Universities (Proceeds of Sales) (Hansard, 15 January 1985)

§ Sir Keith Joseph

On 21 January 1982, at column 182, I announced the experimental introduction of new arrangements to allow universities greater freedom to retain the proceeds of sale of land or buildings acquired with assistance from public funds. The purpose of these arrangements was to help universities to make the most economic and efficient use of accommodation and to identify property that was not being fully or effectively used and might be surrendered.

Before the introduction of the new arrangements a university that sold property it wished to replace by new buildings or adaptation might, with Treasury agreement, be given a special grant towards the cost up to the amount of the proceeds surrendered. The revised arrangements announced in January 1982 further provided for universities to be able to retain up to 100 per cent. of proceeds of sale up to £100,000 for use within two years on building or adaptation work. Where the proceeds of sale were more than £100,000 the university could either retain £100,000 under the rules for the smaller projects or up to 92W 50 per cent. of the proceeds of sale for use within three years on building or adaptation work or the acquisition of property.

Following consultation with the University Grants Committee I am satisfied that these arrangements have contributed to the capacity of universities to make the most effective use of their sites and properties and that it would be appropriate to consolidate and extend them. Universities will be informed in detail of the new arrangements by the UGC, but the main features are as follows:

(a) Where a university disposes of sites or properties (including leases of 25 years or more) the university will be allowed to retain up to £200,000 of the proceeds of sale on condition that:

(i) the committee is notified of the university's proposal to dispose of the property and of the purpose to which it is proposed to use the proceeds;
(ii) the sale proceeds are used within three years of receipt by the university on building or adaptation work, repairs or maintenance or the acquisition of property. Sale proceeds may be used (subject to Treasury approval) for projects related to university/industry collaboration.

(b) Where a university disposes of property where the proceeds of sale are more than £200,000 the university may with the UGC's approval and as an alternative to (a) above retain up to half of the proceeds of sale for the purposes and on the conditions outlined in (a) above.
(c) Universities will also be allowed (subject to the approval of UGC) to use up to 100 per cent. of the proceeds of sale on cost-effective schemes to rationalise or replace existing facilities.
(d) Proceeds of sale and any accuring interest not used as provided for above will be surrendered to the Consolidated Fund. Universities will be expected to be able to account separately for the retained proceeds of sale and any related interest.
(e) Assets acquired with general income will be covered by the same general rules as assets financed from capital grant, although any amount to be surrendered to the Consolidated Fund will be calculated taking account of the proportion of general income coming from non-Exchequer sources at the time the asset was acquired.
(f) The limit on the amount universities may spend on minor works will be increased from 3 per cent. to 4 per cent. of recurrent grant.
(g) Universities will be allowed to retain rents from properties which are in commercial use of benefit to the institution concerned and rents from properties occupied by displaced tenants. Net rental income from any other Exchequer-funded property not in normal university use will continue to be returned to the Consolidated Fund unless the UGC exceptionally agrees otherwise. The case for the university continuing to hold such property will be kept under review by the UGC.