Why has London Met been banned from taking foreign students?

A disproportionate and dangerous decision.

The news broke this morning that London Metropolitan University has been banned from admitting foreign students, leaving 3,000 non-EU students facing deportation from the UK unless they can find an alternative sponsor within the next 60 days. The decision will cost the university £30m, the equivalent of a fifth of its budget, and could, vice-chancellor Malcolm Gillies, has warned, threaten its future. In 2010-11, it ran an operating surplus of £3.9m, and had net assets of £112m.

So why was London Met's licence revoked? The university's "highly trusted sponsor" status was initially suspended last month over fears that "a small minority" of students did not have accurate documentation. The UK Border Agency has now announced that London Met's failure to address "serious and systemic failings" (the latest audit revealed problems with 61% of files randomly sampled) means that it will be formally banned from admitting foreign students. A UKBA spokesman said: "Allowing London Metropolitan University to continue to sponsor and teach international students was not an option."

There is little doubt that London Met's admissions process was deficient. Vice-chancellor Malcolm Gillies has previously said that university leaders "absolutely accept" that international student recruitment "will need further adapting". But in revoking the university's licence entirely, the government is indulging in an crude form of collective punishment as legitimate, fee-paying foreign students lose their right to study. As Sunder Katwala points out, it is bizarre that no transitional arrangements were made. That the decision was announced on the day that new (and likely embarrassing) immigration figures are published, raises further questions over ministers' motives.

There is now a significant risk of contagion as would-be students are deterred from coming to the UK. Universities have already warned that the government's immigration cap is restricting their ability to attract overseas pupils. With higher education worth £12.5bn a year to the UK, ministers are cooking a golden goose.

Home Secretary Theresa May at last year's Conservative conference. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Taxation without benefits: how our tax system increases inequality

We often hear the progressive income tax used as a proxy for all tax when it actually accounts for just over a quarter of the tax take.

Tax may not be the burning issue on everyone’s minds over the next month, but the Panama Papers leak has proven that the thorny issues of who pays what, and what level of tax is fair, are ones that are never too far away from the public consciousness.

One of the most important annual publications on tax is the Office for National Statistics’ Effects of Taxes and Benefits on Household Income. Published today, it shows, among other things, the proportion of income paid in tax by people at different points on the income spectrum. This may sound like the natural domain of the data nerd, but it actually tells us some rather interesting facts about our system of taxes and benefits.

First, the good news. Our much maligned welfare system is in fact a beacon of progressiveness, drastically reducing the level of income inequality we see in this country. In fact, overall, taxes and benefits are quite substantially redistributive. Without them, the income of the richest 20 per cent of households would be 14 times higher than the poorest 20 per cent. With them, that gap falls to only four times.

The benefit system as a whole decreases the Gini coefficient, the most frequently used measure of inequality, by 14 percentage points. For anyone who sees taxes and benefits as a key component in reducing economic inequality, or boosting the incomes of the poorest, or, frankly, tackling social injustice, this is rather welcome news.

But now for the bad news.

While our welfare system is undoubtedly progressive, the same cannot be said of our tax system when looked at in isolation. The poorest face a disproportionately heavy tax burden compared to the richest, paying 47 per cent of their income in tax, compared to just 34 per cent for the richest. Last year (2013/14) this difference was 45 per cent – 35 per cent, and the year before (2012/13) the gap was 43 per cent – 35 per cent. So while the proportion of income paid in tax has fallen slightly for the richest, it has increased for the poorest.

While some taxes like income tax are substantially progressive, those such as VAT and Council Tax are not. Even after adjusting for rebates and Council Tax Benefit, the poorest 10 per cent pay 7.1 per cent of their income in council tax while the richest 10 per cent pay only 1.5 per cent.

Should this matter, if our system of benefits continues to narrow the gap between rich and poor? Well, yes, not least because that system is under severe pressure from further cuts. But there are other good reasons to focus on the tax system in isolation from the benefit system.

Polling by Ipsos MORI has shown that the public believes that the tax system by itself reduces inequality, and it is often spoken of by politicians as if that is the case. We often hear the progressive income tax used as a proxy for all tax, for example, when it actually accounts for just over a quarter of the tax take.

Understanding why the tax system does not by itself reduce inequality is therefore important for both thinking about how tax revenues could be better raised, and for understanding the importance of the benefit system in narrowing the gap between the richest and the poorest.

John Hood is Acting Director of the Equality Trust