As we begin the new academic year thousands of students up down the
country will be leaving home for the first time to begin their Higher
Education (HE) studies. Unfortunately for these students what should be
an exciting and liberating occasion is overshadowed by the colossal debt
they will be forced to take on as they become the first to pay the new
£9,000 a year tuition fees.
As we begin the new academic year thousands of students up down the
country will be leaving home for the first time to begin their Higher
Education (HE) studies. Unfortunately for these students what should be
an exciting and liberating occasion is overshadowed by the colossal debt
they will be forced to take on as they become the first to pay the new
£9,000 a year tuition fees.
For those who have chosen to study away from home, this eye-watering
sum is just one of a myriad of costs they will be faced with, not least
among them – rent. Except for the privileged few, whose parents can
afford to fund their studies, being a student in 2012 simply means
joining everyone else in the on-going struggle to make ends meet.
Given the situation that students face it might come as a surprise
that international finance capital and property investors are pouring
millions of pounds into student housing in search of mega profits.
Although the global crisis of capitalism has meant austerity and poverty
for the 99% ,for the capitalist class it has meant a vast accumulation
of money – areas for a profitable investment have dwindled.
Normally businesses reinvest a portion of their profits to increase
production in the hope of selling more goods and thereby increasing
their profits. However, when we are in a recession caused by an
overabundance of goods that cannot be sold, who wants to invest to
produce even more? Combined with ever increasing inflation and the
tumbling value of stock exchanges the world, over this causes the
capitalist class to desperately seek somewhere ‘safe’ to stash their
loot, hence the huge rise in the price of gold for example.
Student exploitation
It is in this context that student housing in the UK has been
identified as the hot new ‘safe’ investment. Spurred by under-supply and
guaranteed student demand, investors have been falling over themselves
to get a piece of the action. Student housing is far more lucrative than
traditional accommodation blocks as developers can cram in hundreds of
tiny rooms rather than space-devouring individual flats. Planning laws
act to encourage this. The usual requirement to include ‘affordable’
housing in any new development is waived when it comes to student
housing.
During the first six months of this year, investment in student
housing more than doubled compared with the same period in 2011, hitting
over £800m with much of the money coming for overseas. Unite, the
largest private student housing provider with a portfolio of 40,000 beds
across the UK , last month reported a doubling of interim pre-tax
profits to £33.5m. With profits like those it’s easy to see why
investors are so keen.
The roots of this profit bonanza lie in the massive expansion of
Private Finance Initiative (PFI) by universities over the past decade.
Despite taking on increasing numbers of students, universities faced a
funding crisis as the government systematically cut their budgets. They
needed somewhere to put the new students but lacked the resources to
build the necessary housing. Encouraged by the government, who were
pulling the same trick with schools and hospitals, universities turned
to PFI whereby private companies would construct the halls of residence
then rent it back to the university at exorbitant rates. The first
residents of a Unite-constructed hall in Liverpool – who had to deal
with excrement leaking from the showers while paying vastly inflated
rent – will probably tell you: PFI generally meant paying a lot more for
a worse service.
This didn’t hold back the growth of PFI however. One of the early
schemes, the University Partnerships Programme (UPP), was sold earlier
this year by Barclays Bank for £1.4bn, to PGGM, a Dutch pension fund.
UPP has a portfolio of 28,000 rooms and a rent roll of £89m. The group
last year secured a £200m deal with the University of Reading to run a
125-year concession for its accommodation and plans to increase its
stock to 35,000 rooms by 2014.
This has led to a situation where in London 35% of all student
housing is now provided by the private sector, in Birmingham the figure
is even higher with almost half of all student accommodation in private
hands. But these figures don’t tell the whole story as just under half a
million students live in privately rented accommodation outside of
traditional student housing.
This process of privatisation is one that has played out across all
sectors of the state in the past period and is eerily reminiscent of the
Care Home investment bubble (read www.socialist.net: “Britain’s care
homes in crisis: Nationalise them now!”). The privatisation of formerly
state services that occurred simultaneously across the developed world
is neither accidental nor the product of neo-liberal ideology, but has
roots in the contradictions of capitalism itself.
Britain was long ago transformed into a rentier economy where the
owners of capital seek profits not by investing in the production of
useful goods but by creating vast sums of fictitious capital totally and
parasitically leeching off the state. As we have explained elsewhere,
the crisis of capitalism is at heart a crisis of overproduction made
worse because workers cannot afford to buy back the very goods that they
produce. In such a situation the capitalists force governments to open
up new areas of the economy for exploitation, this is the motivation for
privatisation.
If students were to listen to the mouthpieces of neo-liberalism that
pass for economics lecturers these days, they might be forgiven for
thinking all this private sector investment and competition would
produce lower rents. Unfortunately for students it has had the opposite
effect. The most recent NUS accommodation survey shows that rent for
student housing actually increased by 21.9% between 2008 and 2010! If
the rest of the rental market is anything to go by, it would be
reasonable to assume that rents increased by a similar amount between
2010 and 2012. So rampant is the inflation of housing costs in the UK
that the homelessness charity ‘Shelter’ has calculated that if general
inflation kept pace, a chicken would now cost £47.50!
Britain is in the midst of a deep housing crisis. Homelessness has
risen by 14% in the last year alone while thousands of families languish
on the council house waiting list with no hope of ever receiving
affordable accommodation. Yet the market remains unable to provide the
quality housing that we so desperately need, instead they construct
‘luxury’ halls of residence that students are forced to pay over the
odds for. The problems faced by students have the same cause as those
faced by workers. As such we need to fight together for a common
solution. As a first step the NUS should work together with the unions
to organise a militant campaign to fight for affordable quality housing
for all:
- No to privatisation of student halls of residence!
- For the immediate introduction of rent controls!
- Nationalise private rented housing under tenants and workers control in order to immediately lower
rents and improve standards ! - Begin a massive building programme of decent social housing!
