Recently revealed plans to demolish a half-century old Park Street restaurant to make way for student flats prompted a storm of reaction.

People took to social media to protest that the last thing Bristol needs is yet more student accommodation, arguing that there has already been a steady stream of proposed developments across the city centre.

MORE student flats? Really? — Chris Bowles (@bristolanimator) December 13, 2018 Sign up to our daily email to receive

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Our city’s two universities are widely viewed as among its most prestigious assets, putting Bristol on the map as a global destination for research and education, and bringing a wealth of economic and social benefits.

But as both UWE Bristol and the University of Bristol expand their offering – the latter through the development of a new £300m campus by Temple Meads – concerns have been raised that the increasing student population is starting to take its toll.

The issue was starkly highlighted at a recent meeting in City Hall, where it was revealed that the council is expected to lose out on £1.6m in council tax revenue in the next financial year, 2019/20 – primarily because of the number of student exemptions.

While keen to stress that the universities and student populations make a great deal of positive contributions to the city, some councillors suggested it should be down to the universities to compensate for financial losses.

“It’s great to have students in our city and I don’t expect them to pay council tax,” said John Goulandris, a Tory councillor for Stoke Bishop.

“But universities could make a financial contribution to the city. They are big businesses these days, they started off as a charity, but now for every extra 1,000 students, that’s £9m in fee income, on top of that there’s rental income and other bits and pieces.

“If students are from overseas, an extra 1,000 students is nearly £20m. It’s big business.”

There was some cross-party consensus on the matter, with Green Southville councillor Stephen Clarke saying: “I love students, they spend money in our pubs and bookshops and many stay on afterwards and contribute to their adopted home.

“However, they also directly cost us about £12.9m in lost council tax as a result of student exemptions.

“It’s a fact that someone has to pay for services provided to students. The Government won’t give us any money, the students have not got any money. It has to come one way or the other from the universities. Just about £200 per student would make up the shortfall.”

Tim Kent, Lib Dem councillor for Hengrove and Whitchurch Park, said it is down to the Government to compensate university cities, arguing that it is otherwise unfair on the cities and the rate payers.

Deputy mayor Craig Cheney pointed out that the impact could probably be lessened if there was enough purpose-built accommodation in Bristol, to prevent students taking up existing housing.

“Universities have argued they face a perfect storm of not enough purpose-built being granted planning permission, whilst we put restrictions on HMOs (house with multiple occupants) making it hard to cater for the number of students coming in,” he told the chamber.

But student accommodation has been branded a “get out of jail” free option for developers, as it exempts them from the usual obligation to provide affordable housing, fuelling concern that a focus on student blocks comes at the expense of much-needed homes for residents.

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Read more: ‘University expansion inadvertently exacerbating Bristol’s housing crisis’

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Addressing some of the concerns, a spokesperson for the University of Bristol said: “We have had constructive meetings with Bristol City Council to develop a strategy for student accommodation in the city.

“It will focus on how we can best deliver the accommodation our students need in a way that maximises the benefits they can bring to communities.

“Delivering purpose-built student accommodation, in the right areas, will enable the city to avoid further unplanned proliferation of student houses in the private rented sector.

“There has been much work done over the last few years with regards to community liaison and the work we do is recognised by the residents associations, who often also say that they love having students live here. We will continue to work closely with the council and UWE Bristol to help ensure more balanced communities where possible.”

Both universities highlighted the huge number of benefits students bring to the city, through voluntary roles, work in the community and contributing to Bristol’s vibrant cultural offering.

On a financial level, University of Bristol students spend an estimated £250m a year on local services and businesses, while UWE students contribute more than £200m, supporting some 7,000 jobs in total.

A spokesperson for UWE said: “Bristol’s universities make a vitally important contribution to the city, both economically and socially.

“As a university, we have expanded our student numbers modestly over the past ten years and have focused our efforts on investing in purpose-built accommodation on campus.

“Across our Frenchay and Glenside campuses, we have more than 5,500 student bed spaces and there are plans to build more.”

While the success of the universities and the wider community is intertwined, city leaders face a delicate balancing act to ensure both can live happily side by side.

Speaking about the forecast council tax levels and impact of student numbers, a Bristol City Council spokesperson said that students not being charged council tax “can impact on the level of council tax income we generate”.

The spokesperson added: “However, Bristol’s large and growing student population marks it out as a leading destination for further education and research, bringing with it many positive benefits for the city’s economy and national and international profile.”

Budget proposals including predictions for council tax income will be discussed at cabinet in January, before being decided on by the full council in February.

Read more: Plans to tighten control over student accommodation in Bristol