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The Council have considered the remarks made at the Discussions of these Reports on 9 November 1999 (Reporter, p. 159) and 7 December 1999 (Reporter, p. 292) respectively. In her remarks Dr Evans made the same substantive comments in each case. The Council referred her remarks on 9 November to the Finance Committee. In the light of the Committee's comments the Council respond to both sets of remarks as follows.
The particular issues raised by Dr Evans may be summarized as follows:
|(a)||whether the Regent House is entitled by Grace to authorize the Director of Estate Management to submit a planning application or to authorize the Treasurer to accept a tender for building works within the funding identified;|
|(b)||whether the University is complying with the Public Accounts Committee's report 'The Management of Building Projects at English Higher Education Institutions';|
|(c)||whether the University's charitable status is in some way being compromised by renting space to commercial companies (a matter of general interest although not directly relevant to either of the Reports being discussed).|
On (a), the relevant authorities are contained in Statute F and Ordinance XIII (Finance and Property), and more particularly in the General Regulations relating to University Property: Sites and Buildings (Statutes and Ordinances, p. 843). Regulation 3 of those General Regulations states that it is '... the duty of the Finance Committee of the Council: … (b) to advise the Council whether a site and funds both for the estimated capital cost and for the recurrent costs of maintenance and use are likely to be available for a proposed building; (c) to arrange for the planning of buildings in such order of priority and within such estimates of cost as the Council may determine; (d) to supervise the erection of any new building or the alteration of any existing building.'
In carrying out these duties, the Finance Committee is advised by its Buildings Sub-Committee which in turn is advised by officers of the Estate Management and Building Service and the Finance Division of the University Offices. Approval by the Regent House is required under General Regulation 4 for any proposal for the erection of a new University building or for the demolition or substantial alteration of an existing University building. It is the Finance Committee's view, which the Council endorse, that a Grace in the form currently used is not actually delegating authority to the Director of EMBS and the Treasurer but is authorizing them to take the necessary executive action to give effect to a decision of the Regent House to approve a project (for which there is invariably a separate but conjoined recommendation and Grace). If a particular project does not require approval by the Regent House under General Regulation 4, a similar argument applies to authorization by recommendation of the Finance Committee approved by the Council. This seems to be the only sensible and practicable way in which documents which require signatures (for example planning applications and acceptances of tenders) can be properly executed by individuals with appropriate authority. The Council do not see any conflict between these arrangements and the provisions of Statute K, 9 on delegation.
On (b), the Council note the University of Cambridge Capital Procurement Procedures which were adopted in January 1999 and widely promulgated throughout Departments and Institutions. These were prepared after lengthy consultation between EMBS, the Finance Division and Institutions within the University and were approved by the then Major Projects Sub-committee. They were drafted in the light of the report referred to by Dr Evans. The Director of EMBS was a member of the national committee which steered preparation of that report.
On (c), Section 505(1)(a) of the Income and Corporation Taxes Act 1988 provides that the rent and profits of any lands vested in trustees for charitable purposes are exempt from tax under Schedules A and D, 'so far as the same are applied to charitable purposes only'. The treatment of income from land is therefore different from the treatment of income from trading (covered by Section 505(1)(e) of the same Act) for which there is a more restrictive provision, namely that the profits of any trade carried on by a charity are only exempt from tax under Schedule D if the profits are applied solely to the purposes of the charity and either (i) the trade is exercised in the course of the actual carrying out of a primary purpose of a charity; or (ii) the work in connection with the trade is mainly carried out by beneficiaries of the charity.
The question which arises in relation to commercial leases granted by the University is not that the act of leasing itself gives rise to tax (which it does not, so long as the rent is used for the University's charitable purposes) but whether the lease is made for a full consideration - if not, a charge to tax could arise under Section 505(2) of the Income and Corporation Taxes Act 1988. All leases entered into with 'outside bodies' are negotiated on an arm's length basis by qualified surveyors either employed internally within EMBS or contracted for the purpose.
The Council are therefore able to advise the Regent House that the University's procedures for the management of major building projects comply fully with statutory requirements and with best practice and that the renting of space to commercial companies, as undertaken in the University, does not compromise the University's charitable status.
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Cambridge University Reporter, 2 February 2000
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