The Dispatch
A Labour of Love?
Over a year after Labour took power in the UK, how has it delivered on the higher education sector’s expectations of change?
By Tim van Gardingen
“Higher education is in crisis” was the stark message, but the plan to escape that crisis was unclear."
"International student inflows are counted in immigration figures, making them an easy target for policymakers managing migration."
In Brief
- Despite expectations, Labour's tenure brought both tighter international student rules and financial pressures, alongside a potential return to Erasmus+ and a slight tuition fee increase.
- The government has further restricted international student pathways, including a shorter Graduate Route, and introduced a potential 6% international tuition fee levy, threatening university finances and global competitiveness.
- With universities facing widespread deficits and vague policy promises, the "barrage of policy ups and downs" highlights a critical need for coherent, long-term strategies to secure the future of UK higher education.
Labour came to power in the UK on a mandate of change. One year since a 13-year reign of the Conservatives came to an end and Sir Kier Starmer moved into 10 Downing Street, change has proven harder than Labour expected.
Labour’s promises enticed many universities. The previous government instigated policies on immigration pressuring international student numbers and chose to not offer financial support to a sector teetering on the brink of financial instability. Appetite for ‘change’, whatever form it may take, was running high.
On this backdrop, it is not surprising that British education policy was a spectacle this year. From signs that UK students may once again have access to Erasmus+ to the further tightening of immigration rules affecting international students, the Labour government has kept British universities on their toes with its barrage of policy ups and downs.
What Was Labour’s Promise to Universities?
Labour’s manifesto managed to say everything and nothing on universities. “Higher education is in crisis” was the stark message, but the plan to escape that crisis was unclear.
Those speculating what the manifesto meant for education latched onto one line more than any other: “The current higher education funding settlement does not work for the taxpayer, universities, staff, or students. Labour will act to create a secure future for higher education and the opportunities it creates across the UK” stated the manifesto.
Universities UK (UUK) saw this as a suggestion that a major higher education funding review could be on the way, calling it “the most eye-catching of Labour’s pledges”.
The Higher Education Policy Institute (HEPI) also highlighted the same part of the manifesto, but criticised it as vague on details and that promises of a “secure future for higher education” gave little hint at what Labour might tangibly do.
Alistair Jarvis, Pro-Vice Chancellor at the University of London, admitted in a blog post published by the Association of Heads of University Administration (AHUA) that universities were far from the top of the list of voters’ priorities. There was “little chance of a Labour government riding to the rescue”, said Jarvis, but he predicted significant incoming regulatory and funding developments which would ultimately lead to positive change.
Manifestos only give a glimpse into what a new government will attempt, and less so achieve. They are not policy, but a notice of direction and aspiration. Labour has so far delivered a mix of the sector’s hopes and fears.
Immigration Rules Villainise Students
The highest profile policy challenges for UK universities came from the Home Office, when a new immigration white paper turned its attention to international students.
The former Conservative government pulled universities into the heart of the country’s inflammatory immigration debate when it raised the minimum salary thresholds for international students on the Graduate Route and tightened rules on students bringing dependents to the UK.
Much of the sector hoped Labour would revert the Conservative’s changes. Instead, they have tightened the rules further. Universities are set to face stronger international recruitment regulation, students with families have more hurdles to bring dependents to the UK, and the Graduate Route is shrinking from 24 months to 18 months.
“I thought the new government would have a better policy for international students” a current international PhD student tells QS Insights Magazine. “Students in the Netherlands and Germany can get permanent residence after their PhD. Compared to that, the UK is already less attractive to students”.
Anti-immigration sentiment has swept across Europe in recent years and is affecting universities. In the run up to the UK’s election last year, A YouGov survey found that 26 percent of Brits thought immigration was one of the top issues influencing their vote. 18 percent said it was the single most important factor in their vote.
International student inflows are counted in immigration figures, making them an easy target for policymakers managing migration. The Home Office cited a rapid increase in sponsored study visas at lower-ranked education institutions and a significant rise in visas for dependants as key drivers for reining in student numbers.
This marks a U-turn from the government’s standpoint in 2019, when it set a target of welcoming 600,000 international students as part of its international education strategy. This is likely because international student numbers quickly surpassed the target, reaching over 730,000 students in 2023/24, triggering a rethink.
