Original post by maghrebloverUnis like LSE and other UK universities have a quota on the number of home students they can take in. This is because the government subsidises their fees, lowering it by (as at 2010/11 academic year) as much as 75-80%. The government has a limit on the amount of money that it can give to these unis per students, because, quite obviously, there are other parts of society which the government needs to fund. As such, it places a quota to make sure it can actually pay for the students.
International students are on a separate quota, determined largely by the uni itself but following guidelines. This, as well as the quality of applications that the unis receive from international students, is partly why the percentage of international students vary across unis.
At the end of the day, for unis like LSE, it is not necessarily who they 'prefer' to take on that reflects their student statistics. LSE might want, and provided they receive all the fees, be able to accommodate 1000 students a year. And they wouldn't mind 800 of them to be qualified home students. However, the UK government places a quote on home students, ensuring that the maximum number of home students LSE can admit is 300, because that is all the government can afford to subsidise.
LSE will then accept the home students it deems to be the most deserving of a place, and this may or may not reach the maximum of 300, but most likely will. LSE still has 700 places left over for that year, and thousands of applications from deserving international students. With the facilities that LSE has and needs to maintain, it would be illogical for them to decide that they need to have more home students and therefore admit only 150 international students. The uni would hardly function because not enough funds would be coming in.
As such, LSE admits 700 international students. The international student thus does not prevent the home student from being admitted, rather the UK government restricts the number of home students that can be taken in for justified reasons.
So, unlike you've stated, unis do not 'prefer' international students. And at the same time, international students do not prevent home students from getting a place.
You've also mentioned that UK unis receive taxpayer moneys which is then used up by international students. The truth is, the taxpayer money given to UK unis are the subsidies from the UK government for the home student. So in our fictitious LSE admission class above, the UK government will pay, to the uni, the rest of the fees which the home students have not paid (essentially the point of a subsidy). This is to pay for the education of the home students ALONE. The international student, on the other hand, pays their entire fees, which in LSE, for example, is £13,000+. They thus pay the full price of their own education.
All of the money received from both home students (whether direct fees or subsidy) as well as international students is used to manage the uni, including new buildings. So if you argued that international students shouldn't use facilities paid for by the UK taxpayer, at the same time, the UK taxpayer shouldn't use the facilities also paid for by the international student. The buildings should thus be used by no one, which is obviously quite silly.
EDIT: Just thought I should add, I am an international student at the LSE.