85% of South and John Snow colleges privately owned

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Private companies own 85% of the newly-built South and John Snow college accommodation at Mount Oswald, a Palatinate investigation has revealed.

Documents available on Companies House show that Equitix, an infrastructure development firm with £6.5bn of worldwide assets, and Campus Living Villages, an Australian trust which is one of the world’s largest providers of student housing, are the ultimate owners of 63.75% and 21.25% of Mount Oswald Colleges LLP, respectively.

The remaining 15% of this consortium, which exists “to finance, design, build and manage” the facilities at the site until 2071, is owned by Durham University via a holding company, Durham Mount Oswald Limited.

Previously, a set of Q&As on the University’s website were available which outlined its minority stake, though not the specific percentages owned by Equitix and Campus Living Villages. These were taken down upon the completion of construction and when asked by Palatinate, a University
spokesperson did not explain why this had been done.

The consortium constructed and has ownership of all buildings at Mount Oswald except for ‘The Hub’, a central building with recreational facilities which a Freedom of Information request submitted to the University by Palatinate showed to be under its direct ownership. Durham purchased the land at the site for an undisclosed fee in 2014 and received £20m from the consortium in 2018 for a 53-year lease.

A University press release from September 2018 described how Equitix “will oversee all aspects of the development in a management services capacity” and that Campus Living Villages “will deliver the day-to-day management of the facilities”.

The institutionalisation of ‘living in’ means that college accommodation can ensure consistent profits for private sector stakeholders

As was suggested by their absence from the University’s staff directory, porters and cleaning staff at South and John Snow are employed by Campus Living Villages. This was confirmed by a university spokesperson when asked by Palatinate, who also emphasised that, “All staff at John Snow College and South College operate in a manner consistent with that of other Durham University Colleges.”

“At Queen’s Campus, buildings occupied by John Snow College and Stephenson College were owned by Durham University,” the spokesperson noted. “Porters and cleaning staff were employed by a third party. Catering staff were employed by Durham University.”

“Services provided by third parties are undertaken under an agreement, performance of which is monitored by the University to ensure consistency of provision and quality of services to students across all colleges.”

Commenting on the findings, a spokesperson for Decommercialise Durham, a student group seeking to limit the extent of commercialisation at Durham, stated: “In short we are furious. It comes as absolutely no surprise to us that private companies are involved in this way and it is a condemnation of the path that the University has chosen to follow.

“We are absolutely not in favour of this privatisation. It is yet another example of the dangers of running the University as a for-profit institution.”

The St. Cuthbert’s Society branch of Durham Students’ Union’s Ripped Off campaign concurred, remarking that, “Students should always be the priority in their accommodation, in the same way that any resident in their own house should be the priority within their place of residence.

“We worry that this will be undermined since the students’ own University is not the sole, or even majority, owner of their accommodation.”

The unprecedented reliance on privatisation revealed by these findings raises questions about the financial model enabling the University’s expansion plans, the motives behind it, its implications for the Durham student experience, and whether privatisation of colleges is to become the University’s modus operandi moving forwards.

As part of its ten-year ‘Estate Masterplan’, the University is seeking to “house 50-55% of students in College-affiliated accommodation”, “establish four to six new Colleges“ and increase the “proportion of non-UK students studying at Durham to 39%” – up from 22% in 2017 – by 2027. If the financial model for South and John Snow is replicated for these new colleges, any profits generated from accommodation fees will pour into the pockets of private firms for many decades to come.

The University did not answer whether students’ accommodation fees are to be distributed among the consortium

The institutionalisation of ‘living in’ as part of the undergraduate application process means that college accommodation can ensure consistent profits for private sector stakeholders. Incorporated in November 2017, Mount Oswald Colleges LLP originally consisted of Durham University, Campus Living Villages and Interserve Developments, another infrastructure development firm. Although it still built the accommodation, Interserve was replaced as a member of the consortium by Equitix in August 2018 after its investors became “spooked by the 50-year length of the contract [to operate the facilities] and worried about the firm getting stuck in an unprofitable position.”

Equitix’s stake in the consortium, the largest of the three at 63.75%, is immediately owned by Equitix V Primary Infrastructure (Durham) LP, a holding company which, via a chain of three other UK-registered companies, is owned by Equitix Holdings Limited, also registered in the UK.

Campus Living Villages’ 21.5% slice of the consortiumis registered to a company called Campus Living Villages (Durham) Member UK Limited, the ultimate parent company of which is Campus Living Trust UK – an Australian-registered trust which is the ultimate owner of all of Campus Living Villages’ UK businesses.

Thus far, the consortium’s operations have been predominantly financed by a £90.2m index-linked bonds loan from The Prudential Assurance Company which is due on 29 February 2064. This accounts for all of the long-term liabilities listed in Mount Oswald Colleges LLP’s 2018-19 accounts.

Despite its stake in the consortium only being 15%, Durham University is supposedly a minority member in name only. The same accounts declare that “in the Designated Members’ opinion there is no ultimate controlling party”, and the University remains the owner of the leased land on which the accommodation is built.

In its statement to Palatinate, a spokesperson for the University sought to stress that, “Student representatives, including JCR Presidents and Durham Students’ Union Presidents, have been fully involved throughout the project, including at the competitive tender, planning and construction phases.

“Students and their representatives continue to be fully involved in the life and operation of John Snow College and South College.”

However, these points do not discount any potential implications pertaining to the level of control the University has over two of its colleges as a result of the lease’s considerable length and their ownership by a consortium in which the University has only a minority share. The highly geared financing model used to fund the construction of the colleges, moreover, suggests that the University is not in the position to fund its plans to build new colleges on its own.

In its response to Palatinate’s investigation, Durham University did not rule out replicating the financial model used as part of the Mount Oswald development in future projects, with its spokesperson saying, “Existing College refurbishments and maintenance programmes are funded by Durham University. No final commercial decisions regarding possible future College developments have yet been taken.”

Likewise, a spokesperson for Campus Living Villages stated that the company “would always consider new student accommodation projects with our partner institutions.” Equitix did not respond to Palatinate’s request for comment.

Importantly, the entrance of private capital into the naturally monopolistic market of college accommodation risks the subordination of students’ interests to those of profit and loss. This is the concern of Decommercialise Durham, who commented, “Simply put, the unique Durham experience is at risk.

“Not only this, but many students already struggle to pay their comparatively high accommodation fees. We would want to know if any of students’ fees have been given to these private companies and, if so, what benefits the students receive for this money and why the University feels it is acceptable to hide this from the student body.

“We pay for high quality accommodation and a supportive community, not to subsidise a private company.”

The University did not answer a question from Palatinate on whether, and how much of, students’ accommodation fees have been, or are to be, distributed between the consortium’s members.

A spokesperson for Cuth’s Ripped Off concluded by saying: “As an ultimate end, Ripped Off sees this as a move further into a profit-motivated university experience and life which ultimately hinder attempts to lower already extortionate accommodation fees.

“These high accommodation fees are something we see as detrimental to not only the student experience, but we know to be detrimental to individuals within colleges and the wider local community.

“Which is why we work and will continue to work to lower these accommodation costs to make them affordable and fairer, something we cannot see these private companies wanting to move towards.”

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One thought on “85% of South and John Snow colleges privately owned

  • Students: Private businesses are the baddies
    Also students: I need a job plz hire me 😢

    Reply

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