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SU ‘cash crisis’: societies may have funds stripped unless UEA helps

Uea(su) is facing a “cash crisis” that could see it run out of money within a matter of months. Without the University’s financial aid the SU may be forced to use societies’ and clubs’ subs account money in an attempt to prevent insolvency.

Management minutes released by the SU show officials said by not using these restricted funds the SU could run out of cash “by late May or June” as opposed to October as first thought. The SU believes they would need “professional legal advice” to be able to use the restricted funds.

As well as a lack of funding from the University, the time lag in receiving the government’s furloughing money has placed extra strain on the SU. The SU has placed 53 career staff and 670 student staff on furlough. 

SU officials believe “no strongly commercially leveraged SU could survive a loss of nine months’ trading without support from its institution”.

If the SU ran out of money it would have to forfeit clubs’ and societies’ money to creditors. Even if the SU uses the funds its officials believe the organisation could only last in its current state until around the start of the 2020/21 academic year.

The University is legally bound to ensure there is an SU at UEA, but it could be severely depleted in its ability to support students.

Earlier this year Uea(su) asked the University for extra annual funding of £350,000 to survive, and another £700,000 in addition to be able to provide more services for students.

Although the University provided Uea(su) with £1.4m for this academic year, the SU pays approximately £700,000 to rent Union House. At other universities around the UK student unions often do not pay rent to their university. In 2019 the University of Bristol provided Bristol SU with close to £1.8m. They provided a building free of rent charges. The true value of rent would usually be around £400,000 per year. And in 2018 Reading University Students Union (RUSU) received more than £1.6m from their university. RUSU pays £100 per year for their facilities.The true value of rent would usually be around £675,000 per year.

One elected member of the SU, who wishes to remain anonymous to protect their role, said they felt the University was keen to acquire some of the services the SU provides, which include the LCR, the bar, Unio and the SU Shop. They added they “don’t think the University understands the extent of our crisis and genuine need for additional funding”.

Following informal meetings between SU and senior University staff in early 2020 the SU felt “it was clear the University had not got the message as to the gravity of the financial crisis faced by the Union” . The SU’s Chief Executive Toby Cunningham advised the SU management committee it was “vital” to convey “if sustainable funding was not put in place there would be a huge impact on student life at UEA.” He added a confidential document would be created to state what services and activities would be cut if the SU ran out of cash.

Assistant Director of the SU’s Finance Committee Tim Cave suggested a series of possibilities to management regarding the SU’s financial future. The possibilities he suggested assume the University will provide no emergency support. Mr Cave suggested if pandemic restrictions are still in effect by September, without the University’s support the SU will run out of money if they used restricted funds. If they did not use the funds Mr Cave suggested “the Union would become insolvent by July”. The SU believes a “worst case scenario” would be that an increasing deficit could swallow any money the University gives to the SU. Mr Cave advised management that “whatever scenario became reality the Union should adopt an approach of ‘how we do what we want to do’ rather than ‘what we want to do’”.

Activities and Opportunities officer and SU Finance Committee Chair Alicia Perez noted the potential ethical breach using the restricted funds would entail, voicing her belief that students would not care about justifications and the imperatives for using the funds. The minutes state she believed it would be “totally wrong to use them for any other purpose than Club or Society activities”.

However, although the SU Finance Committee debated the “moral hazard” of using restricted funds Mr Cave said if the SU did not survive the crisis the money would be lost anyway.

Miss Perez later said the SU Finance Committee had asked her to draft a letter to the University asking for financial aid. She said the Finance Committee had asked the letter should ask the University to “provide a clear, meaningful statement of support” so their annual accounts could be signed off, the deadline for which had already been extended to the end of July. Miss Perez added the letter would need to mention the possible use of restricted funds to stave off insolvency.

Campaigns and Democracy officer Sophie Atherton said that in a meeting with the Vice Chancellor she and the other full-time officers had made him aware a “negative response” from the University to this letter would affect the Vice-Chancellor’s relationship with full-time officers.

However a University spokesperson said: “We value the contribution Uea(su) makes on student experience at UEA both academically and socially. The University and the SU are in discussions about the significant financial challenges that both organisations are facing as a result of the COVID-19 pandemic.

“It is very difficult to make direct comparisons on the financial arrangements between universities and their student unions.  There are complex arrangements that vary from institution to institution regarding how funds flow between institutions.  For example, UEA provides cleaning and IT support services to the SU at no charge but this does not show in either party’s financial statements.”

Some students believe societies would be negatively affected without Union support. Jasmine Savage is the President of UEA Drama Society. She said using clubs’ and societies’ money “would obviously be detrimental” to her society. “Like most other societies we depend on the Union for support. We as a society depend a lot on our own members financial support, but obviously the access to funding and resources is important to the development and continued prosperity of the society.

“Drama students have an externally organised theatre society. Therefore, the students that will be potentially affected will be non-drama students whose involvement in theatre would be severely limited and indeed their expected university experience might be changed as a result. I’m sure that many people can relate to this sentiment: often it’s not the course that you choose that will make you time at uni, but the people you meet and the interests you develop that make your time at university a memorable one.”

She added: “We as a society try to make theatre as open and accessible to everyone, and without the support of the union, I doubt our job can be done as effectively.”

When we put these findings to the SU, its officers told Concrete: “UEA SU unlike many other Student Unions, have to rely on its commercial operations for 80% of its revenue, the UEA grant covers just 20%, the sector average would be nearer a ratio of 40/60. As the Union is a charity, reserves have to be in line with the Charities Commission guidance. Covid-19 has meant we have not been able to trade via; the LCR, Waterfront or Unio as lockdown has closed these services, whilst the shop remains open (the only service open on campus) its takings are down about 80%.

“This has had an effect on the Student Unions’ finances which is why we have taken necessary steps such as; furloughed 53 career staff and [around] 600 student staff in order to make our reserves go further, but these reserves are not infinite. In order to plan for the future we are currently modelling different scenario’s, impacts and outcomes, however it is difficult to predict with certainty any likely outcome until the picture regarding lockdown and trading is made clear by the Government.”


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05/05/2020

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Jack Oxford and Chris Matthews