5 myths about cutting the rent at UCL, Myth Number One: ‘UCL Can’t afford to cut the rent, students ‘need to contribute’ to generate a surplus’

This is the first of a series of ‘myth-busting’ articles about UCL’s polices that will seek to provide students with arguments to debunk management opposition to cutting the rent in student accommodation. Ok, let’s deal with the big myth first, head on:

In a letter to the Cut The Rent Campaign in March 2015, Vice Provost Rex Knight claimed that students in UCL accommodation ‘need to generate a contribution.’ By this he meant that that the annual income from our rents needs to be higher than the running costs of the halls. Furthermore, he argues, the surplus needs to increase every year. He wants the surplus to rise from just below £10m to £15m between 2014 and 2016 alone. This is a rise from a surplus of around £5m in 2009 (see graph). In 2014 UCL’s total income from rent was £31m and in 2016 it’s expected to be £34m. In other words, we can expect that between 2014 and 2016 32-44% of our rent won’t pay for the running costs of halls but for capital investment.

The claim that this money has to come out of students’ pockets is a myth.

Investment to improve the standards of halls is solely needed. However, the problem is that the money for these future redevelopments has been taken from students by raising rents at a rate far higher than inflation. Not only will students never see the benefits of the surplus we are generating but we are also paying more, proportionately and in real terms, every year. As a result, a huge number of rooms at UCL are now completely unaffordable.

Does UCL have other option than to exploit students in this way? Of course they do.

UCL has a lot of money. Over the next few year management want to increase the university’s overall surplus from 2.5 to 5.5% – sending an additional £47m going into the coffers every year. This is so that UCL can fulfil huge investments in new campus buildings. Between now and 2025 the bosses are planning to invest over £1bn in new facilities in Bloomsbury and Stratford. In principle there’s nothing wrong with these investments – because management decided to drastically increase student numbers we need more space. But it proves that for management raising the rent for students is not a must, it’s a matter of priorities. UCL could reduce the rate of its billion pound investments by 0.01% and afford to cut our rent by 40% if they wanted to. They chose not to, and no students were involved in making this decision.

rent chart 5
The increase in UCL rent surplus since 2009.

To give another example of how management priorities to use our resources: In 2013 there were 377 members of the upper echelons of UCL staff and management who with salaries ranging between £100,000 and £320,000 per year, according to the university’s 2014 annual financial statement. At the time, 377 people represented slightly less than 4% of the entire UCL staff body. Roughly, they all received between 6 and 18 times more money than a university cleaner in a year. The combined cost to UCL for paying salaries to these 377 people was at least £51,640,000.*

A year later, the number of top staff and bosses earning over £100,000 had increased to 429, and top incomes rose to £350,000. All-in-all, the cost of paying these salaries went up by at least £7.5m, to at least £59,150,000. During the same period, rents for students went up by around 5%. Students became more exploited at the same time as those earning above £100,000 were paid more.

ucl pay statistics
From page 36 of the UCL Annual Report.

Compare these sums to the income and the surplus generated from students’ rent. Between 2014 and 2015 the UCL predicted an increase in the income from student accommodation by about £2m, from £31m to £33m. This meant yet another above-inflation rent increase for students. However, what these statistics demonstrate is that if UCL had frozen (not cut) the money they put into management pay in 2013, they could have instantly slashed rents by 24%, rather than increase them the following year.

The point here is not to say that there is a dichotomy between estates investment and student rents, or between management pay and student rents. Rather, it is to point out that the UCL has the money to cut rents for students if they wanted to, were they to rebalance their budgets. Student accommodation does not necessarily have to generate a surplus in order for UCL to keep improving standards in halls – it’s a matter of priorities. What we can conclude is that UCL is currently prioritising higher rents for students and higher pay for managers and that no students were involved in setting out these priorities.

Now the field is open to agree or disagree with these priorities.

  • You can get involved in the ‘UCL, Cut the Rent’ Campaign at the next planning meeting on Wednesday. Full details here.
  • Also don’t miss the next UCL Defend Education activist organising meeting on Monday, here.

* The statistics available do not reveal the exact amount every top staff member was paid, only the income brackets and the amount of people on salaries within these brackets. Therefore all calculations are conservative, estimating that all high-earners in one bracket receive the lowest salary in that bracket. All of the 68 people who earned between £100,000 and £110,000 in 2013 are assumed to have been paid £100,000. This is why all totals are labelled ‘at least.’