LONDON: Indian student groups, UK academics, and universities have warned that Labour’s proposed levy on international students could drive Indian talent away and deepen financial strains in the higher education sector.
The levy, set at 6% of international student fees, would be used to fund new means-tested maintenance grants for domestic students from low-income families, education secretary Bridget Phillipson announced at the Labour Party conference on Monday. Labour said the policy would “ensure revenue from international students is used to benefit working-class domestic students.”
But critics argue the move risks deterring overseas applicants. INSA UK president Amit Tiwari said: “Indian students alone contributed over £4 billion to the UK economy last year. Adding a new charge will push them towards Canada, Australia and the US.” India is currently the UK’s second-largest source of students after China, with over 98,000 study visas issued in the year ending June 2025.
A study by consultancy Public First projected the levy would reduce international student numbers by 16,100 in the first year, costing universities £240 million in fee income. Over five years, the sector could lose 77,000 students and £2.2 billion.
“About 40% of universities are already in deficit,” said Public First partner Jonathan Simons. “A levy will worsen losses, forcing job cuts and reducing places for UK students, who rely on international fee income to subsidise courses.”
The warning highlights growing tension between Labour’s plans to widen access for domestic students and fears that additional charges could undermine the UK’s appeal as a global study destination.
