UK Would Spend £450m a Year on EU Student Fees, If Brussels Opens Made in Europe Access

Ministers have drawn up plans to let students from the EU pay the same tuition fees as British students, and they are prepared to spend up to £450m a year compensating universities for the lost income, the Guardian has learned. The offer comes with a condition: Brussels must first give the UK access to its Made in Europe industrial programme.

The EU wants its students to pay just over £9,000 a year rather than international fees, which can exceed £60,000. The demand briefly halted negotiations earlier this year, with British officials saying they had been blindsided when it appeared in the talks. One person with knowledge of the discussions said the government is willing to give the Europeans what they want on fees, but must get something significant in return, and that access to Made in Europe is the biggest prize it is pursuing.

The £450m figure needs careful handling. Two sources who have seen Treasury costings say it reflects the most expensive scenario: fees cut to the domestic level and very high demand for British courses. Treasury officials have modelled several scenarios, varying the size of the discount and the level of demand. Another source said the true cost was likely to be lower, and a government official called the figure speculative. Mark Corver of Campus Numerics, who analyses university funding, previously estimated the cost to the sector at £140m in the first year and £400m across the three years of a typical course.

The industrial scheme is the other side of the bargain. The UK was excluded from the definition of European for the purposes of the programme, which would impose trade restrictions on outside countries, prompting warnings from the British government and the UK car industry. France, the principal opponent of British inclusion, has since shifted. Its proposal would admit any country that was in the single market on 1 January 2020, provided it accepted dynamic alignment on EU trade measures. That could be awkward for London, which applies much lower tariffs than the EU on Chinese electric vehicles. Business secretary Jonathan Reynolds recently told the Guardian he would not set tariff policy in response to pressure from Brussels.

Much else is moving. Before the summit on 20 November, agreement is understood to be largely reached on emissions trading, agricultural products and a youth mobility scheme. Reports suggest up to 80,000 young Europeans could come to Britain to work, live and study; EU states had asked for 100,000 to 150,000, with some arguing for no quota. The sides are also nearing a deal on British access to European biometric databases, which could help track asylum seekers. EU diplomats say the UK's top request is Eurodac, which holds the fingerprints of all asylum seekers aged six and over, but warn it was not built for law enforcement and not every member state may back sharing data with a non-member. The UK is also seeking access to Schengen Information System II, which holds records on fugitives, missing persons and stolen goods. A planned London meeting between EU migration commissioner Magnus Brunner and home secretary Shabana Mahmood two weeks ago was cancelled at the last minute, and officials at the Cabinet Office and European Commission have carried on the work.

The politics at home are delicate. Cheaper places for EU students could prove controversial when many British graduates are calling for changes to their own student loan repayment plans. A government spokesperson said the administration is building an ambitious, close relationship with the EU to strengthen the economy, protect British industry and create opportunities for young people.

On Sunday, former chancellor Rachel Reeves, who left the Treasury when Andy Burnham became prime minister, praised his willingness to think boldly about Europe and said she believes Britain's future lies in the EU. In a Harvard speech on Monday she will say the government must prove to the public the benefits of closer ties and show Europe it is serious and open to compromise. Burnham wants the summit to display that commitment and to set out options for the future relationship, including full re-entry.

A first draft of the joint statement goes to EU ambassadors on Wednesday, with text open to change until 20 November. Member states want firm wording on fees while the UK holds out for guarantees on Made in Europe, which is due to be finalised next year. Ten days ago, with talks deadlocked, the EU discussed decoupling fees from the statement and deferring them six months. Diplomats still hope for what one called the real reset.