Under the original proposals, some of the highest affected universities were University College London (£42m), the University of Manchester (£27m) and King’s College London (£22m). It is said that the levy would pay for maintenance grants as a way to invest in the ‘higher education and skills system’.
The Higher Education Policy Institute estimates that the 6% proposed tax would have cost Newcastle University £9m, with the total cost on higher education institutes in the UK expected to reach £621m. Under the fixed charge £925 per student, Newcastle would be less affected.
The Higher Education Policy Institute estimates that the proposed tax would have cost Newcastle University £9m...
Vice-Chancellor and president of Newcastle University, Professor Chris Day expressed his concerns stating: “While we strongly support measures to improve financial support for students, we remain deeply concerned about the proposed levy on international tuition fee income to fund these changes.”
In addition to worries about the levy, Newcastle University reported a £35 million shortage in the budget last year due to a decline in international student numbers.
Fees brought in by international students are key in funding university-based research as grants and contracts barely cover research costs. Data from the Office for Students shows that universities in the UK lost £6.2 billion on research grants in 2023-2024, revealing harsh realities researchers face when trying to secure funding.
"Fees brought in by international students are key in funding university-based research..."
Mark Fothergill, an independent researcher responsible for compiling the data stated: “International students are the backbone of our higher education system, contributing over £10 billion in fees to English universities – around £4.50 of every £10 of fee income. No wonder the 6% levy is seen as a tax on one of the country’s best-performing sectors.”
This raises the question: what will universities do to cover the cost of the levy? One potential solution would be to increase international student fees. However, in the already competitive market for international students, this would lead to a decrease in interest from prospective students from overseas.
Other options include implementing budget cuts and cutting research spending within universities in an attempt to prioritize resource allocation. Although the proposed levy is yet to be confirmed in the 2025 Autumn Budget, universities across the country will be faced with tough decisions when it comes to recovering the potential loss.
Update: HM Government's Budget saw a £925 fixed fee per student, compared to the 6% proposed levy.
HC 1492 – Budget 2025 Strong Foundations, Secure Future – November 2025