Union questions Lancaster University over student property deal ‘pressure’
A Lancaster University lecturers’ trade union has raised what it describes as ‘serious concerns’ about the university’s management
A Lancaster University lecturers’ trade union has raised what it describes as ‘serious concerns’ about the university’s management, questioning the financial impact of a deal with a student property company and accusing university chiefs of ‘over-relying’ on information from accountants KPMG to justify a university job cut plans.
The Lancaster branch of the University & College Union (UCU) has raised the questions as Lancaster University considers potentially 450 job cuts to save £30million.
The union has queried the work of the university’s council and executive bodies; the university’s relationship with property firm UPP and the university’s use and control of financial information from accountants KPMG.
However, Lancaster University has defended its management and governance, saying factors including fewer international students mean it has to find savings. It has also defended its decisions and work with outside partners.
Property company UPP and accountants KPMG were contacted with the various accusations in full but said they would not be commenting.
‘PROPERTY RENT MODEL’
The lecturers’ union understands Lancaster University entered a 48-year agreement with property developer UPP in 2003 which ends in 2051. It said UPP has around 4,300 student bedrooms around the Lancaster campus, which is about two-thirds. UPP works with universities across the country.
The union believes Lancaster University has to meet a ‘target-modelled rental income’ requiring an extra 1.5 per cent increase on top of inflation per year. The university is liable for the rent of accommodation whether bedrooms are occupied or not, the union understands, based on reports around the 2021 student rent strike during the Covid-19 pandemic. That student dispute arose over unhappiness with rent demanded during lock-downs when in-person teaching was cancelled.
In a new press statement with various questions, the lecturers’ union said:
“Information is important for Lancaster UCU to understand the full picture of the university’s finances, given that it is proposing to cut 450-plus jobs.
“In the absence of full transparency regarding the UPP contract, to assess the university’s liabilities and effects on the financial picture and redundancies, it would not be unreasonable for our members to conclude the UPP deal is partly responsible for the financial problems the university claims to be in.”
The union has also raised questions about potential, or perceived, conflicts of interest, transparency issues and the independent review of KPMG financial reports and assumptions around them which, the union says, the university is using to justify its proposed changes.
‘PRESSURE’
The union’s Lancaster branch president, Dr Sunil Banga, said: “It seems there is a web of convoluted relationships and off-balance sheet deals between UPP, a private student accommodation developer, and Lancaster University. KPMG, which has been advising the university on its financial situation, also audits UPP and its associated companies. This is a serious conflict of interest.
“In the absence of transparency from the university’s executive board and its council on how this conflict of interest was allowed to happen, contributing to a situation where the employer is threatening to cut hundreds of jobs, affecting livelihoods and the local economy, Lancaster UCU members can reasonably conclude that the UPP deal is partly responsible for the financial problems the university claims and, equally, potentially creating pressure on the university to sack staff to protect the commercial partner’s income streams.”
Dr Banga added: “Lancaster UCU is taking further advice on whether this should be raised with the Financial Reporting Council.”
The Financial Reporting Council regulates auditors, accountants and actuaries, who measure risks and uncertainties. It sets corporate governance and stewardship codes.
UNIVERSITY RESPONSE:
Lancaster University has defended its management and governance arrangements since announcing the jobs cut review earlier this year.
The Local Democracy Reporting Service sent the latest, full UCU accusations to the university. It did not respond specifically to every accusation but a spokesperson said: “The university is having to make very difficult but necessary decisions in the light of financial pressures impacting the whole UK university sector.
“As a result of these pressures, which include increased operating costs and declining international student numbers, the university is seeking to find total cost savings of £30million from our payroll budget across academic and professional services. The university is making every effort to try to find these savings through voluntary means – a process which is currently under-way – in consultation with our trade unions.
“While we are working to find non-payroll savings, some capital projects are essential investments which enable the university to continue to operate as a safe and attractive place to live, work and study for our students and staff. We continue to operate our business to high sector and industry standards and all high-value contracts with external suppliers are required to go through strict procurement and due diligence procedures.
“Lancaster is determined to continue to offer excellent research and teaching as a leading comprehensive university, offering a full range of disciplines in line with our strategy to remain a recognised global leader which has a transformative impact in the communities in which we operate.
“The university is making careful choices about where to invest and where to deliver strategic efficiencies, guided not only by financial considerations but also by wider factors such as student demand, research impact and civic contribution.
“We recognise that this is a deeply unsettling time for our staff, students and the communities we serve. We do not enter into this process lightly. However, achieving financial sustainability is essential to securing the university’s future.”