Hidden Tax, Clear Costs
Hidden in the white paper was an unexpected shock: a proposal for an international tuition fee levy. If approved, this would be placed on income received from international student fees, with the income “reinvested into skills”.
The final decision on the levy and details of what it entails is to be set out in the Autumn budget, but according to an annex of the white paper the levy could be set at 6 percent. The levy could increase the cost to students coming to the UK as providers pass on the cost and could hit student visa demand by up to 7,000 students, according to the Home Office.
A HEPI analysis suggests that the new tuition fee levy could hit UK university finances by up to £620 million, with the largest burden on large metropolitan universities, predicted costs reaching up to £42 million for UCL alone.
“Perhaps the biggest frustration of all about this policy is the lack of detail on how the money will be used” Nick Hillman, director of HEPI, tells QS Insights Magazine.
“The government says the money will stay in education and skills but what on earth does that mean? It is bizarre to announce a tax without giving any detail on how the money will be spent.”
The levy, Hillman explains, may not only exacerbate university costs, but also leave the UK uncompetitive in the international market.
“Someone sitting in Beijing desperate to learn in an English-speaking country does not have to come to the UK. They can just as easily go to New Zealand, Australia, Canada, Ireland or the United States; or even to find a course taught in English in mainland Europe.”
Universities in the Red Attract Regulators
The international student immigration debate is so pertinent because the biggest pressure on the sector is funding, and the problem is only growing. To government, international students feed into immigration figures. To universities, they are a major source of income and keep institutions above the red line.
This year, more UK HE institutions slipped under the line into deficit. The Office for Students (OfS) warned in November that 72 percent of higher education providers could face a deficit in 2025-26 and 44 percent of the sector expected to report a deficit for three consecutive years with small and medium sized institutions disproportionately affected.
Financial pressures have stacked up over time and from all sides, according UUK. “Universities have been doing more with less for years. With home fees effectively frozen since 2012, rising costs and unpredictable international student recruitment, it has been a uniquely difficult period for higher education,” a UUK spokesperson says.
Now the government is launching a crackdown on university programme franchising. The Department for Education (DfE) said that controls on franchising agreements would “safeguard public money and shore up the reputation of our world class higher education sector”.
‘Rogue higher education operators’ cost the UK taxpayer £2 million in 2022/23, according to DfE. More than half of the 341 franchised institutions are unregistered with OfS, the university regulator in the UK, so they are not directly regulated.
Universities with unregulated franchises risk financial exploitation, but education Secretary Bridget Phillipson makes it clear that well run franchises are still welcome and encouraged.
“Franchising can be a valuable tool to widen access to higher education, and these proposals will ensure students can trust the quality of their courses, no matter where or how they choose to study”, Phillipson says.
“The credibility of our universities is at stake, but these proposals seek to protect students and safeguard taxpayer’s money”.
Silver Linings
What goes down must come up, and alongside the political and financial minefield, the first year of the Labour government brought wins for universities too. UK-EU mobility is back on the cards and long-awaited tuition fee increases, longed for by universities if not students, are coming into effect.
In May, the UK and EU agreed to “work towards a UK-EU youth experience scheme” and association to Erasmus+, Europe’s flagship student mobility programme. Both the new and former government rejected European Commission proposals for such a scheme, but the Labour government has changed tact and indicated it is willing to compromise so long as there is a cap on student numbers.
Mobility negotiations are under heightened scrutiny and sensitivity around migration issues in the UK and the government is likely intent to protect its policy position from the new immigration white paper.
Another long-standing demand of the sector came to fruition in November last year, if not at the scale hoped. DfE announced that maximum tuition fee limits are to rise, applied from August 2025 in time for the start of the next academic year. The fee caps vary depending on whether providers hold certain accreditation from OfS, but for most will stand at £9,535 for standard full-time courses.
While universities will welcome the increase, it is questionable whether it is enough. An analysis from UUK shows that tuition fees lag far behind inflation. Tuition fees have grown by £535 since 2013, a fraction of the £7,000 increase if fees had kept up pace with inflation. That would have brought fees to just under £16,000 .
Yet UUK remains optimistic. “The government has been a real champion of universities, and the decisions to index link a fee uplift and protect research funding were the first steps in the right direction - as well as opening up the potential for Erasmus participation. But there is a long way to go.” a UUK spokesperson tells QS Insights Magazine.