversations to turn to ensuring the levy is not introduced at six per cent as the Home Office previously modelled, or mitigating its impact for some or all providers. Certainly, as Phillipson chose the same speech to remind us she had taken “the decisive steps we needed on university finances” it would feel like it is not her intention to add to the woes of higher education providers that are genuinely struggling.

    DfE has said that the new grants will be “fully funded” by an international student levy. It’s worth noting that this is not the same as saying that all the levy money will go towards the grants.The tie between the grants and the levy is politically rather astute – it will be very difficult for Labour backbenchers to argue against grants for students on low income, even if they are committed to making arguments in the interests of their local university. But legislatively, establishing a ring fence that ensures the levy only pays for these grants will be very difficult – other parts of government will have their eye on this new income, and the Treasury is famously very resistant to ringfencing money that comes in.

    It also opens up the idea of the government specifically taxing higher education with targeted levies. It is notable that there has been no indication that the levy will be charged on private school fees, or fees paid to English language colleges, where these are paid by non-resident students. DfE itself suggests that £980m of international fees go to schools, and a further £850m goes to English language training – why leave a certain percentage of that on the table when it can be used to support disadvantaged young people in skills training?

    What would it achieve?

    In the end, even grants at the maximum level of £3,000 a year that were recommended by the Augar review wouldn’t have made much difference to student poverty, and there’s been a lot of inflation since.

    And a part of the idea of the levy was to reduce (albeit slightly) the number of study visas granted – if you recall, the Home Office report emerged in a month that everyone became concerned about students claiming asylum. If that part of the plan works (if that was ever really the plan, rather than a fortunate coincidence) then surely there would be less money to play with for maintenance – and any future government that attempts to reduce international higher education recruitment would be accused of taking the grants away from working class students on priority courses?

    The real value in the reintroduction of the grant is that it is politically totemic for Labour. But if it encourages more disadvantaged students to go into HE because of a perception of better affordability when they will still struggle, there will be both a financial and political cost in the long term.

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  • UK’s international fee levy could slash enrolments by over 77k

    UK’s international fee levy could slash enrolments by over 77k

    Some 16,100 international students could be deterred from studying in the UK in the first year universities are levied 6% of all their international student fees, comes the stark warning from a new report from the think tank Public First.

    Should the government make good on the proposal – outlined in the immigration white paper earlier this year – this figure could rocket to more than 77,000 students in the first five years of its implementation, the report predicts.

    The government expects universities to pass the increased costs onto international students themselves by raising fees. But Public First cautioned that such a move would have catastrophic consequences by driving international students away, hitting the UK’s economy by £2.2 billion over five years and leading to a reduction of 135,000 university places for domestic students.

    The think tank projected that a 6.38% international student fee increase – necessary for universities to pass on the entire cost of the levy – would have a far greater impact on students’ decision to study in the UK than the government has anticipated.

    This is because the government’s forecasts were based on data for EU students. However, Public First noted that price elasticity of demand for non-EU students is greater than their EU counterparts – meaning they would be more likely to be look elsewhere if they found UK fees too expensive.

    Jonathan Simons, partner at Public First and author of the report, noted that the projected impact of the levy “is much more severe than had been predicted previously”.

    It is not widely understood just how much our economy is supported by international students and it’s really crucial that any policy that could affect international student numbers is considered through this lens

    Jonathan Simons, Public First

    “This, of course, will hit our universities, around 40% of whom are already in deficit, and that could lead to a further loss of jobs, a loss of university places for UK students and a loss of vital research investment,” he added.

    “Perhaps even more significant, though, is the hit an international student levy could cause to local, regional and national economies across the UK. It is not widely understood just how much our economy is supported by international students and it’s really crucial that any policy that could affect international student numbers is considered through this lens.”

    Henri Murison, chief executive of the Northern Powerhouse Partnership and chair of the Growing Together Alliance, said that the levy was opposed by all of England’s major regional employer organisations “because the resulting decline in international students would be hugely damaging to all the regions of the country”.

    “The Chancellor should take note of the economic damage of this policy which undermines a critical UK export and we have requested an urgent meeting to raise our concerns,” he said.

    The proposed levy has been widely criticised by higher education institutions.

    Last month, a HEPI analysis predicted that UK universities could take a £621m hit if the policy goes ahead, with those situated in big metropolitan cities set to be the worst affected.

