UK (Parliament Politics Magazine) – Chancellor Rachel Reeves faces pressure from business leaders to scrap the international student levy, warning it could cut overseas enrolment and slow growth.
As reported by The Independent, business leaders call on Rachel Reeves to drop the proposed levy on international students, warning it could hurt growth and global competitiveness.
What did business leaders urge the government over the international student fee hike?
In an open letter, business groups condemned the proposed 6% increase in international student fees, calling it a “university tax” with potential unintended consequences for the UK.
The letter adds pressure on the chancellor ahead of the upcoming Budget, following ministers’ measures to tighten student visa regulations.
The open letter, endorsed by 15 organisations including UK Music, Business LDN, and Tech UK, says international students contribute billions, boosting local businesses and regional growth.
The letter said,
“A reduction in international student numbers could also indirectly affect domestic student opportunities. As income from international fees helps subsidise the cost of home students.”
They continued,
“We therefore urge the government to pause the implementation of the levy, undertake a full risk assessment and to consult fully with the higher education and business sectors on a sustainable funding model that protects opportunities for disadvantaged students without undermining one of the UK’s most successful export markets.”
How are business chiefs warning the government over the student fee hike?
Henri Murrison, CEO of the Northern Powerhouse Partnership, said international students play a “central role” in driving economic growth in cities like Sheffield, Manchester, Leeds, and Newcastle.
He stated,
“They support local businesses, create jobs, and help sustain our universities, which are key to city regions productivity growth.”
Mr Murrison added,
“The proposed levy risks pulling the rug out from under one of the few areas where the northern growth corridor currently outperforms its competitors globally.”
John Dickie, chief executive of Business LDN, which represents firms including Deloitte and Uber, said removing the international student levy would “support growth and enhance the UK’s global competitiveness.”
He added,
“Overseas students make a significant contribution to the economy so we should be rolling out the welcome mat for the most talented people from across the globe rather than pushing them away.”
What did the government say about the international student levy?
A government spokesperson stated,
“The International Student Levy will fund the reintroduction of targeted maintenance grants to break down the barriers to opportunity for disadvantaged students.”
They said,
“We have also taken tough decisions to put universities on firmer financial footing. We are increasing tuition fees annually in line with inflation and have refocused the Office for Students to monitor the financial health of the sector,” adding, “We are taking action to open up access to universities, restoring them as engines of aspiration, opportunity and growth. We will set out further details in the Autumn Budget.”
How did the government plan to introduce a levy on international students?
According to the May white paper, ministers are exploring a 6% levy on higher education fees for international students.
Following the white paper, which proposed reducing graduate visas to 18 months, sector leaders warned the plans could affect international student enrolment and strain university finances.
What did PublicFirst research reveal about the impact of the student levy?
Research conducted by policy consultancy PublicFirst, published in September, found that nine of the UK’s 12 regions could lose over £100 million in the first year if the international student levy is implemented.
The analysis showed that Labour-held areas would face the largest losses, with London at £480 million, Scotland at £198 million, and the South East £163 million.
The research indicated that Labour holds 37 of the 50 UK constituencies most affected by the proposed levy.
How many international students are studying in the UK?
The number of international students studying in the UK in 2025 is approximately 732,000. There has been a steady rise in international student applications, with 118,800 applicants as of January 2025, showing a 2.7% increase from the past year.
The total international student population in UK higher education was about 732,285 in the 2023/24 academic year. There is significant growth in students from countries like China, India, and Nigeria, with India and Nigeria.
