The UK is looking at imposing an annual cap of 45,000 on young Europeans who can come to Britain, similar to the limit for Australians on working holiday visas, The i Paper can reveal.
Ahead of a crunch summer summit with the European Union, the UK is examining how to deliver a youth experience scheme with the bloc, while honouring its manifesto pledge to reduce net migration. Australia is currently the largest participant in the UK’s backpacker visa programme aimed at 18–30-year-olds.
With reduced net migration, Government insiders believe there is now “headroom” for increased movement from the EU. The scheme is intended to be reciprocal, allowing young Britons access to the EU and vice-versa, so any final migration tally will depend on how many young Europeans take up the offer.
Ministers are said to be keen to present any changes as an “opportunity” for youngsters, following a decision to rejoin the Erasmus+ student exchange programme in 2027.
The i Paper has uncovered details of the UK’s plans as part of extensive reporting into what’s really happening behind the scenes as the Government pushes for closer ties to the EU.
In 2020 then Prime Minister Boris Johnson’s Brexit deal prioritised UK independence from EU regulations over smooth trade. Now Sir Keir Starmer’s “Brexit reset” envisages realigning with EU rules in three areas to help the free flow of trade: food and farm exports, electricity, and emissions trading.
But arguments over the extent of youth mobility and the tuition fees paid by continental university students in the UK have emerged as key sticking points as both the UK and EU talk tough in the months before a crunch summit in late June or early July.
Earlier this week, European Commission vice-president and trade commissioner, Maroš Šefčovič, said both sides had to “change gears” now to get a deal over the line. “To come to an agreement on the youth experience scheme, we will need a solution of tuition fees,” Šefčovič said.
Row over tuition fees looms
The EU wants its students to pay “home” fees of about £9,500 a year in England and Wales and lower still in Scotland and Northern Ireland, rather than the higher international rate, which can rise to nearer £40,000.
But British negotiators say they have been blindsided by the demand, which was not mentioned in the “common understanding” reset framework agreement signed last May and would cost British universities an estimated £140m a year.
At a time when 40 per cent of the university sector is running a deficit and up to 50 institutions at risk of closure, The i Paper understands Rachel Reeves is vehemently opposed to the demands, for fear of undermining the sector’s viability. Bankrupt universities could damage students’ education and mean both internal job losses and in the local ecosystem they support.
UK Prime Minister Keir Starmer and President of the European Commission, Ursula von der Leyen attend a press conference at the UK-EU summit at Lancaster House on May 19, 2025 (Photo by Carl Court/Getty Images)Brussels disputes this analysis, pointing out European student numbers in the UK have halved from 153,000 in 2020-21 to around 75,000 in 2023-24. Reducing fees could lead to higher take-up of places and lower costs overall, EU sources argue.
In her keynote Mais lecture last week, the Chancellor criticised the “deep damage” Brexit had inflicted on the UK economy, citing an estimate that it was as much as 8 per cent smaller than if the country had stayed in the bloc. She promised closer alignment where it serves UK interests to reduce trade barriers and boost growth.
Cabinet Office minister Nick Thomas-Symonds is already preparing a bill to allow greater alignment with the EU over a wide suite of areas, giving legal shape to the political reset.
He has also tasked officials with a “scoping exercise” to find out where companies are already complying with EU rules and so it no longer makes sense to separately apply UK ones, with a view to removing border checks on those goods. Ministers believe all sectors apart from some hi-tech industries such as artificial intelligence and financial services could benefit.
Tough talk on both sides
Ahead of the summit, which the Prime Minister is expected to attend, negotiators on both sides are busy clocking up Eurostar loyalty points in a back and forth between Brussels and London.
The EU and UK are negotiating on food standards, animal breeding, pesticide use, reintegrating the electricity market and carbon emissions trading. Insiders said the UK is expected to succeed in its demand for some of its so-called carve outs, despite EU reluctance to allow “cherry-picking” or enjoying single-market benefits without accepting associated obligations.
But with three months to go, negotiators are also at the silverback gorilla phase of talks; each hoping a chest-beating show of strength will encourage the other to back down on key demands.
Currently, the UK sees no obvious compromise on tuition fees. But if the EU were to be more ambitious in its aims for alignment in which both sides maintain similar rules, standards, and regulations, some in London believe progress could be made. One Government source suggested the EU could perhaps look to the future with a statement of political intent on alignment that goes past the summer summit.
Hardened negotiators also suspect another issue other than tuition fees could bubble up the agenda in the next couple of months as the talks get closer to the wire. Nowhere is this clearer than the effect the US-Israel war on Iran is having on worldwide energy prices.
Oil prices have surged about 50 percent since the start of the war, which has choked off the Strait of Hormuz to shipping, meanwhile slashing oil and gas production across the Middle East. At the pumps this week petrol and diesel prices were at their highest in nearly three years.
Race to secure new energy deal
The price hike has concentrated minds in Brussels and London over plans to re-couple electricity markets. Doing so would strip out around £370m a year in inefficiencies. The UK and EU power markets are not fully linked, meaning traders are forced to use manual auctions when buying up energy.
Ministers had been weighing up whether access to the internal energy market was worth the political price tag that comes with having to contribute to “solidarity payments” or handouts to poorer members of the EU. Such payments could trigger Brexiteers jumping up and down and shouting betrayal.
Now, insiders say the Iran War has changed the balance in minister’s minds when weighing up whether payments to the bloc are worth it. Sources told The i Paper rising electricity costs change the equation, alongside a more fundamental recognition that the UK’s energy security is a top priority.
“You can’t just magic up a new nuclear plant,” as one Government source puts it, so finding a deal on electricity prices is a priority. In Whitehall, officials are working on a cost-benefit analysis of paying into the European fund, with a decision yet to be made.
The Conservatives and Reform are likely to be outraged that ministers are heading towards payment, but Starmer also is facing calls from his own side to go even further towards Europe.
This week London Mayor Sadiq Khan said Labour should go into the next general election promising to rejoin the EU. Cabinet ministers including Health Secretary Wes Streeting and Justice Secretary David Lammy have also separately called for the UK to rejoin the customs union with the bloc.
Labour expects to be outflanked on Europe not just by the Liberal Democrats, but also the Green Party, which is targeting Labour’s London heartlands in council elections in May.
There is also a view within the Labour Party that Starmer was too timid in his initial reset demands and that his asks would not contribute enough to reignite the UK economy. With growth flatlining, that pressure will only increase.
Cabinet ministers are braced for Labour to perform badly in May’s elections and a subsequent debate about the direction of the Government.
So in the month before the summit, any chest-beating about tuition fees won’t just be coming from Brussels. Starmer and Reeves could also find themselves under pressure from Labour MPs to make further concessions.
Anything, just anything, they say, to get economic growth going.
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