Universities set to lose £5.6bn as overseas applications plummet

Rise in tuition fees a key factor in growing financial threat as UK becomes a 'no-go zone'

Britain is gaining a reputation abroad for being a "no-go" zone to international students – risking the loss of billions of pounds both to the economy and to universities reliant on foreign students for the higher fees they pay.

Restrictions on visas, the massive rise in tuition fees for European Union students at English universities and the murder of a student from India over Christmas are posing a threat to the future of universities, academics warned yesterday.

At stake is not only the vast extra earnings they bring to the economy – estimated at £5bn a year – but UK universities' reputation as being world-class institutions in which to study. One estimate, in a report by the consultants London Economics, reckoned that Britain could lose out on nearly £8bn in income – £2.3bn lost to the economy and £5.66bn in lost fees revenue.

Ministers have been anxious to crack down on immigration and have issued fewer waivers for students.

"The trouble is that the Home Office is more important than the Department for Business, Innovation and Skills [which is more welcoming to international recruits] in Government," said Sir Peter Scott, professor of higher education at London University's Institute of Education.

"Also, is the media more interested in negative stories about immigrants or the positive impact of international students on the economy? Well, we know the answer." Dr Jo Beall, director of Education at the British Council, said that the UK was currently the second most popular overseas destination for students, behind the United States – responsible for 10 per cent of the market.

However, the figure was declining "so we can't be complacent".

The Latest figures from the Universities and Colleges Admissions Service show the number of EU students applying to British universities has dropped by 11 per cent. They face the same fees increase to up to £9,000 a year as English students – and are finding it cheaper to study in their own countries.

The number of international applications is still rising – at 13 per cent – but academics at the conference believe the constant clamour to cut down on visas will inevitably take its toll on the numbers.

In numbers

£830m Cuts to university teaching funds from central Government this year – reducing places by 15,000

9.9% Fall in applications

to English universities this year as tuition fees treble

2.3bn Potential loss of revenue over next decade from fall in EU students put off by higher fees and tighter controls on study visas