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Second Report of the Council on amendments of Statute G, II (Financial relations between the University and the Colleges: the Colleges Fund): Notice

24 May 1999

The Council have considered the remarks made at the Discussion of this Report on 27 April 1999 (Reporter, p. 578). After consulting the Finance Committee, the Colleges Fund Committee, and the Fees Sub-Committee of the Bursars' Committee, they have agreed to make the following comments:

1. The Council have noted Dr Edwards's account of negotiations over College fees during the past thirty years.

2. With regard to the points made by Professor Lamb, the Council are aware that, as he has reminded them, they agreed in 1995 to follow his suggestions and to retain in Statute G, II, 6 the tax levels currently specified there, even though these were no longer operative at the time. In 1995 the Council accepted his argument that, if those levels were once removed from the Statute, it might be difficult to reintroduce them at a future date; nevertheless they pointed out in their comments (Reporter, 1994-95, p. 966) that, even if the old rates of tax were retained in the Statute, it would still be necessary to obtain the consent of the Colleges before taxation at those levels could be reapplied. Given the changes that have taken place since 1995, the Council do not believe that any useful purpose would now be served by retaining in the Statute a reference to rates which are no longer effective, and they have proposed the removal of those rates in order to improve the drafting of the Statute and make its meaning more readily comprehensible.

3. Professor Lamb suggested that the rates currently specified in Statute G, II, 6 applied continuously from 1928 until 1986-87, but this neglects the system of repayments to Colleges (referred to by the Fees Sub-Committee of the Bursars' Committee in paragraph 5 of their report; see Reporter, p. 475) which operated until 1978-79. By the operation of that system the effective rate of taxation of the Colleges was reduced very substantially. Thus, in 1975-76, the year of the Council's Report which proposed the phasing-out of repayments, the effective rate of contribution, as a proportion of the total net assessable income of the Colleges, was 12.3 per cent. Repayments to the Colleges were steadily reduced from 1975-76, and were discontinued altogether from 1978-79. From 1987-88 the rates of contribution were gradually reduced (see the table in paragraph 5 of the Sub-Committee's report), the top rate being set at 10 per cent from 1992-93 onwards.

4. Professor Lamb suggested that, by reason of the increases proposed in the bands for the lower rates of University contribution, the income of the Colleges Fund after the transitional ten-year period will be less in real terms than it is at present. The exact effect of the present proposals in ten years' time is, of course, impossible to predict. However, the Fees Sub-Committee have modelled the effect of their proposals using the actual figures presented in the accounts of all the Colleges for the years 1990-91 to 1997-98 inclusive. That exercise predicts that, at the proposed final contribution rates of 2 per cent, 5 per cent, and 10 per cent, from 2008-09 onwards, the annual income of the Colleges Fund will be very slightly greater (in real terms) than at present. The reason why the proposed increase in the bands for the lower rates of University contribution does not lead to an eventual reduction in income is that substantial changes are also proposed in relation to the deductibility of expenditure on repairs and improvements to College buildings. Recognizing the uncertainties of the future, the Fees Sub-Committee have recommended, in paragraph 14 of their report, that the position should be reviewed on a regular basis and that the per caput allowance prescribed by Statute G, II, 4(vii) should be decreased if that proves necessary to achieve the target figure set. Such a change could be effected by Grace.

5. Professor Lamb asked for further information about the distribution of grants from the Colleges Fund. It has been the practice of the Council and the Colleges Fund Committee to report to the University at four-yearly intervals on disbursements from the Fund; in accordance with this practice, the Council published a Report in May 1994 (Reporter, 1993-94, p. 827) giving details of distributions for the years 1994, 1995, 1996, and 1997. The Council reported again in 1996, to record the distribution of the additional sum of £1m received as a special benefaction from Trinity College (Reporter, 1995-96, p. 378). The Council would normally have expected to report again in 1998 announcing grants for the four years 1998, 1999, 2000, and 2001; they did publish a Report in June 1998 (Reporter, 1997-98, p. 722) but, as was explained in paragraph 4 of that Report, the uncertainty about the future funding for Colleges led the Colleges Fund Committee to determine grants for one year only, these grants being made on the same basis as in 1994 and 1996. The grants from the Fund listed in the three Reports referred to amount to £9.7m in total. The Council understand that the Colleges Fund Committee will be reporting to them again in the near future.

6. The Council note that Dr Evans was concerned in her remarks with the general relationship between the University and the Colleges, but that she did not touch on the matters dealt with in the Report under consideration.

7. Similarly, Dr Findlay was concerned largely with questions relating to the form of College accounts, which lie outside the scope of the present Report; these matters are referred to in the Council's Notice (p. 631) on their Report on College contributions in the financial year 1998-99.

8. The Council remind the University that the proposals of the present Report have been put forward in order to implement an undertaking given by the Colleges, through the Colleges Committee, to the HEFCE as part of the College fees settlement. The Fees Sub-Committee of the Bursars' Committee have emphasized that it is important to the Colleges that the University should permit that undertaking to be honoured.

9. The Council are accordingly submitting a Grace to the Regent House (Grace 6, p. 661) for the approval of the recommendations of their Report.


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Cambridge University Reporter, 26 May 1999
Copyright © 1999 The Chancellor, Masters and Scholars of the University of Cambridge.