by Atul Hatwal

An analysis of the government’s latest higher education funding figures by Uncut reveals that British universities will lose £766m of revenue each year as a direct result of the government’s target to cut net migration below 100,000.

The cut will inevitably increase upwards pressure on fees for domestic students, according to academics.

David Cameron renewed his commitment to the target in his speech on immigration earlier this week and to achieve the government’s target of net migration in the tens of thousands, the government’s Migration Advisory Committee has identified the need for cuts of 60% in the numbers of foreign students.

Based on the current level of net migration, 239,000 per year, a reduction of 139,000 is needed to reduce net migration below 100,000, which would mean 83,400 fewer foreign students – 60% of 139,000.

Because of European law, the UK can only bar students from outside the EU which means non-EU students will bear the full brunt of the cuts.

New government figures reveal that last year non-EU students contributed £2.6bn in fees, over 30% of the total tuition fees budget. Based on these figures a cut of 83,400 would mean a revenue shortfall of £766 million per year.

If the government wanted to plug the shortfall through the tax system, this would involve tax increases equivalent to a hike in the higher rate of income tax by 1p.

Amongst the hardest hit by the revenue reduction will be some of the country’s leading universities which have the highest proportions of foreign students.

This includes the LSE, which has 65% foreign students, Imperial College with 40% foreign students and the University of Warwick with 28% foreign students.

The result of the cuts will be greater pressure to increase fees to the maximum.

Universities will typically charge foreign students fees that are several times the level that are charged to UK students, cross-subsidising costs for domestic students.

For example, a student wanting to study a physics degree at Imperial will be charged well over £20,000 per year. This is substantially more than the £9,000 tuition fees that British university students will pay at the top annual fee rate.

The cross-subsidy will have been factored into Universities’ calculations in setting fees. A senior academic at a top five university was blunt about the costs of their degrees,

“At £9,000, we don’t even cover our costs. The actual cost for a physics degree is £14,000. Without a cross-subsidy it isn’t going to work”

In contrast to the British stance, Australia recently changed its immigration policy to make it easier for its Universities to attract high-spending foreign students, particularly from India.

Similarly, the USA and Canada don’t include foreign students in their main immigration statistics that the political debate does not prevent their universities attracting valuable overseas students.

At a time when tuition fee budgets are already under pressure and several leading universities have already started pushing to lift the £9k cap, the cuts to foreign students will further destabilise higher education funding plans in Britain.

Atul Hatwal is associate editor of Labour Uncut.