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  • Podcast: Sexual misconduct, international levy, closures

    Podcast: Sexual misconduct, international levy, closures

    This week on the podcast we examine the results of the Office for Students’ first sector-wide survey on sexual misconduct.

    With over 50,000 responses from final-year undergraduates, the data provides a stark picture of prevalence, reporting, and staff-student relationships in higher education. But with only sector-level results released, questions remain about transparency, accountability, and the regulator’s approach to such a sensitive issue.

    Plus we discuss the politics and potential consequences of a proposed levy on international student fees – a policy idea that could reshape funding, recruitment, and the UK’s global competitiveness. And we take stock of warnings from the Institute of Physics about possible closures of departments and courses, asking what this says about funding for high-cost subjects and the sector’s capacity to manage contraction and change.

    With Charlotte Corrish, Head of Public Policy at the Office of the Independent Adjudicator for Higher Education, Mark Bennett, Vice President Research and Insight at Keystone Education Group, and David Kernohan, Deputy Editor at Wonkhe, and presented by Mark Leach, Editor-in-Chief at Wonkhe.

    The “regulatory burden” on sexual misconduct needs to lift the weight from students

    What OfS’ data on harassment and sexual misconduct doesn’t tell us

    IOP: Quarter of UK university physics departments risk closure as funding crisis bites

    Public First: Counting the cost – Modelling the economic impact of a potential levy on international student fees

    You can subscribe to the podcast on Acast, Amazon Music, Apple Podcasts, Spotify, Deezer, RadioPublic, Podchaser, Castbox, Player FM, Stitcher, TuneIn, Luminary or via your favourite app with the RSS feed.

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  • UK unis could take £620m hit from international student levy

    UK unis could take £620m hit from international student levy

    Based on the latest HEPI data, the Institute estimates the levy could “hamper universities’ ability to compete with institutions in other countries,” said independent researcher Mark Fothergill, who compiled the data. 

    The proposed 6% levy on international students’ tuition fees was first introduced in the government’s highly anticipated immigration white paper, coming as a surprise to many in the sector.  

    HEPI has warned that the policy will hit both large internationally engaged universities and smaller specialist institutions. According to the analysis, the largest financial losses are expected to hit big metropolitan universities with high proportions of international students.  

    Namely, University College London (UCL), which derives 79% of its fee income from non-UK students, could be faced with financial losses of £42m. 

    Meanwhile, Manchester University and King’s College London (KCL) could also be hit with heavy losses of £27m and £22m respectively, with 19 institutions paying at least £10m. 

    Stakeholders have pointed out that while the levy is intended to raise money for the “higher education and skills system”, it is unclear if all the money will come back out of the treasury, and how it will be spent if it does. 

    “International students are the backbone of our higher education system, contributing over £10 billion in fees to English universities – around £4.50 of every £10 of fee income,” Fothergill said. 

    “No wonder the 6% levy is seen as a tax on one of the country’s best-performing sectors,” he added.  

    With more details expected in the autumn budget, universities are left with two options: pass the cost onto students and become less competitive or absorb the costs and leave less funding for teaching and research, HEPI suggested.  

    While universities haven’t announced to what extent they would try to absorb the extra costs, a reduction in international student numbers – whose fees subsidise university research – would also hamper sector finances.  

    Speaking at a conference last month, the UK skills minister Jacqui Smith maintained the government was “not levying international students directly”, suggesting it would help show students’ economic contribution to local communities.  

    The levy is a shadow looming large over universities as they prepare for the next academic year

    Nick Hillman, HEPI

    “Threatening an expensive new tax on one of the country’s most successful sectors with only a rough idea of how the money will be used seems far from ideal,” said HEPI director Nick Hillman.  

    “Currently, the levy is a shadow looming large over universities as they prepare for the next academic year,” he added.  

    Amid policy volatility in other markets, the UK has increasingly been cited by students as the most stable of the ‘big four’ study destinations, with stakeholders keen to preserve this reputation.

    “There are good reasons why Australia opted not to implement a levy when it was proposed there a couple of years ago,” warned Fothergil.  

    With the UK higher education sector already facing severe financial headwinds, Hillman said university leaders were worried the levy will be “yet another weight dragging them down in the struggle to remain globally competitive”. 

    According to OfS data, 72% of providers could be in deficit by 2025/26, with a sector-wide deficit totalling £1.6bn.  

