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The Council have considered the remarks made at the Discussion of this Report on 8 July 2003 (Reporter, 2002-03, p. 1180). At the Discussion, various concerns were raised about the East Forum project. The concerns fell into two main areas: about the proposed building and about Cambridge Enterprise.
1. Some speakers were concerned that the East Forum would be an unnecessarily lavish and complicated building, which would be expensive to maintain. The Council can reassure the Regent House that this is not the case. The intention is that the East Forum be an economical building (to construct and operate) which is simple and robust. There is no intention to adopt lavish finishes.
2. Several speakers expressed serious concern that the East Forum project would expose the University to unjustifiable financial risk in respect of the lettable space, which was proposed to be financed by a mortgage-type loan. This is a valid and substantial area of concern, particularly in view of the current financial pressures upon the University.
3. The Report on the East Forum project explained that Cambridge Enterprise needs to build close working links both with academics and with non-University organizations which can provide finance and advice to start-ups and spin-outs. For this reason the East Forum is planned to contain lettable space for relevant non-University tenants such as venture capital firms and accountants. This would be in addition to University space for Cambridge Enterprise staff and incubatee companies, a seminar centre, and a café/restaurant. The Report proposed that whereas the University space would be funded by donation and by contribution from the University for catering, the lettable space would be financed by the University through an internal or external mortgage-type loan of £11m.
4. This approach to the lettable space amounted, in financial risk terms, to a property development by the University. The East Forum proposal contained mechanisms to minimize the financial risk. Specifically, it proposed that no further money be spent on professional fees for the project until most of the prospective tenants had signed non-binding letters of intent. It also proposed that construction would not start until at least 90% of prospective tenants had signed binding leases for their space. These leases would be for fifteen years, with five-year break points; it would be unrealistic to expect to obtain longer commitments.
5. Even with these safeguards, significant financial risk to the University would remain. The next tranche of professional fees, to take the project to full planning permission, would cost £730,000. If the prospective tenants do not sign leases, this expenditure would be abortive. Even if the prospective tenants do sign leases, one or more tenants might terminate their leases after five years, whereas the payback of the loan with interest would require rents to flow for thirty years. It may not be possible to increase rents to cover other financial risks, and it is a key policy decision as to how much risk, if any, the University feels justified in taking to create the lettable space.
6. The Council, through the Planning and Resources Committee, are currently considering other ways in which the East Forum can be constructed so that financial risk to the University is kept to the minimum. When revised proposals have been prepared, these will be published. Depending on the level of detail available at that stage, the Council will either seek approval in principle and then publish a further Report which will include proposals for the building and how it will be funded, or publish such a Report straightaway. This Report will address the various issues of detail that were raised in the Discussion.
7. Some speakers were concerned that because the prospective donor would require the University space in the East Forum to be used for enterprise-related purposes for a defined period (e.g. 25 years), this would effectively bind the University to maintain Cambridge Enterprise in existence for that period. Speakers who were doubtful about or hostile to Cambridge Enterprise did not wish to see the University enter into this kind of obligation.
8. The Council make the following points in response to this concern:
|(a)||Cambridge Enterprise consists largely of the bringing together of various units within the University, most of which have been in existence for many years and are likely to continue in existence for many years to come.|
|(b)||The wording of any obligation entered into with the donor will focus upon broad objectives (which are likely to endure) rather than upon detailed activities (which may need to change substantially over the next 25 years).|
|(c)||It is unusual for donors to give money for buildings that have no stated and reasonably fixed purpose.|
9. The view was expressed that the creation of Cambridge Enterprise (the principal University occupant of the East Forum) is part of an effort by the University administration to introduce undesirably acquisitive policies on intellectual property. Cambridge Enterprise is an established organization, located firmly within the University administration as part of the Research Services Division, and it will operate in accordance with whatever IPR policy the University adopts. The policy is still a matter for consideration by the Regent House following the publication of the Report of the RPC Working Group on Ownership of Intellectual Property Rights (Reporter, 2002-03, p. 1286), and the remarks made at the Discussion of that Report on 21 October 2003 (Reporter, 2003-04, p. 123).
10. It was suggested that Cambridge Enterprise is a costly and unnecessary bureaucracy, which should be reduced in size or even abolished; that academic staff should be free to exploit their IPR in any way they wish (subject to University policies on IPR); and that Cambridge Enterprise is unlikely to achieve its aim of generating significant income for the University.
11. In response the Council repeat what was said in the Notice on the establishment of Cambridge Enterprise: 'Funding for the new organization will come from existing budgetary provision and Cambridge Enterprise will follow the practice of CUTS in charging for its services to cover its own costs. In the future it will aim to make a small surplus each year, to be used for investment in areas such as expanding patenting or providing 'proof of concept' grants' (Reporter, 2002-03, p. 1007).
12. The objective of Cambridge Enterprise is not to maximize for its own purposes the revenues and financial returns to the University from academics' intellectual property but to help the academic community make its inventions and discoveries more successful commercially. Any income generated will belong to the University and the academic community and will not be under the control of Cambridge Enterprise. The skills and contacts of Cambridge Enterprise are intended as a service to help to increase the effective transfer of knowledge from the University into the market place, to the increased benefit of the University, its academic staff, and the national economy.
13. Part of the reason for moving the main part of Cambridge Enterprise to the East Forum is to bring it closer to the important customer base of Departments that is growing on the West Cambridge Site. Cambridge Enterprise already has a small group of staff located, for the same reason, at the Addenbrooke's Hospital Site, and expects to retain some staff in the centre of Cambridge to support the Departments located there.
14. The RPC Working Group on Ownership of Intellectual Property Rights, in their Report, proposed that a review of the Research Services Division should be undertaken. At the Discussion on 21 October 2003 the Registrary announced that the Council had agreed to such a review to take place in the first half of 2004. The review will cover all aspects of the Division, including Cambridge Enterprise, and will involve seeking the views of both internal users and external funding partners.
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Cambridge University Reporter, 26 November 2003
Copyright © 2003 The Chancellor, Masters and Scholars of the University of Cambridge.