Rachel Reeves is being urged by London business and university chiefs not to introduce a visa levy on foreign students.
They warned the Chancellor that the proposed higher education charge could pile further financial problems on some universities.
“Introducing a levy at a time when many institutions are facing acute funding pressures...could force universities to cut costs further still by postponing infrastructure projects, implementing hiring freezes and closing some courses,” John Dickie, chief executive of BusinessLDN and Liz Hutchinson, chief executive of London Higher said in a letter to Ms Reeves.
“Some providers may be forced to increase fees, which would damage the UK’s international competitiveness.”
They added: “London was recently named the world’s best student city for the sixth consecutive year.
“It is in the interest of our economy that we retain that position.”
Ministers proposed in the Government’s flagship immigration White Paper imposing a levy, possibly at six per cent, on universities’ income from international fees, and cutting graduate visas from two years to 18 months.
The White Paper stressed there were problems involving “misuse and exploitation of student visas”, and that “too many graduates” are remaining in Britain after their studies while not moving into graduate level jobs.
But the London business and university chiefs, who have been campaigning on this issue, emphasised that international students generate £20 billion for the UK in exports through expenditure and tuition fees, including £9.6 billion for London.
They also claimed that each of the 650 parliamentary constituencies in the UK is £58 million better off because of international students, or £560 per citizen, rising to £1,040 in the capital.
They added: “Aside from the clear financial benefits of welcoming international students to the UK, they contribute to a richer learning environment in our universities, create opportunities for cultural exchange on campuses and in our communities and extend the UK’s soft power worldwide.
“We recognise there are legitimate concerns about immigration that need to be addressed.
“But efforts to reduce immigration should not come at the expense of the UK’s world-leading education sector.”
The graduate visa route was launched in July 2021 as an unsponsored way for students to stay in the UK for two years (or three years for PhD students) after graduation.
The aim of the route is for international student graduates to work, or look for work, following the successful completion of an eligible course.
The white paper adds: “We recognise the valuable contributions that graduates make to the UK but it is important that those who stay transition into graduate level jobs and are properly contributing to our economy.
“Therefore, we will reduce the ability for Graduates to remain in the UK after their studies to a period of 18 months.
“The Government will explore introducing a levy on higher education provider income from international students, to be reinvested into the higher education and skills system. Further details will be set out in the Autumn Budget.”
