Rachel Reeves is facing mounting pressure from London’s business and university leaders to abandon plans for a proposed visa levy on international students, which they warn could further destabilise Britain’s already strained higher education sector.
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In a joint letter to the Chancellor, John Dickie, chief executive of BusinessLDN, and Liz Hutchinson, chief executive of London Higher, cautioned that the introduction of a levy—reportedly set at six per cent of income from overseas tuition fees—could deepen financial pressures already felt across many institutions.
“Introducing a levy at a time when many institutions are facing acute funding pressures…could force universities to cut costs further still by postponing infrastructure projects, implementing hiring freezes and closing some courses,” they wrote.
They warned that some universities may be compelled to increase fees, undermining the UK’s international competitiveness. “London was recently named the world’s best student city for the sixth consecutive year,” the letter continued. “It is in the interest of our economy that we retain that position.”
The levy is one of several measures outlined in the Government’s immigration White Paper, which also proposes reducing the graduate visa duration from two years to 18 months. The document cites “misuse and exploitation of student visas” and raises concerns that “too many graduates” are remaining in the UK without entering graduate-level employment.
However, business and academic leaders argue that such changes would jeopardise a sector that delivers enormous economic value. They claim that international students generate £20 billion annually for the UK in exports through tuition fees and living costs, with £9.6 billion of that figure attributed to London alone.
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They further estimate that every one of the UK’s 650 parliamentary constituencies benefits by £58 million because of international students—translating to an average gain of £560 per citizen, or £1,040 in the capital.
Beyond financial benefits, the letter underscored the broader value international students bring to Britain. “They contribute to a richer learning environment in our universities, create opportunities for cultural exchange on campuses and in our communities and extend the UK’s soft power worldwide.”
The graduate visa scheme, introduced in July 2021, enables international students to stay in the UK for two years after completing their degree (or three years for PhD graduates), to work or seek employment. The Government now intends to shorten this to 18 months and explore the introduction of a levy to be reinvested into the higher education and skills system. Further details are expected in the Autumn Budget.
While acknowledging public concerns around immigration, the signatories warned that efforts to reduce numbers should not come “at the expense of the UK’s world-leading education sector.”
