Revealed: Migration cap to cost British universities £766 million per year in lost revenue and push up fees

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.

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5 Responses to “Revealed: Migration cap to cost British universities £766 million per year in lost revenue and push up fees”

  1. swatantra says:

    Thats nearly a billion.
    And with no future Gaddafi offspring to help bale LSE and others out.
    No wonder Dutch Italian and oher European Universities are muscling in on the lucrative student market. And Indian Universities providing equally and even superior courses than the recently enobled polytechnics and technical colleges now termed ‘metrotpolitan universities.
    We could end up with the extraordinary situation of English Universities for English Students, and elite ones at that.’

  2. Roger says:

    Being Tories the motivation is racist and the implementation will be completely cocked-up.

    It is also becoming increasingly clear that Tory HE policy represents nothing less than a gigantic project of social engineering – they (not altogether unreasonably – the 50% target was a ludicrous one for a society whose educational problems are all at the school level) have surmised that way too many people go to university at far too much public expense, so have set up the new fees system and the restrictions on overseas students to create the maximum destructive effect – eliminating dozens of institutions and reducing the HE system back to roughly what it was in the 80s.

    But step back one minute and ask yourself whether in fact having colleges like the LSE draw 65% of students from overseas is an ideal situation.

    I myself a few years ago inquired about taking a postgraduate degree at the LSE but even though I had a first class BA and was well within the formal application period, was told not even to bother as they had a 50% quota for UK students on that course which had already been filled.

    HESA actually gives the number of overseas students in 2009/10 as 406,000 out of 2.5 million – i.e. 16%.

    But 125,000 or 5% of total students of these were from the EU so the real numbers are 280,000 or 11%.

    So if a few universities are showing much higher percentages of overseas students there is a fundamental inequity built in right here – institutions like the LSE and Imperial have for many years been much richer than other (non-Oxbridge) universities because they can draw in the children of the international bourgeoisie and charge them exorbitant extra fees.

    And providing the global elite with higher education simply does not strike me as a socialist priority.

    Sure it does generate more income but by the same rationale we should be excluding UK patients from our best NHS hospitals and using the facilities to treat rich foreigners privately (which does already happen to some degree but to nowhere like the level we are talking about in HE).

    In fact I’d even argue that the cancer of marketisation and managerialism which is afflicting our universities has to some degree grown precisely out of the ever increasing reliance of institutions on foreign students and their fees – this led them to spend more and more money on marketing their ‘brands’ overseas, creating fundamentally bogus courses in ‘business studies’ as these were perceived to sell best and the extra income resulting from it funded new levels of management whose alien corporate values are coming close to abolishing the academy as we once knew it.

    And it is clear that illegally or illegally many of these overseas students DO stay here after graduation – to the great benefit of the UK but to the detriment of their own societies who lose their skills forever.

    UK universities should be focused on educating UK students free of charge as they once did – overseas students that pay their way are a nice to have but should not represent one in six of the student body or be central to any institutions finances.

  3. swatantra says:

    It makes sense for the LSE to have a high proportion of foreign students who can interact with home grown students and each other. The LSE is prmarily teaching Politics Economics Law and Government, not Nuclear Physics. Exchanging political ideas is no bad thing; coming into ccontact with democracies is no bad thing because they can take those fresh ideas back to their autocratic govts and change things in their own countries. Thats if they return. Not all do and the point about skills shortage and knowledge back home being more and more depleted is well made. Some do make it back home; unfortunately Saif lapsed back into his old ways. LSE can’t win them all.

  4. Nick says:

    Nice generalisation.

    ie. Foreign students are good for the UK. Broadly correct unless you were one of the hard working students at the University of Wales where you’ve just discovered that your degree could have been bought on the cheap.

    So now by implication all migration must be good.

    Try telling that to someone on minimum wage who has to pay 2,500 pounds a year to subsidize a migrant who doesn’t earn over 40K.

  5. Rob the crip says:

    Nick mate here here

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