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Labour promises new maintenance grants ‘funded by fee levy’

Means-tested support only to be offered to those studying courses aligned to party’s priority areas

Published on
September 29, 2025
Last updated
September 30, 2025
Source: Labour Party

Labour has promised to reintroduce maintenance grants for students “who need them most”, funded via the planned levy on international student fees.

Students studying “priority courses” will be offered additional support, with “tens of thousands” set to benefit, the party said.

Education secretary Bridget Phillipson used her speech to the party’s annual conference in Liverpool to announce the new grants, which Labour said would be in place “by the end of this Parliament”.

Phillipson has been under pressure to increase support for students after raising tuition fees for this academic year. The rising costs facing students have led to an increase in part-time work, while more students are also choosing to commute from their family home instead of studying in a new area.

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The new grants will be means-tested and available for those taking courses from level 4 to level 6. But Labour said these programmes must “support the industrial strategy and the Labour government’s wider mission to renew Britain”.

It said the grants “will be fully funded by a new International Student Levy, ensuring that revenue from international students is used to benefit working-class domestic students, and support growth and opportunity”.

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Phillipson told the conference in Liverpool that Labour was putting universities “back in the service of working-class young people”.

She said she had taken “the decisive steps we needed on university finances,?so opportunity is there tomorrow, for all who want it”.?

“But I know, you know, that we must do more,” Phillipson added. “So that is why today I’m announcing that this Labour government will introduce new targeted maintenance grants for students who need them most.??

“Conference, their time at college or university should be spent learning or training, not working every hour God sends. That is the difference a Labour government makes.”

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Speaking in a fringe session on widening access hosted by the Social Market Foundation shortly after the minister’s announcement, Vivienne Stern, chief executive of Universities UK, said that while the return of maintenance grants was welcome, it would come at the expense of a group of students who the British higher education sector was “really fortunate” to host.

If the full value of the levy was passed on to international students, some of them might be unable to afford to come to the UK, Stern warned, noting that the education of domestic teaching was already a loss-making activity for universities.

“This is a three-cup trick,” Stern said. “You give money to a small group of students over here, but where does it come from? It comes from a source of funding which is massively cross-subsidising the provision of domestic education and I think that’s a mistake.”

But, Alex Stanley, vice-president for higher education at the National Union of Students, described the move as a “real win” for students.

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“It takes some of the burden off of parents, makes lives easier for students and gets rid of some of that burden of debt, so that’d be a fantastic win for all of us.”

Nick Harrison, chief executive of the Sutton Trust, said it was a?“positive step in breaking down barriers to opportunity for students from the poorest backgrounds” and helped to establish?“the important principle that the poorest should not graduate with the highest debts” but he said grants should be extended to all students from low income backgrounds in the future.

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Jo Grady, general secretary of the University and College Union (UCU), said treating international students “as cash cows” to fund maintenance grants amounted to “robbing Peter to pay Paul”.

tom.williams@timeshighereducation.com

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Reader's comments (6)

Very positive story here, bringing back maintenance grants funded by the international levy.
Jo Grady, general secretary of the University and College Union (UCU), said treating international students “as cash cows” to fund maintenance grants amounted to “robbing Peter to pay Paul”. Well it's charging a fee for those students from abroad (to whom we don't have any obligation in principle) wealthy enough to be able to afford it to be able to support our own students (who can't otherwise afford to attend University here). Jo is paid by our subs to represent the interests of we academic staff working in the UK university sector, and not the interests of international students. And do remember there are many bursaries to aid international students in difficult circumstances (Palestinians for example) so we are doing our bit on that front, and rightly so. But well off "Peter" is not in the same situation as poor "Paul" and he is not being robbed but weighing up how to spend his cash as he sees fit and which system to enroll within. He can go to Australia or USA among many others. International students are thus not "cash cows", the point of the analogy is that the "cash cow", like the poor dairy cow, has no choice but to give up the milk intended for her calves (taken from her to supply veal) to the farmer to flog to the dairy industry for filthy lucre. International students have a free choice where to study and whether they wish to stump up the fee if they can afford it or have someone else to pay for it. The Cash Cow analogy is frequently misapplied, usually effacing this rather distressing subtext. Perhaps killing the "goose that lays the golden egg" might be more appropriate for Jo to use in future, though still not exact analogy.
Indeed, we should not be too worried about the international student as it were as we are providing a high quality educational service. Only the better off or those who can access financial support will be able to afford this in the first place. Obviously, we don't want to set the cost too high and deter students who will go to the US or Australia or wherever, and this is the financial judgment we must make. Similarly with this EU proposal for free mobility for young people whereby it is proposed that domestic rather than international fees would be applied to EU students, we often seem to be much more concerned with the situation of well-off middle class Europeans than the plight of our own disadvantaged young. I think this is a modest but welcome support for social mobility.
The problem with a hypothecated approach to funding grants is that if the hypothecated source dries up due to falling demand, the grants policy is thrown into jeopardy. I also hope that the Treasury have done their sums properly. Currently any overall increase in spending on student grants by the Department for Education in England produces around around 20% extra costs on Barnett consequentials for the three devolved governments, whose university international student recruitment income does not contribute to the income stream! Thus for every ?1,000 extra raised by the student levy on international students studying in England, only around ?840 is available to be spent on grants to domestic students in England and ?160 is split between the undifferentiated grants to the three devolved governments. For obvious reasons, the UK government controlled Treasury don't normally agree to handing out extra spending money raised solely in England like this to devolved governments whose spending and taxes they don't totally control; so the way they might deal with it is to insist the extra payments to devolved governments come from savings from elsewhere within the Department for Education budget, ie something else gets cut instead. Are there any wily HE journalists who understand the Barnett formula and going to ask about this apparently anomalous fiscal policy?
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Very interesting!!! But surely this would only apply if there is an increase in funding , i.e., if there were less spending elsewhere to balance this financial injection then there would be no consequences? Just because it is hypothecated does not mean it will contribute to an increase in funding overall. There are many ways in which these consequentials can be finessed in accounting terms. I would imagine Rachel Reeves will have found a way around this? But the sheer lunacy of devolved government that has been inflicted on us by the Nationalists foes throw quite a few spanners in the works, I can tell you. Though fewer now we are out of the EU.
Oh Yes! I think we can take it for granted that Rachel and her gang at the Treasury are across this one! And do bear in mind that Two-Tier Keir is currently rowing back on Sir Tony's aspiratuion for 50% of the age group to attend university, so I imagine there's enough wriggle room when it's all ironed out to deal with any pesky Barnett consequentials! But you are right to raise the issue I think.

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