Business leaders have urged Chancellor Rachel Reeves to scrap a proposed levy on university fees for international students, warning it could harm economic growth and global competitiveness. In an open letter shared with The Independent, 15 groups including UK Music, Business LDN, and Tech UK condemned the planned 6 per cent charge as a “university tax” with “unintended consequences”.
The letter argues that international students contribute tens of billions to the UK economy annually, supporting local businesses and regional regeneration. It also warns that a drop in international student numbers could affect domestic students, as fee income from overseas students helps subsidise home student costs. The groups call for a pause, a full risk assessment, and consultation with higher education and business sectors.
Henri Murison, chief executive of the Northern Powerhouse Partnership, said international students are “central” to the economies of northern cities like Sheffield, Manchester, Leeds, and Newcastle. “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,” he added.
John Dickie, chief executive of Business LDN, said scrapping the levy would support growth and international competitiveness. “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,” he said.
Research from Public First estimated that nine out of 12 UK regions would face losses exceeding £100 million in the first year of the levy due to likely student declines. The impact would be largest in London (£480 million), followed by Scotland (£197 million) and the South East (£163 million). Of the 50 most affected constituencies, 37 are held by Labour.
A government spokesperson defended the levy, stating it would fund reintroduced maintenance grants for disadvantaged students. They added that the government is increasing tuition fees in line with inflation and refocusing the Office for Students to monitor financial health, with further details expected in the Autumn Budget.
