A tougher stance by the Home Office towards overseas students studying at British universities could cost the country up to £2bn a year, according to forecasts published by the Higher Education Policy Institute.
Its report also found that UK higher education could increase revenue from higher fees for foreign students after Britain leaves the EU. But the potential gains would be wiped out if the government insists on tightening student visa numbers.
Nick Hillman, director of Hepi, said: “Were the Home Office to conduct yet another crackdown on international students, then the UK could lose out on £2bn a year just when we need to show we are open for business like never before.
“Removing international students from the net migration target would be an easy, costless and swift way to signal a change in direction.”
The study, which examined the forces affecting international study at British universities , estimates that 20,000 potential students could be deterred by further efforts to restrict student visas, as part of its larger strategy of forcing down immigration.
While universities would lose almost £500m a year in fees from 20,000 fewer international students, the UK as a whole would lose a further £600m a year in the lost spending outside of fees, such as rent and food.
But the largest loss would be the more than £900m a year foregone in what the report calls “the detrimental impact on universities’ supply chains” through lost spending – the multiplier effects of what the analysts describe as “indirect and induced effects on the wider UK economy associated with this source of export income”.
Alistair Jarvis, deputy chief executive of Universities UK, representing the higher education sector, said: “This report provides a stark warning of the potential economic loss associated with policies that restrict European or international student numbers. If universities are to continue to boost the economy and benefit communities, they need the right support from government.”
John Pugh, the Liberal Democrat education spokesperson, accused the government of damaging universities through “populist pandering”.
“Brexit already poses a huge risk to our world-leading universities, the government should aim to mitigate this damage not increase it,” he added.
Earlier, a committee of MPs heard warnings from university leaders that Brexit risked setting British universities back decades, with other EU countries already actively looking to poach talented staff and students.
Asked about the probable impact of a hard Brexit, Prof Alistair Fitt, the vice-chancellor of Oxford Brookes University, said: “It would probably be the biggest disaster for the university sector for many years.”
Prof Alastair Buchan, the University of Oxford’s incoming head of Brexit strategy, said: “We need to be leading, and we have been leading as universities in the past 10, 20 years. Thirty or 40 years ago we weren’t, when we joined the EU. To lose that would be absolutely shooting ourselves in the foot – we must not do that.”
Buchan, the dean of Oxford’s medical school, takes up his new role on 20 January. His seniority and the status of the post is a clear sign of the gravity with which Oxford and other universities are treating the potential impact of the UK leaving the EU.
The Hepi report, which was compiled in conjunction with the consultancy London Economics, argues that while students numbers could fall in the event of Brexit, with EU students no longer given access to the same terms as British students, incomes at institutions such as Oxford could actually rise because of the higher fees charged to international students.
But Catherine Barnard, a professor of EU law at the University of Cambridge, told the education committee hearing that the early signs were of a decline in student numbers, including those from outside the EU.
She cited a survey by Cambridge of potential international students who did not take up a place, with a number of respondents mentioning “anti-immigrant sentiment” as one reason.
“Particularly in the field of maths, the German universities are really looking to tap into the pool of talent that we are getting from Hungary and Poland,” Barnard said.
Buchan told MPs that the Brexit department and the Department for Education had no way of communicating with universities about the problems they faced.
“In the Department for Exiting the European Union, there is no structure of who we can talk to, there’s no base camp, there’s no one responsible for research or education in universities,” he said.
“Likewise, in the Department for Education, there’s nobody really responsible for leaving the EU. So there’s a real need to see who is the channel or the portal for information.”