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  • Writer's pictureLeeds Finsights

Understanding LUU’s Finances

This article was written for the LUU (Leeds University Union) by our Managing Director, Alfie Milnes-Dobbs

Leeds University Union (LUU) is one of the largest students’ unions in the country and was the first in the UK to be awarded ‘Excellent’ status by the National Union of Students (NUS). Boasting over 300 clubs and societies, a nightclub, 5 food outlets and 11 shops running such a behemoth organisation comes at a cost.

30,721 students joined one of LUU’s 330 clubs and societies, showing its presence on campus.

As a charity, separate from the University, any profits made are 100% reinvested. Any profit taken from food, drink, merchandise and event purchases in LUU is used to improve the Leeds student experience so you can be guaranteed your money isn’t going into the University’s pockets.

Leeds Finsights, the University of Leeds student ran financial publication, took a look at how LUU operated fiscally in 2019 and here’s what they found.

Overall, LUU had a total income of nearly £12.3m in 2019 with an expenditure very similar and only leaving a surplus of £2k (change from £310k deficit in the previous year due to increased grants and access to funds). With Leeds University donating the largest chunk on the income statement (a block grant of £3.4m) followed by shop income (£2.6m) and bar income (£2.6m). This shows how important revenue from shops, bars and venues is to LUU.

Shops, bars and venues make up the largest expenditures too but are followed by nearly £2m spent on student services and £570k on student advice. £720k is spent on student activities and volunteering. Total expenditure in 2019 was £12.3m showing LUU income equals expenditure.

Through Joblink (the union’s job hunting service), over the year £1.1m in wages was paid to students through the agency. Whilst the union paid over £5.5m in wages and salaries with 455 students employed (on a weekly contract) at their busiest time. LUU on average employs 329 students on weekly contracts and 165 monthly staff.

LUU has a strong balance sheet with total net assets sitting unchanged at £3.9m and a cash balance of £3.2m (of which £800k is held on behalf of clubs and societies).

Operating similar to an SME but as a not-for-profit, you can see LUU handles an enormous amount of capital annually.

Leeds Finsights is satisfied that any profit from food, drink, merchandise and event purchases at LUU is reinvested into student services like ‘Help & Support’ and club/society management, but given the data, period was 2019-2020, how will this have been affected by COVID-19?

  • The £5.2m income that comes from bars and shops is in jeopardy and will have had a significant reduction in 2020/21.

  • Given that one in three hospitality firms face collapse and the hospitality trade body UKHospitality saw a £53.3bn year-on-year drop in sales from April to September, LUU’s finances look worrisome.

  • Retail looks to have suffered the same fate, if not worse with major stores plummeting into administration (Arcadia, Go Outdoors, Victoria Secret).

However, LUU stands well supported with a history of strong assets and extensive experience of operating as a large organisation, so we posed six questions:

1. How prepared was LUU for a situation like this? Was a worst-case scenario (a full one-year closure) ever planned for?

LUU: We annually review a register of strategic risks to identify challenges to our operation, but a globally impactful event like Covid-19 including the scale and continuation of on-campus disruption – our off-campus teams have continued to support students throughout – had not been modelled. However, we were financially prepared for the unknown in two ways:

  1. We aim to hold ‘free reserves’ (money not allocated to a specific area) at the top end of our policy range (£697k) and used this to finance the running of the organisation as our income dropped.

  2. We have always tried to diversify our income streams as much as possible. In the last year, our university grant has been the only fixed source of income but we have seen growth in Joblink, such as providing digital ambassadors to support the university’s switch to online education.

2. Does the government’s furlough scheme help recover some of the costs associated with running the bars and shops? Is it enough to cover the shortfall from revenue?

LUU: To survive through the pandemic, we took the tough decision to restructure in summer 2020, starting with a voluntary redundancy programme.

The furlough scheme allowed us to save more jobs and we are particularly proud that we used it to continue paying students who would normally work in our bars and shops. Between March and December 2020, we paid £360,000 to students at a time when many other employers made students redundant or cancelled their hours.

3. Is the University grant (or are other subsidies) likely to increase due to the drop in bar and shop income this year?

LUU: The University continues to give us great support and they have committed to provide enough funds to help us maintain our student services over this difficult period.

4. Has LUU had to reach into their cash reserves and therefore reduce tangible assets?

LUU: We have been able to maintain our reserves, but we have had to restrict our capital expenditure this year to help achieve this. Fortunately, we did not have any big projects planned for this year so the impact should not be too significant.

5. What is the impact on clubs and societies finances this year? Are they still likely to receive the same grants and funding?

LUU: Societies’ financial position has been reasonably stable, so although membership and therefore income is down, there has been much less activity and hence expenditure due to the pandemic restrictions.

The same grants and funding are available but the take up has been reduced due to the lower level of activity.

6. Are there any other costs associated with the pandemic that will not be reflected in the 2020-2021 financial accounts such as thrown away food and drink stock or increased mental health counselling funding?

LUU: All costs such as wastage will be reflected in the accounts. Some of the exceptional costs, such as emergency hardship grants (we’ve given out over £70,000), are being covered by the University rather than LUU.



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