Minister pressed on fears over £85million tax bill

The Herald Scotland

15-05-2025

'I know in my constituency of Edinburgh West, the wellbeing of our four universities in Edinburgh are vital not just to the economy but to the livelihoods of many of my constituents.
'International students in turn are vital to the wellbeing of those universities, and Universities Scotland say that the measures proposed this week by the Government on immigration could cost universities in Scotland £85 million a year in terms of the levy (as reported in The Herald).
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'There's a great deal of concern about this, so can the Leader arrange for me to have a meeting with the relevant minister to see how we can address this issue and perhaps reassure our university sector?'
Commons Leader Lucy Powell replied: 'Look, it's important to say that international students play a really important part to our country and bring with them skills and make a great contribution to our country. I think that's why (Universities UK) said this week that actually our measures will keep us very competitive in these areas, but I do take on board what she's saying.'
Under a proposal unveiled on Monday as part of the UK Government's drive to curb immigration, a new 6% tax would be imposed on universities on their income from foreign students.
Calculations by university sources in Scotland based on the number of overseas students at 19 institutions in the sector north of the border during 2023/24 estimated the bill would come to around £85m a year if the tax is introduced north of the Border.
The additional potential cost comes on top of existing acute financial challenges and major job losses at a number of Scottish universities.
Claire McPherson, Director of Universities Scotland, told The Herald last night the international students tax could exacerbate budget problems in the sector and urged the Prime Minister to reconsider its introduction.
'We urge the UK Government to think carefully about the impact that a levy on international student fees will have on universities and the attractiveness of the UK as a study destination," she said.
"Universities' financial and operating environment is already very challenging. We cannot understand the logic behind a levy that would move resource away from universities. It risks making a bad situation worse.'
She also called for the UK ministers to allow the Scottish Government to decide whether to introduce the levy.
'Within the UK, we'd hope to see the UK Government defer a decision on the applicability of any levy in Scotland to the Scottish Government, reflecting the fact that university funding is devolved," she said.
"We'd then hope that the Scottish Government will see this as an opportunity to differentiate Scotland's higher education sector from the rest of the UK, in terms of strengthening Scotland's appeal when recruiting internationally. That would be one way to create an opportunity for Scotland from amongst a suite of immigration policy measures that Scotland does not otherwise have the powers to control.'
Scotland's higher education minister Graeme Dey said he was 'as a matter of urgency" seeking clarity from the UK government on whether "the proposed levy on international students is intended to only apply to universities in England."
A UK Government spokesman told The Herald last night: 'We will fully consult all the devolved governments, including the Scottish Government, on the implementation of the international student levy and will be setting out more details around this in the Autumn Budget.
'The analysis we've given so far of the potential impacts is based on the levy applying to English higher education providers only.'