Burnham’s latest Brexit plan threatens one of Britain’s great success stories

Britain’s universities are in the grip of a painful financial crunch. Thousands of jobs have already been lost in higher education in recent years, with more likely to go soon. At the start of the summer, the House of Commons Education Select Committee warned that there is now a serious risk of some universities falling into outright insolvency. This is particularly troubling when you look beyond reports specific to the sector, and consider the Government’s plans on tech, reindustrialisation, trade, defence and skills. All require a thriving higher education system as the nursemaid of the new innovations, exports and highly-skilled workers on which each will depend. Universities are an export industry in themselves, too, when they bring in large amounts of money for educating overseas students. A series of governments have played their part in the current crisis, kicking holes in the same system which they simultaneously relied on to help deliver their various agendas. Most notably, since 2010 the “tens of thousands” net-immigration target unwisely included overseas students in the numbers – treating the customers of a temporary services export as if they were long-term immigrants to this country. That’s rooted in a United Nations definition of immigration, but it’s hard to understand why the coalition government decided to accept it, or why the May, Johnson, Sunak, Starmer and now Burnham governments continued to do so thereafter. It would have been more accurate, and less economically damaging, to exempt them from the outset and explain why. I have an uncomfortable suspicion that the choice not to was rooted in a lack of confidence in the Home Office to successfully ensure students wouldn’t overstay their visas.While it’s obviously right to clamp down on bogus students, and understandable to limit the right of those on student visas to bring multiple dependents with them, other decisions – like Starmer’s £925 annual levy per student on universities – are incomprehensible. This was an active penalty for universities successfully attracting international talent which both burnished the UK’s international prestige and effectively subsidised domestic British students. This is the context for what is now reported to be the Government’s intended bargaining chip with the EU: a hefty cut in the fees EU students pay to study in Britain. A month ago, ministers were reported to be considering a discount, which would mean those students would pay only the cost of the course, effectively a subsidy of around £280m a year. Now, though, it seems they are moving closer to Brussels’ demand, which is to charge the same as British students, which would cost £450m or more annually. This would blow another huge hole in universities’ finances. Either the sector must swallow the cost, meaning more job losses, fewer places for British students and less investment in the research that ministers also say they want to see happen, or the Government – and by that I mean us taxpayers – will be expected to pick up the tab. In case it has escaped anyone’s notice, the Treasury’s coffers are not exactly overflowing currently. Taxpayers, like universities, are subject to intense financial pressures, too. It’s also fair to say that the level of trust in politicians’ willingness to pay up is quite low among the academic community, given the experience of the last few years. Even worse, it still isn’t clear what ministers will actually secure from the EU in return for this extra cost. They’ve signalled to all and sundry how keen they are to get a deal, and EU negotiators surely know that it would be so embarrassing if Burnham and Miliband came home empty-handed that they can drive a hard bargain. The fact the potential bill has grown by £160m a year in a few weeks, amid what appears to be an ongoing retreat from Britain’s initial negotiating position, doesn’t seem like a good sign. It’s ironic that while the new Government has committed to keeping Starmer’s international students levy, thereby penalising the recruitment of paying, profitable foreign students, the only kind of international students it seems keen to encourage are those that would cost either universities or taxpayers money. One sign of the Government’s desperation to secure a deal – any deal – with the EU that it can show off at home is that there is precious little talk of making good the existing debt owed by EU students for courses that have already been received. According to data from the Student Loans Company, 103,400 EU nationals who graduated from British universities are now earning above the threshold at which loan repayments are required. However, 42 per cent of them paid nothing back last year, and £360m of student loans to EU recipients are now in arrears. In a reasonable negotiation, this would surely have come up. After all, British taxpayers put the money up for these loans in the first place, our universities provided the education required, and many of our own graduates now labour under student debts that accrue a punishing rate of interest. If we are now to foot the bill for a new scheme of subsidised education for EU students, a reasonable quid pro quo would be agreement that these debts should be paid. When Andy Burnham’s predecessor was still in Downing Street, Kemi Badenoch had a saying she deployed regularly. On Chagos, fishing rights, American tariffs and trade union disputes, she would declare: “When Labour negotiates, Britain loses.” The new Prime Minister still has time to ensure that the same label doesn’t apply to him – our taxpayers, universities and students cannot afford it.