PPP doubts as halls plan flops

September 20, 2002

The collapse of a flagship public-private partnership that would have helped Sheffield University to raise more than £50 million by selling its student accommodation has sent shockwaves through higher education this week.

The plan to turn student housing over to the Unite Group was abandoned at the 11th hour when Unite decided the venture was too risky and unprofitable because the buildings were "old and uneconomic".

Using PPP to realise assets held in university properties was hailed as a means of raising capital for universities to spend on teaching and research. The collapse of the scheme will be a blow to the government's aim of hiving off the cost and risk of major projects.

This week, Unite issued a statement urging universities to forget PPP deals and instead sell off their land and buildings to property developers to head off a looming accommodation crisis.

The Sheffield scheme had been under negotiation for more than two years and was backed by the Higher Education Funding Council for England, which paid for half the legal and financial costs under its Pathfinder scheme.

Its failure has led students' leaders to demand to know how much money was wasted on the project. Hefce is said to have spent more than £1 million. A Hefce spokesman could not confirm the amount, but said the project had been "very substantial".

Unite said the collapse of the deal had cost it £1.3 million.

Sheffield vice-chancellor Bob Boucher said much had been learnt during the negotiations: "We are aware that the outsourcing of student accommodation is an emerging market with difficult issues inherent for both universities and the private sector."

Unite originally bid to acquire more than 5,000 student spaces in the city in a 30-year leasing arrangement that would have allowed the university to rent the beds back. It later scaled back the deal by 50 per cent.

Sheffield said this week that it still intended to sell more than half its beds to other firms on the open market, but not until it replaced them with quality affordable accommodation elsewhere.

Students have been against the sell-off from the beginning. A vote revealed that 86 per cent of students wanted the university to continue to provide accommodation. Welfare officer Kate Willingham said: "We believe that rents will rise above the rate students can afford. This deal puts the interests of the university's bank balance before that of students."

Another PPP scheme, Wilmslow Park in Manchester, has been under construction for months. It will house about 1,000 students from three universities and the Royal Northern College of Music. Manchester Metropolitan has allocation rights for 226 students, who are currently in alternative accommodation.

Louise Yates, vice-president of Manchester Metropolitan students union, said: "Students who booked privately have been placed mainly in hotel accommodation or unequipped (no pots, pans or bedding) halls. They have been offered £25 a week until their rooms are ready at Wilmslow Park and this is supposed to cover food and transport costs for the week."

The National Union of Students said: "Although we are not against all forms of PPP, we are anxious that student choice is being reduced while universities upgrade their accommodation because of the lucrative conference trade. This is top-up fees by the back door because some social classes are gong to be outpriced as more accommodation is owned by companies and run for profit."

Jarvis, which runs a company called University Partnerships Programme, said PPP was still viable: "Universities wouldn't get involved if there was no real financial incentive in it for them. We have been operating for five years, investing £400 million in the sector."

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