The number of first-year overseas students entering English universities fell again this year and visa issuances are down in seven of the UK¡¯s top 10 countries for recruitment, show new figures that raise financial concerns for the sector.

The number of new non-European Union undergraduate and postgraduate entrants to English ÖйúAƬ institutions fell by 1.7 per cent in 2015-16, according to figures from the ÖйúAƬ Students Early Statistics Survey (Heses).

If these early indications prove accurate, 2015-16 would be the second successive year of falling overseas new enrolments. Numbers of non-EU first-year enrolments in England fell 1 per cent in 2014-15, according to ÖйúAƬ Statistics Agency data.

The impact of policies pursued by the Home Office under Theresa May, including the scrapping of post-study work visas and the continued inclusion of overseas students in targets to reduce net migration, is a long-running concern for UK universities.

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Meanwhile, a British Council analysis of recent Home Office figures finds that the number of study visas issued fell by 2.6 per cent in 2015. This is the first decline since 2012, the British Council says.

The Home Office says that the number of UK university-sponsored study visa applications fell by 1 per cent to 166,366 in 2015, although it adds that the number for Russell Group universities rose by 7 per cent.

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The British Council warns in a briefing on the figures that ¡°while the overall slump was relatively slight¡± in terms of student visa issuances in 2015, ¡°seven of the UK¡¯s top 10 recruitment markets registered notably sharper declines¡±.

It adds that ¡°a severe crunch in inward student mobility was only averted thanks to strong growth in China¡±, where Tier 4 issuances were up 9.6 per cent to 70,318.

But there was continuing bad news on Indian recruitment, with Tier 4 issuances falling by 9.8 per cent to 10,554.

The British Council says in its briefing that ¡°UK universities are becoming increasingly reliant on China¡±, but notes that there are future challenges to British recruitment there given the Asian nation¡¯s ¡°falling youth population, slowing economic growth¡± and ¡°improving domestic ÖйúAƬ quality¡±.

The Heses figures were detailed in the ÖйúAƬ Funding Council for England¡¯s annual report on the Financial Health of the Sector, published on 21 February.

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Madeleine Atkins, Hefce chief executive, said: ¡°While the sector has benefited from increased fee income generated from overseas students, it needs to be alert to the risk of underachieving against its ambitions for overseas recruitment. The latest data may be evidence of this risk materialising.¡±

Despite a fall in overseas first-year entrants in 2014-15, total non-EU numbers across all years of study still inched up, by 1.9 per cent, and, thanks to tuition fee rises, the English sector recorded an increase in income from these students, according to the Hefce report. Overseas fee income was up 8.1 per cent to ?3.6 billion in 2014-15.

Hefce¡¯s report says: ¡°One of the sector¡¯s most significant risks is a fall in overseas recruitment causing fee income to fall.¡±

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Bob Rabone, chair of the British Universities Finance Directors Group, said that he would expect universities to be monitoring the indications of overall falling overseas student recruitment ¡°very closely and running various financial scenarios so that they are ready to respond appropriately¡±.

¡°International students are a vital part of the sector, for both financial and academic reasons; and in my view we should continue to extend the relative scale of [recruitment] for the benefit of both home and international students,¡± he said.

Mr Rabone, chief financial officer at the University of Sheffield, said that even a 1.7 per cent decline in overseas numbers should still ¡°translate into increases in gross income because of price rises¡±.?

¡°However, the big question is whether to reverse this drop in numbers, future price rises will need to be tempered,¡± he added.

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Mr Rabone warned that much of UK universities¡¯ research activity, which ran at a ?2.8 billion deficit in 2014-15 according to English universities¡¯ figures on full costs in the Hefce report, ¡°is only possible if it can be underpinned by surpluses from other activities, of which overseas student income is the most significant¡±.

john.morgan@tesglobal.com