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Article for Red Pepper now online

December 16, 2012

Degrees of Profit at London Metropolitan University

Editing of the article has slightly confused the relationship between ‘shared services’ and equity investment.

The subsidiary company in a shared services initiative can be set up as a private or public limited company allowing shares to be sold to prospective investors. Profits made by the subsidiary can then be distributed to those investors.

The university transfers assets and non-academic staff to the subsidiary, but then must pay rent and fees on those same assets and services under monopoly conditions. In this way, the subsidiary can turn a profit from the management of the university.

The basic structure can be tweaked to enable a ‘buyout’ depending on the distribution and type of shares involved. See page 7 of the Universities UK report, Developing Future University Structures, for an illustrative diagram.

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