University delays plan to ‘privatise’ services after visa fiasco

London Metropolitan puts outsourcing tender on hold to focus on UKBA court battle

By David Hencke | 19 October 2012

“We desperately need to concentrate on getting our house in order instead of playing out a neo-liberal experiment”
 – Max Watson, chairman, London Metropolitan university’s branch of Unison

Plans for the UK’s first university to have its operations taken over by a private company have been put on hold.

London Metropolitan university has delayed deciding on who will run its services because of the row with the UK Border Agency (UKBA) over overseas students.

It comes as an internal document leaked to Exaro underlines the scale of the university’s financial uncertainty.

Exaro revealed in August that the university was poised to name the company that would run all its operations except teaching and the vice-chancellor’s office.

The company would also work for a “special-purpose vehicle” created by London Met to try to take over the running of other universities across England, in a deal worth potentially more than £500 million.

The contract to run the university’s operations alone is worth £74 million over five years, with an option to extend by three years.

It was due to start running this month, but the plans have come to grief after UKBA two months ago stripped the university of its “highly-trusted status” that enabled it to sponsor visas for students from outside the European Union. This left around 2,000 students at the university having to find courses at alternative universities or leave the UK.

The university, which is hugely reliant on income from overseas students, is taking UKBA to court in an attempt to overturn the ban.

It won a temporary reprieve at a hearing in the High Court last month that allowed existing students to remain. The High Court gave permission to the university to seek a judicial review, but no date has yet been set for a full hearing.

This has put at risk an ambitious plan to privatise university services, which has the support of David Willetts, universities minister. But the university, which has several sites in central London, says that it cannot give a date for awarding the contract until the court hearing has been held.

A university spokeswoman said: “The scheme has been delayed because of the uncertainty over the university’s sponsorship status.”

Unison, the trade union representing support staff at the university, is pressing for the plans to be dropped altogether.

Max Watson, chairman of the university’s Unison branch, said: “We desperately need to concentrate on getting our house in order instead of playing out a neo-liberal experiment, which is distracting us from the current task at hand.

“We remain unconvinced that the plans could work even if there were good will towards them, which there is not, and our members are as determined as ever to see the end of these damaging proposals once and for all so that we can get on with rebuilding pride in our public university.”

The university was created in 2002 by the merger of two former polytechnics. It was hit by a financial scandal under previous management four years ago.

An internal ‘risk register’, which was drawn up by the university this month, underlines continuing financial problems.

The document, a copy of which has been obtained by Exaro, reveals that the university’s most pressing problem is its “failure to achieve financial sustainability.”

On a scale of 1 to 5, it scores both the “likelihood of event happening” and “severity of the impact” at 5.

Just as high on the scale is the risk of “failure adequately to manage the student population”, which could lead to loss of income from student fees.

The document also warns that there is a similar level of danger posed by a potential “failure to provide accurate student and staff data for maximum use as management information for planning and to meet all compliance needs.” This could lead to the loss of “several” millions of pounds and “reputational damage”, it says.

It scores the likelihood of a “failure to manage the changing portfolio of university services in an efficient way” as ‘4’, and impact ‘5’. This puts at risk “investment costs in services, partnerships and ventures, potentially £3.4 million”.

It adds: “Strategy and approval process for new joint-ventures to be developed by director of finance and university secretary in January 2013.”

The university denied that this was the target date for its services to be taken over by a private company.

Update 19 October 2012 4.56pm: Within hours of Exaro breaking this story today, London Met announced that it was scrapping the tendering process to outsource its services altogether.

The university issued a statement shortly after 4pm this afternoon about what it terms “shared services” rather than “outsourcing” or “privatisation”. It said: “Our student and financial landscape has shifted dramatically since the revocation of our highly-trusted sponsor status on August 29, and notwithstanding our success in the High Court on September 21, our business has changed.

“We no longer feel that the basis on which we opened the competitive dialogue for shared services is now the best match for our new circumstances. However, we are grateful to all those parties who have committed resource and time to the tender process.

“We are especially grateful to BT Global (which withdrew earlier in the month), to Capita, and Wipro, for their part in the dialogue.”

The statement said that the university would appoint by the end of the year a “partner” to help “re-engineer” its “support services”.

It continued: “The re-engineering will necessarily also help to take cost out of our business, so that the financial impact of this year’s lower enrolments is mitigated.”

It added: “The vice-chancellor thanks all who have worked so hard to support the protracted procurement process in recent months. This work will usefully inform the impending process.”

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