    Alongside the levy, the government’s white paper proposed shortening the graduate route visa from two years to 18 months, and tougher Basic Compliance Assessments (BCA), with the latter set to be introduced in September.  

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  • London Mayor slams proposed international tuition fee levy

    London Mayor slams proposed international tuition fee levy

    In a keynote address earlier this week at Imperial Global Ghana – Imperial College London’s overseas branch campus in Accra – Sadiq Khan warned that proposals for a new levy on international university fees would hit the UK’s finances hard, describing the policy as “an act of immense economic self-harm”.

    The UK government is currently considering a new levy on income that English universities generate from international students as part of its immigration whitepaper, which could not only put students off coming  from overseas but also create a substantial extra financial burden for already stretched universities.

    International students contribute about £12.5 billion to London, and another £55bn to the national economy every year, Khan pointed out. For this reason, the government should not make it difficult for these students to study in the UK, Khan said at the event – which formed part of his trade mission to Ghana.

    With 5% of students in London’s higher education institutions coming from Africa, Khan stressed the need to ensure that international students are not frustrated. 

    “Closing our economy to global talent would be an act of immense economic self-harm. One that would slow down growth and leave working people in Britain worse off than before. At a time when President Trump is attacking international students, we should be welcoming them,” he added.

    Khan said the international students also bring a longer-term labour market value, as many stay after their studies to work in key economic sectors from tech and AI to finance and creative industries. For this reason, he disagreed with the view that, “we should pull up the drawbridge to international students or punish universities that choose to welcome people from around the world”.

    On Imperial College opening up a hub in Ghana, he said London is ready to contribute to the development effort of Ghana, “not as a patron, but as a partner. In a genuinely reciprocal relationship that brings benefits to us both”.

    President Trump is attacking international students, we should be welcoming them
    Sadiq Khan, Mayor of London

    The vice-chancellor of the University of Ghana, Nana Aba Appiah Amfo, said the university is committed to providing to its  students with a transformative experience that goes beyond the classroom to nurture innovation, leadership and practical problem solving, adding that “this commitment is rooted in our strategic plan, which prioritises student success, impactful research and strategic partners”.

    “One such partnership, rich in promise and results, is with Imperial College London. What began as a collaboration between two researchers has evolved into a university-wide alliance, advancing work in climate change, diagnostics, and entrepreneurship. It is a powerful model of what mutual trust and shared purpose can achieve,” Amfo added.

    She said the Student Venture Support Programme has become the flagship agenda of the partnership which was launched in 2022 with the Imperial College and is  equipping students with skills, mentoring and funding to turn ideas into viable ventures. 

    To date, it has supported over 400 students and more than 115 startups, spanning four universities across Ghana.

    Despite Khan’s strong opposition to the levy, it looks likely to go ahead.

    At last week’s BUILA conference, skills minister Jacqui Smith doubled down on the need for the levy, saying it would reinforce public confidence in the UK’s international education sector.

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  • The proposed international student levy could be the tipping point for a fragile sector

    The proposed international student levy could be the tipping point for a fragile sector

    • Professor Duncan Ivison is President and Vice-Chancellor of the University of Manchester.

    Almost one year into the Labour government’s term, its vision for higher education is emerging. One exciting aspect of it is the role they see universities playing in helping to drive their agenda for inclusive growth. The recently announced R&D funding commitments, including regional ‘innovation clusters’, and the Industrial Strategy, all point to the role that higher education will play in driving innovation through world-class research and producing the highly skilled graduates our life sciences, technology, defence, and creative industry sectors – among others – will require. This is good news for the sector.

    Baroness Smith, Minister for Skills, and Lord Vallance, Minister for Science, have made clear that they see the core principles that will shape the UK’s higher education sector over the next five years. This includes contributing to economic growth, conducting the highest quality curiosity-driven research, helping build national capabilities in key sectors, contributing to the economic and social well-being of the regions in which we’re based, and being a global force for UK soft power through international collaborations.   

    This is a compelling vision and one that –  at least for the University of Manchester – we are keen to support,  including through our forthcoming Manchester 2035 strategy.   

    But in politics, vision quickly runs up against political reality, and we can also see now some of the challenges the sector will face, not least in relation to immigration and the difficult fiscal situation the government faces. The recent Immigration White Paper makes that clear.

