Student Clampdown Could Cripple Struggling Cities

The UK government’s tougher stance on international students could deliver a heavy blow to cities where universities are central to local jobs, exports and regeneration, according to new analysis from Centre for Cities.

The warning comes as the Home Office contacts tens of thousands of overseas students about removal if they overstay their visas, and ministers consider further curbs.

In a briefing published today, Centre for Cities says universities are among the biggest exporters in many places outside the Greater South East. In Exeter, Dundee and Leicester, higher education is the single largest export sector, driven by fee-paying international students; it ranks in the top 10 exporters in over half of UK cities and is larger than legal services in Cardiff and metal manufacturing in Sheffield. The think-tank also highlights cities such as Leicester, Plymouth, Hull and Stoke-on-Trent, where universities support a high share of knowledge-sector jobs and local economic activity.

The report lands amid mounting financial pressure across the sector. Reliance on international fee income has increased from around 5% of university revenue in 1995 to roughly a quarter today, but that income is now at risk from restrictions on student dependants (tightened from 2024), proposals to shorten the Graduate visa, and a mooted levy on international student fees. Centre for Cities cautions that national reforms which weaken universities could cut across the government’s ambition to “deliver growth everywhere”.

One flashpoint is the proposed 6% levy on international fee income in England. Independent assessments suggest it could remove more than £600m a year from universities, with the regional pain falling hardest outside the South East—precisely where local economies are most university-reliant.

Signs of stress are already visible. The University of Dundee has received up to £40m of direct support in principle from the Scottish Government to stabilise its finances, underscoring how quickly difficulties can escalate.

Ministers, for their part, say they recognise the economic value of “world-class” universities and the contribution of international students. Alongside consulting on the levy and immigration reforms—including proposals in May’s white paper to reduce the standard Graduate visa to 18 months—the government has increased the undergraduate tuition-fee cap in 2025/26 by 3.1% (in line with forecast inflation) and tasked the Office for Students with a stronger focus on sector financial health.

For cities with thinner private-sector bases, universities don’t just educate—they anchor high-skill employment, pull in overseas revenue, and sustain local high streets. Policy choices on migration routes and university funding therefore have uneven, place-based consequences. Centre for Cities’ message is blunt: if reforms deter international students or drain university resources, the fallout will be felt first and hardest in the very places the government most wants to level up.

Source: The Guardian