About 10 per cent of students would qualify for relaunched maintenance grants if the government restricts them to priority courses, compared with more than 50 per cent who accessed them under the old system, the Institute for Fiscal Studies (IFS) has estimated.

The Labour Party has pledged to reintroduce maintenance grants by the end of this Parliament, funded by a levy on international student fees.

The grants, which do not have to be repaid, will be limited to students on so-called priority courses that support the industrial strategy and the government’s missions.

Labour is set to outline further details in the autumn budget on 26 November, including how the levy to fund them will operate.

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, the IFS calculates that if the new grants were available to students on priority courses with a household income of less than £25,000, about 10 per cent of students would currently qualify.

The economic research institute said providing a £4,000 grant for these students would have cost roughly £500 million in 2023-24.

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If the international student levy goes ahead at a 6 per cent charge, as was initially mooted by the government, universities would be set to pay out about £620 million.

Under the old system that was abolished in 2016-17, more than half of students qualified for maintenance grants as they were not restricted to specific subjects.

The IFS said restoring the former grant system would cost about £2.6 billion in today’s prices.

As part of its analysis of the recently published Post-16 White Paper, the IFS said the government “has not been clear on the economic rationale” for the international student levy, which “would constitute a tax on a major UK export”.

The report adds that “earmarking” levy revenues for specific spending streams is “problematic”.

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“If total spending on maintenance grants is genuinely tied to the amount raised through the levy, this is unlikely to represent good policymaking as there is no reason that optimal spending on these grants would match – or evolve over time in the same way as – levy revenues,” it states.

“If the amount raised from the levy does not affect the amount spent on the grants, particularly in future years, then the hypothecation is effectively meaningless.

“If the aim of the levy is purely to raise revenues, then the government should make the case for why such a levy is the best way to raise additional revenues.”

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The report also estimates that current government plans for student finance, as set out in the White Paper, mean some domestic university students could receive £1,000 less living cost support by 2029-30 in real terms than equivalent students this year.

Although maintenance loans will rise in line with forecast inflation each year, the long-running freeze on income thresholds that determine entitlements means students are eligible to borrow less each year.

“Wednesday’s budget will give us crucial information on the design of a new levy on international student fees, and on maintenance grants for low-income English students,” said Kate Ogden, a senior research economist at IFS and an author of the report.

“There are big questions still to be answered: how high will the levy be; how will means-testing for the new maintenance grants work; and will the grants be additional to existing loan entitlements or replace them?

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“Both universities and students will be watching to see whether the government is taking away with one hand and giving back with the other.”

helen.packer@timeshighereducation.com