Universities at Risk as Labour’s Migration Reforms Slash International Student Numbers

The Labour government's white paper on UK immigration, published in May 2025, outlined a stricter new vision, introducing tougher visa rules for both international students and skilled workers. The prime minister said that settlement in Britain should henceforth be regarded as a privilege rather than a right. The broader Labour immigration reforms are to trim net migration. Reducing the period of post-study stay for international graduates from two years to 18 months will form the core of this reform. Besides, the English language requirement for a skilled worker visa will be elevated beginning in 2026, and the immigration skills charge fee paid by UK employers who sponsor overseas workers will grow by one-third. The expected effect of these policy changes regarding the skilled worker visa is dual: recruitment and retention of talent will become more difficult for companies.

By its worst estimate, the new changes would cost the UK economy a total of £1.2 billion over five years, but it could be as high as £4.4 billion; however, the most modest gain in the best-case scenario rather suggests an additional small gain of £0.8 billion. Losses can primarily be attributed to the decline in university tuition fee income, lower visa fee revenue, and less income tax contributions owing to fewer graduates remaining in the UK following graduation.

The experts have raised the alarm about the economic implications of immigration into the UK. Jamie Arrowsmith from Universities UK International has in essence pointed out, indicating that the changes could end up harming both local economies and university finances: increased tuition fees collected in England by universities are likely to be countered or offset by other movements, including the proposed levy for international students and more stringent rules of reference on visa compliance, according to the warning issued to payback expenses.

Political debate almost ignores the real costs and benefits of migration, added Sunder Katwala of British Future. While it is a drain on housing and services, immigration also provides much through taxes, university fees, and NHS surcharges. A more balanced and honest discussion is needed. Indeed, net migration figures are already falling, with only 431,000 net additions to the UK population in 2024, compared to 860,000 in 2023. It can be said, though, that despite decreasing the overall net migration numbers for England, the government still pushes for tougher controls over immigration. Criticism has been drawn, including some comparisons to some of the controversial political speeches from the past, due to Sir Keir Starmer's comments over how the UK becomes "an island of strangers."

A former Secretary of Education, Alan Johnson, warned that targeting international students would jeopardise the future of UK universities. According to the Home Office report, between 11,000 and 15,000 students might now prefer not to come to the UK each year because of the new rules. Applications for graduate visas are set to reduce by about 16,000 a year until 2030. The report shows a steep rise in study visas given out to students of lower-ranked institutions, while the top 100 universities recorded a drop in visas. This trend has informed the record levels of migration and given rise to scrutiny on the graduate visa route.

Although the reforms may be beneficial in the long run, encouraging training of the domestic workforce, officials are still not sure how they will be managed by businesses. In exchange for these restrictions, the government is extending pathways for high-skilled migrants, introducing the High Potential Individual (HPI) route and Global Talent route, which will allow graduates and exceptional professionals a stay of five years in the UK. The Labour immigration policy radically changes UK visa fees and regulations, which can have far-reaching implications on universities, employers, and the economy as a whole. The Home Office report aptly counsels scrutiny of the risks of financial loss and the strategic positioning of global talent.

Editor’s Note:

The proposed changes to UK immigration policy by the Labour government signal a massive departure from the established conventions in international mobility, particularly for students and skilled workers. By tightening visa regulations, for example, by shortening the stay period of the Graduate Visa or raising the English language requirements for skilled worker visas, the government is trying to reduce net migration and focus on developing the domestic workforce. Conversely, these reforms are causing uproar in the educational and business arenas, with many claiming that the long-term economic ramifications could far outweigh any benefits. Even the Home Office's impact assessment estimates that the UK stands to lose £4.4 billion over five years, mainly due to reduced domestic income from universities, reduced revenue from visa fees, and reduced income-tax contributions.

Universities are expected to suffer among the hardest. The reduction in the graduate visa duration and expected decline in international student numbers could greatly impact institutions' finances, especially for those reliant on overseas enrolments. The experts at Universities UK International noted that gains made through increased domestic tuition fees might be offset by the cumulative impact of these immigration reform measures.

In addition, the prospect of an international student levy and increased pressure on visa compliance only adds to the sector’s woes. Alan Johnson, the former education secretary, voiced that targeting international students might compromise the viability of some universities, a warning that has been echoed by unions and sector leaders who fear long-term damage to the UK's standing as a global education hub. Still, with the expansion of the routes for high-skilled migrants, such as those under the High Potential Individual and Global Talent schemes, these measures may still not offer compensation for excessive restrictions. The UK’s capacity to attract and retain global talent underpins its economic and cultural vitality.

According to Skoobuzz, a more balanced, evidence-driven approach is needed, which recognises both immigration's pressures and benefits and makes sure that the UK remains an open, competitive, and forward-looking nation in a rapidly changing global landscape.

FAQs

1. What are the key changes in the Labour immigration policy?

Labour’s immigration policy includes stricter UK visa rules, such as reducing the graduate visa stay period from two years to 18 months, raising the English language requirement for skilled worker visas, and increasing the immigration skills charge paid by UK employers sponsoring overseas workers.

2. How will the Labour government’s immigration policy affect the UK economy?

According to a Home Office report, the UK could be up to £4.4 billion worse off over five years due to reduced university tuition income, lower visa fee revenue, and fewer international graduates staying to work and pay taxes.

3. What did the Home Office reveal about the £4.4bn immigration impact?

The Home Office assessment outlined three scenarios: a central estimate of a £1.2bn loss, a worst-case scenario of £4.4bn, and a best-case gain of £0.8bn. The losses are mainly linked to changes in graduate visa rules and reduced international student numbers.

4. What are the new UK immigration rules in 2025?

New rules include:

• Shortening graduate visa duration to 18 months (effective 2027)

• Raising English language requirements for skilled worker visas

• Increasing the immigration skills charge by one-third

• Expanding the High Potential Individual and Global Talent visa routes

5. How much does a UK work visa cost under the new policy?

The immigration skills charge will rise by 33%, increasing costs for UK employers sponsoring overseas workers. Visa fees may also be affected by broader policy changes, though specific figures were not detailed in the report.

6. Will the UK’s skilled worker visa requirements change under Labour?

Yes. From 2026, the English language requirement for skilled worker visa applicants will be raised, making it harder for some overseas workers to qualify. This is part of Labour’s plan to prioritise domestic workforce development.

7. How will the graduate visa changes affect UK universities?

Universities are expected to lose income from reduced international student enrolments. The report estimates 11,000 to 15,000 fewer students per year, with graduate visa applications falling by 16,000 annually by 2030. This could impact university finances and global competitiveness.

8. What is the impact on international students?

International students will face stricter visa conditions, shorter post-study work periods, and potentially higher compliance requirements. These changes may discourage applications, especially to lower-ranked institutions, which have seen rapid growth in sponsored study visas.

9. What are experts saying about the immigration reforms?

Sector leaders, including Universities UK International and British Future, have warned that the reforms could harm economic growth, university sustainability, and the UK’s ability to attract global talent. They call for a more balanced and evidence-led approach to immigration policy.

10. What are the High Potential Individual and Global Talent routes?

These visa routes are being expanded to attract exceptional talent. The HPI route allows graduates from top global universities to stay in the UK for two years. The Global Talent route supports individuals in academia, arts, culture, and technology for up to five years.