    One of the more contentious aspects of the White Paper – in addition to reducing the graduate visa route from 24 months to 18 – is the proposal for a 6% levy on international student fees.

     Of course, for those of us familiar with Australian higher education policy, it is, as Yogi Bera once said, déjà vu all over again.  The Australian government proposed a 2% levy on international fee income in 2023, but it was never implemented. The main purpose of that levy was to redistribute fee income from the larger, research-intensive metropolitan universities to those (mainly in the regions) who struggled to attract international students. It stalled in the Australian parliament after fierce criticism from some parts of the sector, as well as the government deciding to pursue its aims through other means.

    In the UK, on the other hand, the levy seems designed to do two things. First, to generate additional revenue for the Department of Education in a very difficult fiscal environment. And second, to make manifest the contribution that international students make to the UK.

    There are several things wrong with this approach if indeed these are the main justifications for it. But I recognise it’s something currently being explored, rather than already decided, and so I offer my thoughts here as part of the consultations now underway.

    First, it’s striking that for a government seeking to position itself as a champion of global free trade and economic growth, they are proposing what is essentially a tax on one of the UK’s most successful export industries (worth ~£22 billion a year from higher education alone).

    Second, the fact that the government doesn’t feel the public understands the contribution that international students make to the UK is deeply concerning. The short answer is that they make a massive contribution: in fact, their financial contribution and talent has been crucial not only in helping the UK maintain its global standing as a higher education powerhouse, but also to the regional and local economies in which universities are based.  

    There are other more specific problems with the levy too, at least for a university like mine.

    For one thing, a levy assumes universities can simply pass on the additional cost to our students. But this neglects the fact that we are operating in a highly competitive international market, and a significant price increase will make us less attractive to some of the fastest-growing parts of it. Moreover, many international students might not appreciate that they are now being asked to cross-subsidise other parts of the UK’s education system, in addition to the significant contribution they are already making. One perverse consequence of a 6% increase in fees might be that we end up abandoning our efforts to diversify the countries from which we recruit and focus only on those who can afford higher fees.  This will only deepen the risk that successive governments have been keen for us to mitigate.

    Moreover, at Manchester at least, we have already factored in increases to our international fees to account for rising costs over the next five years. Adding 6% on top of that would be unworkable.  So, we would either have to absorb most, if not all, of the levy (plus inflation), or increase our fees substantially and lose market share. Assuming that we would see very little of the levy come back to us – the history of hypothecated funding is not encouraging in this regard – this would be a major financial blow.  It would also, as a result, likely generate much less income than the Department hopes.  For a sector already teetering on the edge of fiscal implosion, this could be the tipping point. To put it into context: for the University of Manchester, a 6% levy would mean a potential loss of ~£43M of revenue p.a by 2029/30, wiping out the slim margin we have for reinvesting in our teaching and research. The levy does nothing to address the structural challenges facing the higher education sector. In fact, it is likely to make things worse.

    But it would also undermine our ability to do the very things the government wants us to do more of. Already, international student fees help us bridge the financial gap between what we receive to teach all our students and what it actually costs, as well as the gap between the full costs of research and what funding councils and charities provide. This is under threat if we get our higher education policy settings wrong. And let’s be clear: it would hurt local students and local economies most. Almost half our students remain in Manchester after they graduate, contributing hugely to our city and region.

    We are keen to contribute to the government’s vision for higher education.  For example, we are spending ~£21M p.a. on helping disadvantaged students with their cost of living and studies. And from this year, we will be investing more than ever before in accelerating the commercialisation of our research and generating more student and staff start-ups, scale-ups and job creation for Greater Manchester and the country.

    I understand the challenges the government faces on immigration and funding higher education. There should be no tolerance of shonky providers serving as a front for migration workarounds. And universities need to prove they are operating as efficiently as possible and collaborating in new and transformative ways – as I’ve argued elsewhere and as we’re doing with Liverpool and Cambridge.

    An alternative approach to a levy would be to develop specific compacts with clusters of universities based on delivering against the government’s core priorities for HE in concrete ways – building on the new ‘innovation clusters’ in the recent R&D announcement. We’re already doing this in Greater Manchester, given the excellent collaborative culture that exists between the universities, further education colleges, and the Combined Authority. It’s a model we could scale nationally.  I look forward to the discussions to come in the weeks ahead.

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