The UK government is prepared to pay as much as £450 million a year to give EU students the same university fees as domestic students, but only if the EU allows Britain to join its proposed industrial programme, the Guardian has learned.
Ministers are prepared to spend hundreds of millions of pounds compensating universities for lost revenue. However, British officials insist it depends on a guarantee that UK companies will be treated equally under the Made in Europe scheme, which would impose trade restrictions on countries outside the bloc.
Negotiators have been working on a series of agreements to be finalised at a summit on 20 November. Areas of progress include emissions trading, agricultural products, a youth mobility scheme that could allow up to 80,000 young Europeans to come to the UK, and a near-agreement on access to EU biometric databases, which could help the government track asylum seekers.
The issue of student fees had briefly stalled talks. EU officials want their students to pay just over £9,000 a year rather than the international fees that can exceed £60,000. The UK’s demand for access to Made in Europe is the other main hurdle. France, which had opposed British inclusion, has proposed allowing British manufacturers into the scheme if the UK accepts dynamic alignment with EU tariffs.
One person with knowledge of the talks said: “We are willing to give the Europeans what they want on fees, but we will have to get something significant in return. The biggest prize we are pushing for right now is access to Made in Europe, so there is a deal to be done there.”
A government spokesperson said: “We are building an ambitious, close relationship with the EU that will strengthen our economy, protect British industry, and create more opportunities for young people across the UK.”
Treasury officials have drawn up estimates for the cost of the fee policy under various scenarios. In the most expensive, with fees reduced to domestic levels and very high demand, the bill could reach £450 million a year. Mark Corver, an analyst of university funding, calculated it would cost the sector £140 million in the first year and £400 million across the three-year period of a typical course. Another source said the true cost was likely to be lower, and a government official described the figure as speculative.
Before the summit, the first draft of a joint statement will be presented to EU ambassadors on Wednesday, with text open to amendment until 20 November. In a speech at Harvard, former chancellor Rachel Reeves will say the UK’s “economic interests, common values and basic geographical reality all point towards Europe”.
Analysis
Why This Matters
- The deal could mark a significant step in the UK’s post-Brexit reintegration with the EU, affecting trade, migration and fees.
- Subsidising EU student tuition would be a large new public spending commitment while domestic graduates face loan repayment concerns.
- It reflects the Burnham government’s strategy of using concrete concessions to rebuild trust and negotiate broader market access.
Background
The UK left the EU in January 2020 after the 2016 referendum. The government of Andy Burnham, who became prime minister earlier this year, has pursued a closer relationship, with some senior figures backing full re-entry. The negotiations cover several areas, with the student-fee demand becoming a key sticking point.
Key Perspectives
- UK government: Will only concede on fees if it gets guaranteed access to Made in Europe, treating British companies the same as EU ones.
- EU negotiators: Want students to pay around £9,000 a year; initially pressed for firm language on fees but later discussed decoupling the issue.
- Rachel Reeves: The former chancellor argues Britain’s future is within the EU and supports the government’s willingness to compromise.
- France: Shifted from opposing UK inclusion in Made in Europe to proposing a conditional offer based on dynamic alignment with EU tariffs.
- Fiscal analysts (Mark Corver): Estimates the fee-reduction cost at £140m in year one and £400m over three years.
- Treasury officials: See a worst-case cost of up to £450m a year, but some call it speculative.
What to Watch
- The EU summit on 20 November, where the joint statement is expected to be finalised.
- Whether the UK accepts dynamic tariff alignment, which could conflict with its current lower tariffs on Chinese electric vehicles.
- How the spending commitment is received domestically, particularly among graduates calling for changes to student loan repayment rules.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedThe UK is willing to spend up to £450 million a year on EU students if it can secure access to Made in Europe.World news | The Guardian: “Ministers are prepared to spend as much as £450m a year to give students from the EU discounted university fees, the Guardian has learned, but only if Brussels allows the UK access to its Made in Europe industrial programme.”
- SupportedThe £450 million figure is for the costliest scenario, with fees reduced to domestic levels and very high demand.World news | The Guardian: “under the most expensive scenario, which involves reducing fees to the same level as domestic students’ and very high levels of demand, the government could end up paying £450m a year.”
- SupportedA person with knowledge of the talks said: “We are willing to give the Europeans what they want on fees, but we will have to get something significant in return. The biggest prize we are pushing for right now is access to Made in Europe, so there is a deal to be done there.”World news | The Guardian: “One person with knowledge of the talks said: “We are willing to give the Europeans what they want on fees, but we will have to get something significant in return. The biggest prize we are pushing for right now is access to Made in Europe, so there is a deal to be done there.””
- SupportedA government spokesperson said: “We are building an ambitious, close relationship with the EU that will strengthen our economy, protect British industry, and create more opportunities for young people across the UK.”World news | The Guardian: “A government spokesperson said: “We are building an ambitious, close relationship with the EU that will strengthen our economy, protect British industry, and create more opportunities for young people across the UK.””
- SupportedNegotiators have been working on agreements to be finalised at a summit on 20 November.World news | The Guardian: “Negotiators have been thrashing out a series of deals for months to be finalised at the long-awaited summit on 20 November.”
- SupportedA youth mobility scheme could allow up to 80,000 young Europeans to come to the UK.World news | The Guardian: “with reports suggesting up to 80,000 young Europeans could be allowed to come to Britain to work, live and study.”
- SupportedThe UK and EU are nearing agreement on British access to European biometric databases, which could help the UK government track asylum seekers.World news | The Guardian: “The two sides are also nearing agreement to allow Britain access to European biometric databases, the Guardian has learned, which could help the UK government track asylum seekers.”
- SupportedEU officials want their students to pay just over £9,000 a year rather than international fees that can exceed £60,000.World news | The Guardian: “EU officials say they want their students to pay fees of just over £9,000 a year rather than international fees, which can rise above £60,000.”
- SupportedFrance proposed allowing British manufacturers into the scheme if the UK accepts dynamic alignment with EU tariffs.World news | The Guardian: “France – which was the principal opponent of Britain’s inclusion in the scheme – shifted its position with a new proposal to allow British manufacturers into the system as long as the UK accepted “dynamic alignment” on EU tariffs.”
- SupportedMark Corver calculated that the policy would cost the sector £140 million in the first year and £400 million across a typical three-year course.World news | The Guardian: “Mark Corver, an analyst of university funding and director at Campus Numerics, previously calculated it would cost the sector £140m in the first year and £400m across the three-year period of a typical course.”
- SupportedRachel Reeves will say at Harvard that the UK’s “economic interests, common values and basic geographical reality all point towards Europe”.World news | The Guardian: “In a speech at Harvard on Monday, Reeves will say the UK’s “economic interests, common values and basic geographical reality all point towards Europe”.”
- SupportedThe first draft of a joint statement will be presented to EU ambassadors on Wednesday, with text open to amendment until 20 November.World news | The Guardian: “The first draft of a joint statement will be presented to EU ambassadors on Wednesday with room for text to be added or deleted up to 20 November.”