A private finance initiative scheme to build student halls has plunged a UK university into a ¡°financial crisis¡± and led to its latest round of job cuts, staff have claimed.

Bangor University¡¯s method of financing its new residences at its Friddoedd Road and St Mary¡¯s sites is facing growing criticism after it announced plans in December to make up to 60 people redundant over the next three years, just a year after nearly 110 employees took redundancy as part of ?8.5 million budget cuts.

The new plans to save ?5 million come despite the North Wales university reporting a surplus of ?17 million in its 2017-18 accounts, which led some to question why the cuts were needed.

However, an independent report commissioned by Bangor¡¯s University and College Union branch has now highlighted the costs associated with the private finance initiatives to create 600 new rooms in 2015 and 1,100 rooms 10 years earlier.

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In the report, its author Andy Green, from THP Chartered Accountants, states that the university used PFI spending to build halls ¡°worth ?68.6 million¡±.

¡°However, there is a longer term liability to repay the third parties a total of ?237 million,¡± he says, adding ¡°these arrangements present the most significant long term liability to the university¡± and point ¡°to a reallocation of costs towards the university estate and away from staff and other overhead costs¡±.

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Bangor¡¯s debt cost ¡°?9.9 million to service during 2018 alone, which was more than cash flow generated from operating activities¡±, the report adds.

In a statement, Bangor said that the report contained a ¡°number of misunderstandings that render many of the comparisons and conclusions invalid¡±.

The figure for future costs ¡°includes the repayment of capital funding and interest, as well as up to 36 years of future maintenance and operating costs¡±, it added.

The annual cost of servicing debt was, in fact, ?8 million, which was covered by rent received, and the builds ¡°do not [place] any sort of legacy burden on current operations whilst they remain in use¡±.

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However, a UCU document circulated to staff describes the PFI issue as one of the ¡°unspoken causes of Bangor University¡¯s financial crisis¡±. It said that an ¡°over-investment in expensive new buildings¡± was the hallmark of an ¡°incompetent estates strategy¡±.

The document claims that Bangor¡¯s staffing levels will have fallen by 14 per cent on levels two years ago once the latest redundancies and the non-replacement of 70 further posts left vacant by retirements and turnover take effect.

Speaking to?51³Ô¹Ï, one Bangor academic said that many staff already faced higher workloads following the departure of colleagues last year.

¡°The amount of interest we are paying on these PFI deals is just insane ¨C we really need to look at terminating them as the costs are enormous,¡± she said.

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The report also disputes claims by the university¡¯s former vice-chancellor John Hughes, who left suddenly last month after eight years in charge, that falling student numbers and rising staff costs lay behind the cuts. Staff costs as a proportion of income had ¡°tracked between 57-60 per cent over the seven years, which is broadly in line with other Welsh Institutions¡±, while student numbers had been ¡°consistent¡±.

Bangor¡¯s impending job losses come amid a tough time for Welsh universities. Last month Cardiff University announced that it was seeking redundancies to plug a ?21 million deficit, while the University of Wales Trinity St David said last week that it aimed to save ?8.5 million a year by cutting staff costs to 55 per cent of revenue, down from 70 per cent.

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jack.grove@timeshighereducation.com