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A clampdown on visas and new charges for international students could strip the UK economy of £1.8 billion in the first year alone, with London expected to suffer the steepest losses.
As part of its “Restoring Control over the Immigration System” initiative, the Government has put forward a 6% levy on tuition fees paid by overseas students. In addition, the length of graduate visas would be shortened from two years to 18 months under the Immigration White Paper.
But a study by consultancy firm Public First warns the consequences would be widespread, with nine out of 12 UK regions facing economic losses of more than £100 million in the first year as a result of declining international student numbers.
London would bear the heaviest blow, losing an estimated £480 million, followed by Scotland at £197 million and the South East at £163 million.
The 10 parliamentary constituencies most affected would each see around £40 million wiped from their gross value added (GVA). Prime Minister Sir Keir Starmer’s Holborn and St Pancras constituency is projected to lose the most, at £72 million, while the Cities of London and Westminster would drop £57 million, and Coventry South £44 million. Of the 50 hardest-hit constituencies, researchers found 37 are currently Labour seats.
Mark Hilton, policy delivery director at Business LDN, warned: “At a time when the Government is making growth its top priority, a higher education levy risks draining hundreds of millions from one of our strongest export sectors. Universities in London and beyond are already under huge financial strain, and world-class research could be the next casualty.”
Public First also estimated that the levy would deter 16,100 overseas students in its first year, rising to more than 77,000 over five years. Since international fees help subsidise places for home students, this could translate into 33,000 fewer domestic student places in the first year and as many as 135,000 fewer over five years.
The financial hit could total £2.2 billion in lost international tuition fees over five years, according to the report commissioned by a group of universities.
Report co-author Jonathan Simons, a partner at Public First, said: “With around 40% of UK universities already running deficits, this policy could deepen financial instability, leading to job cuts, reduced places for UK students and a collapse in funding for critical research.”
Natasha Chell, a partner at Laura Devine Immigration, added: “The levy risks sending the wrong message to international students at a time when the UK is in fierce competition to attract global talent. It undermines the government’s pledge to bring in the brightest and best, while ignoring the essential economic and skills contributions international students provide, particularly in shortage sectors.”
In response, a Government spokesperson defended the plans, saying: “We are committed to ensuring higher education investment benefits communities more broadly. Our reforms put universities on a more stable financial footing, with tuition fees set to rise in line with inflation for the 2025/26 academic year and the Office for Students tasked with monitoring sector health. We are determined to restore universities as engines of aspiration, opportunity and growth.”
