Universities?will be forced to cut more jobs if the government pushes ahead with plans to introduce an international student levy, even if lobbying succeeds in pushing it down from the proposed 6 per cent, vice-chancellors have warned..

Plans to take a cut of overseas fees to fund education and skills blindsided vice-chancellors when proposed in the government¡¯s immigration White Paper in May and, while many still hope to be able to block the idea entirely, there is a growing realisation that it has support across Whitehall.

Skills minister Jacqui Smith recently said it would be a way of ¡°demonstrating the contribution¡± international students make to the UK as she confirmed Labour was still exploring the plan, although nothing has yet been finalised.

It is understood the policy was included?initially as an internal compromise to placate those pushing for more dramatic changes to the graduate route visa, which will be reduced by six months.

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But the levy may turn out to be far more financially damaging to universities than the alternative, with many rejecting the government¡¯s apparent belief that they could just pass the extra cost on to students.

¡°It¡¯s not just that [international students are] already paying way more than UK students, they¡¯re already paying at the limits the markets will bear,¡± said Larry Kramer, vice-chancellor of the London School of Economics and Political Science (LSE).?

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¡°We¡¯re all operating on shoestring budgets, whatever they think, and if I thought there was a margin because we were undercharging, I would have raised the fees already.¡±

If the levy did go ahead at?6 per cent ¨C as has been modelled by the Home Office ¨C Kramer said the institution would pass one-third of the cost on to international student fees; one-third would be saved through efficiencies; and the final third would be accounted for by ¨C somewhat perversely given the government¡¯s goal of reducing net migration ¨C recruiting more international students.?

Duncan Ivison, vice-chancellor of the University of Manchester, which was the fourth-biggest recruiter of international students in the 2023-24 academic year, also said his university would probably look to absorb the costs rather than passing them on to students.?

¡°That starts in the ?30 million mark and gets up to close to ?43 million pounds a year potentially,¡± he said. ¡°And that just basically wipes out pretty much all the financial headroom we have for doing the things that the government quite rightly wants us to do.¡±

He added that universities may be limited to recruiting students from less price-sensitive markets, further exposing the sector to risks from geopolitical shifts as a result.?

Anthony Finkelstein, president of City St George¡¯s, University of London, said the institution may have to consider reducing domestic student numbers, axeing more expensive courses, including health-related ones, as well as potentially cutting staff ¨C something the institution had so far managed to avoid, despite the?wave of redundancies?sweeping the sector.?

¡°If you took ?8 million off my bottom line, I¡¯d have to,¡± he said. ¡°It¡¯s absolutely crazy.¡±

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Universities are currently consulting with the government over the plans, but details around how the policy would work logistically, including how the levy would be calculated, remain vague.?

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The government is understood to have committed to not bring the levy in for 2025-26 and there are doubts about whether it would be workable in 2026-27, given that universities tend to set their fees early on.

Harry Anderson, deputy director at Universities UK International, said, ¡°Our starting position is that we don¡¯t think this is a helpful direction of travel and that anything that is taking money out of the sector right now, given the financial challenges, is not a helpful policy intervention. It¡¯s not putting the sector on the long-term financially sustainable footing that we need.¡±

If the government is unwilling to drop the policy, universities will likely push to reduce the percentage as much as possible and ask for a commitment that funds raised are ringfenced for the higher education sector. But even that raises questions of autonomy and efficiency within universities.?

¡°The money is being spent on education and skills already,¡± said Finkelstein. ¡°What on earth is the point of taking a 6 per cent levy and then reinjecting it back into the system?¡±

And, while more financially secure institutions may survive, ¡°there is no question that some number of universities are going to go out of business¡± if the policy comes into force, Kramer said.

¡°The student levy is like a final nail in a coffin for a whole lot of institutions that [the government is] putting under massive strain because of little other agenda items,¡± he said, pointing to?rises in national insurance, reductions to the?Strategic Priorities Grant?and new?free speech regulations?as all adding to universities¡¯ costs.

¡°Negotiating with them to make this [levy]?4 per cent rather than?6 per cent¡­doesn¡¯t get to the fundamental problem on their side or ours,¡± he continued.?

¡°There¡¯s a set of things that they¡¯re doing here that need to be looked at comprehensively.¡±

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helen.packer@timeshighereducation.com