A crackdown on international students in Britain could hurt struggling cities where universities help power the local economy, the government has been warned.
Tens of thousands of overseas students are being contacted by the Home Office to tell them they will be removed from the UK if they overstay their visas and have no legal reason to stay.
However, the Centre for Cities thinktank said the changes could have a bigger negative impact for places outside London and the south-east of England that were more reliant on their universities for economic activity.
As almost 3 million students return to universities across the UK this month, it said that Labour would face tensions between its growth mission and the plan to curb net migration levels.
While stating that a crackdown on the higher education sector could have a negative impact for the country at large, Centre for Cities said the impact would be more heavily felt in cities including Leicester, Plymouth, Hull and Stoke-on-Trent.
This is because their local universities play an outsized role in supporting jobs, economic activity and exports in these places compared with more prosperous university towns such as Oxford and Cambridge.
“Any changes will be felt widely across the country but particularly in cities with struggling economies where universities are one of the most important exporting industries,” it said in the report.
Growing numbers of universities in England are being drawn into a financial crisis driven by falling international student numbers, funding cuts and below-inflation increases in tuition fees for UK students.
Several institutions are millions of pounds in deficit, while some are at risk of collapse. Dundee University has received up to £40m of emergency support from the Scottish government.
The sector has become increasingly reliant on overseas students as an important source of revenue, with their total contribution rising from about 5% in 1995 to about a quarter of all income.
However, this income is being put at risk by restrictions on foreign students’ dependents coming to Britain, the government’s immigration white paper proposal to limit the graduate visa and a levy on international student fees.
Highlighting the “town and gown” connection between universities and their communities, Centre for Cities said some places were more heavily reliant than others on the presence of a higher education institution.
Higher education is among the top 10 sectors for exports in most cities and large towns with universities because of the fee-paying international students they attract to the local area.
However, the report found the sector leads global activity in Exeter, Dundee, Leicester and Nottingham. Higher education also generates a higher share of exports than legal services in Cardiff, and than metal manufacturing in Sheffield.
Local universities’ share of high-skilled knowledge jobs is also high in places like Plymouth (32% of all knowledge-sector jobs), Stoke (31%), Hull (24%) and Sunderland (18%).
Andrew Carter, the chief executive of Centre for Cities, said universities were significant economic assets across the country, but particularly in places that had relatively little private sector high-skilled employment or exports.
“Many UK universities are under financial strain, raising questions about their future. Any changes to higher education policy will not be felt evenly across the country,” he said.
“National reforms that weaken the sector risk cutting across the government’s ambitions for delivering growth everywhere.”
A government spokesperson said: “This report rightly highlights the value of our world class universities to their communities and the wider British economy, and we recognise the valuable contributions which international students make as part of that.
“We are exploring the introduction of a levy on the money which universities make from international students, which would see the funds reinvested into our higher education and skills system to unlock opportunity and drive growth.
“To put universities on a secure financial footing, through our Plan for Change, we have increased tuition fees for the academic year 2025/26 in line with forecast inflation and refocused the Office for Students to monitor the financial health of the sector.”
