The government¡¯s plan to replace migrant workers with domestic talent in the IT and engineering sectors is unlikely to succeed without reform to the higher education funding system, the Migration Advisory Committee (MAC) has said.??

English universities currently lose more than ?3,000 per year for each domestic student they educate in these subjects, according to?.?

The MAC was commissioned by the government to look into how companies use the immigration system when hiring IT and engineering professionals, with these sectors among the most likely to employ foreign workers.

A central tenet of the Labour government¡¯s plan to bring down immigration is to train enough local workers to meet skills gaps, so the country does not depend?on those from overseas.

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While the committee found the sectors are not ¡°reliant¡± on international recruitment ¨C with the majority of hires coming from the resident workforce ¨C foreign workers are being used to fill skills shortages.

If the government wishes to plug these gaps with domestic workers, it must re-evaluate the funding model in higher education and further education, the report says.

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In 2024-25, English universities received additional funding from the Office for Students (OfS) for students studying lab-based engineering courses of ?1,737 per student, while those delivering computing and information technology courses received an additional ?289.50.

In contrast, ?11,580 in additional funding is assigned to students on medical courses.

The report notes the estimated ?3,000 loss per student is calculated based on course price figures produced in 2016-17, with little clarity available on how much these programmes cost to deliver today.?

It finds that domestic tuition fee freezes are ¡°particularly affecting¡± the expansion of IT and engineering courses, likely?because of the higher cost of delivery.?

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¡°Given this, universities are not significantly increasing the provision of STEM courses, despite growing demand for these courses. This is an issue that needs to be addressed so that the skills pipeline is improved,¡± the report says.?

The report was finalised on the same day education minister Bridget Phillipson?announced a cut to the Strategic Priorities Grant, which helps fund high-cost courses.?Although STEM subjects will continue to receive the funding, it is not being uprated with inflation, meaning it is in effect being cut in real terms.

¡°If providers are asked to make a loss on providing courses it is perhaps unsurprising that they choose not to expand provision in such courses,¡± the MAC report highlights.

With UK policymakers expected to set out their plan for a reformed higher education funding model in the coming months, the committee highlighted the fee model in Australia, where, in 2021, the government introduced a new package that saw differential fees used to incentivise students to choose courses viewed as a priority.?

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While the report points to evidence that this model has had little impact on student choice, the MAC says recent Australian proposals ¡°maintain the principles that the level of funding should differ by field of study and be adjusted to better reflect the costs of delivery¡±.

It also suggested a ¡°nuanced¡± approach to level 7 apprenticeships may be ¡°more appropriate¡± after the government?cut funding for anyone over the age of 21?enrolled on these programmes.

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¡°The government should seek an approach that does not lead to a reduction in graduate-level training in STEM subjects, as this would directly conflict with the objectives of the industrial strategy,¡± the report says.

helen.packer@timeshighereducation.com