Rachel Reeves urged to scrap international student levy over concerns for growth
Business leaders have called on Rachel Reeves to scrap a proposed tax on university fees for international students, warning it could have significant consequences for growth and global competitiveness.
In the open letter they shared IndependentBusiness groups have condemned what they call a “university tax” and warned that a planned 6 per cent increase in wages would have “unintended consequences” for the UK.
The memo piles further pressure on the chancellor ahead of the Budget and comes after ministers put forward a raft of measures designed to tighten rules on student visas earlier this year.
The letter, signed by 15 groups including UK Music, Business LDN and Tech UK, claims international students contribute tens of billions of dollars to the economy every year by “supporting local businesses and accelerating regional regeneration”.
“The decrease in the number of international students may also indirectly affect domestic student opportunities,” the letter said.
“As income from international fees helps cover student expenses at home.”
They added: “We are therefore calling on the government to halt the imposition of the tax, carry out a full risk assessment and fully consult the higher education and business sectors on a sustainable funding model that protects the opportunities of disadvantaged students without harming one of the UK’s most successful export markets.”
The government’s immigration report, published in May, said ministers would explore introducing a tax on higher education income from international students, with ministers looking at 6 per cent.
After the white paper was published, which also said the government would cut postgraduate visas to 18 months, industry leaders warned the plans could deter international students from coming to the UK and further exacerbate universities’ financial difficulties.
Henri Murrison, chief executive of the Northern Powerhouse Partnership, one of the signatories of the letter, said international students were “at the heart” of the economy of cities such as Sheffield, Manchester, Leeds and Newcastle.
“They support local businesses, create jobs and help sustain our universities, which are key to productivity growth in city areas,” he said.
“The proposed tax risks pulling the rug out from under one of the few areas where the northern growth corridor is currently outperforming its global rivals.”
John Dickie, chief executive of Business LDN, which represents firms including Deloitte and Uber, said removing the tax would “support growth and the UK’s international competitiveness”.
“Students abroad make a significant contribution to the economy, so we must provide a welcoming environment for the most talented people from around the world rather than pushing them away,” he said.
Research published in September by policy consultancy PublicFirst predicted that nine out of 12 regions in the UK would face a loss of more than £100 million in the first year of the tax due to the loss of international students.
The biggest impact will be in London at £480 million, followed by Scotland (£197 million) and the South East (£163 million).
Researchers said 37 of the 50 most affected constituencies were held by the Labor Party.
A government spokesman said: “The International Student Levy will fund the reintroduction of targeted maintenance grants to remove barriers to opportunity for disadvantaged students.
“We have also taken difficult decisions to put universities on a stronger financial footing. We are increasing tuition fees in line with inflation every year and have refocused the Office for Students on monitoring the financial health of the sector.
“We are taking action to open up access to universities, making them engines of aspiration, opportunity and growth. We will set out more details in the Autumn Budget.”
