Report 98/04

Analysis of estate returns 1997

Executive summary

Purpose

1. This document gives an overall picture of the sector's estate, as revealed by the estates returns submitted by institutions in 1997.

Key points

2. The returns show that:

1. The sector's estate is 9.3 million m² net floor space. It provides 215,000 bed spaces and has a total insurance value of £18 billion.
2. The sector has estate needs totalling some £4.2 billion, the largest of which are for backlog maintenance (£706 million), insufficient accommodation (£589 million) and student residences (£386 million).
3. The sector has development proposals estimated to cost £2.3 billion, which will address some of the needs outlined in the returns.
4. Health and safety and other legislation is estimated to cost the sector some £294 million to implement. However, the annual provision set aside to address this legislation is only about £32 million.
5. The amount set aside for routine maintenance (£140 million a year) is 1 per cent of the insurance value of the sector's estate. Building Maintenance Information Service (BMIS) standards suggest that at least 1.5 per cent should be set aside to keep an estate in a good condition, discounting the need for money to address backlog maintenance problems. The resulting funding gap is about £60 million a year. This figure is likely to be much higher due to the existing backlog in the sector.
   

Background

4. Circular 9/97 asked institutions to provide copies of their estates returns by 11 July 1997. These update information in the institution's estate strategy documents, which were received in 1995, and in the 1996 estates returns.

5. The estates returns provide both institutional data, which help to highlight problems and project proposals of individual institutions, and sector-wide information. This helps us to identify trends in the sector, to assess the match between our priorities and the sector's intentions, and to advise the Secretary of State on the funding needs of higher education institutions.

Main findings

6. Main findings can be broken down into six broad headings:

• floor space
• valuation
• maintenance
• space management
• problems - including legislation and obsolete laboratories
• major projects.

Floor space

7. The net internal floor space of the sector is 9.3 million m² and the gross internal floor space is 12.37 million m². Of this, 27 institutions have over 100,000 m², and eight institutions have over 200,000 m² net space.

8. The sector provides a total of 215,000 bed spaces, which represents one bed space for every first year 18-21 year old full-time undergraduate not living at home. A further 7,000 bed spaces are under construction. There is a wide variation in levels of provision between institutions.

9. There is over 350,000 m² of university clinical and pre-clinical space within NHS sites, either as stand alone buildings on NHS sites or embedded within an NHS hospital premises. In addition, there is 240,000 m² of medical school accommodation within individual institutions.

10. Within institutions' 9.3 million m² net floor space, there are wide variations between different academic subjects. The largest uses of space are Science (20 per cent), Engineering and Technology (10 per cent), Clinical and Pre-clinical Medicine (8 per cent) and Art Design and Performing Arts (8 per cent).

Valuation

11. The total insurance value for the sector is some £18 billion, split between £14 billion for non-residential and £4 billion for residential provision. This indicates an average insurance value of £1,100 per m² to insure non-residential space in institutions. However, the actual figure ranges from £630 per m² to £4,000 per m² for individual institutions.

Maintenance

12. Institutions are allocating decreasing sums of money for maintenance, particularly after 1997-98. The amount set aside for routine non-residential maintenance is approximately £140 million a year, in addition to a sum for long-term non-residential maintenance of about £120 million per year. However, there are higher figures in 1997-98, which coincides with the ending of the KDK and Hunter initiatives to fund backlog maintenance projects.

13. In 1995-96, institutions only spent £122 million of their estimated budget of £142 million for non-residential long-term maintenance. There was a similar underspend in 1996-97.

14. The table and the graph below demonstrate the sector's spend on maintenance.

15. Institutions still identify maintenance as the largest estate problem the sector faces. Backlog maintenance affects 3.8 million m², with an estimated cost to remedy of £706 million. This is up by 41 per cent from last year's figures and may reflect a continuing deterioration in the quality of the estate. It may also reflect the fact that institutions are more aware of the size of the problem, and are producing better data.

Space management

16. The returns show that most institutions are aware of good space management practices; many are already measuring occupancy or frequency of use. For example, 68 institutions conduct surveys on the frequency of use of lecture theatres with over 50 seats, and seminar rooms with between 10 and 50 seats. In addition, 52 of these institutions measure occupancy rates of these rooms.

17. Far fewer institutions survey the use of laboratories, for teaching or research. The numbers that survey academic offices and administrative space is lower still.

18. Of the 87 institutions who responded, 69 intend to increase their space utilisation rate.

Problems

19. The 1996 estates returns showed that the sector faced estate problems with an estimated cost of £2.7 billion over a five-year period. The figure for 1997 has risen by 55 per cent, to £4.2 billion. This may be due to a growing awareness of problems and more accurate estimates of the cost to remedy them, together with the growing impact on the sector of resource shortages.

20. The greatest problems, in order of floor area affected, are health and safety compliance, backlog maintenance, disabled access/special needs, and site development constraints. All of these affect over 20 per cent of the estate, with health and safety and backlog maintenance affecting over one third.

21. In terms of cost to remedy, the largest problems are backlog maintenance, insufficient overall accommodation, health and safety legislation, insufficient student residences, obsolete laboratories and insufficient research space.

22. Institutions also highlighted problems relating to poor quality, bad fit and obsolete space, temporary buildings, insufficient social space and library accommodation, insufficient sports facilities, space remodelling and energy efficiency.

23. The issue of backlog maintenance is of particular concern. According to the BMIS standards, the level of planned routine maintenance is not sufficient to maintain the present quality of the estate, which institutions admit is considerably below a reasonable standard. If routine maintenance is not addressed, then backlog maintenance will continue to increase, and the sector could face building failures within the next two or three years.

Legislation

24. The 1997 estates return incorporated a new feature, that of legislative requirements. We asked institutions to provide (where possible) estimated figures to address 10 legislative requirements which affect the sector's estate.

25. Responses were incomplete, varying from 22-53 per cent, depending on the item of legislation. For institutions that did respond, this indicated a need for some £220 million to address these 10 basic items of legislation. If this figure is grossed up across the sector's estate, it would suggest a conservative figure of £294 million to implement existing legislation.

26. We also asked institutions how much they set aside each year to address legislation. This figure amounted to some £24 million for the institutions that responded, which would suggest a total of £32 million a year for the sector.

27. On the basis of the figures provided, it would take 10 years for institutions to address existing legislation, to bring them up to 1997 standards. In addition, further legislation is proposed which will increase the cost to institutions of statutory compliance.

28. The Disabilities Discrimination Act 1995 was singled out as having the greatest financial impact on institutions, with an average cost of £5 per m² to implement. This would suggest a sector wide need of £61 million. However, detailed independent surveys by individual institutions of the costs to enable people with all disabilities to access all parts of every building, suggest a figure of £25 per m². The Act does not specify that this level of access is required, but if it was provided across the sector the cost would be £311 million.

29. The incompleteness of the returns on legislation gives cause for concern for the sector as a whole. Many institutions do not know the likely cost of implementing legislation and have therefore not made any provision for it.

30. Given the magnitude of the problem, we will be working with the sector to clarify the needs and consider possible solutions in response to legislative requirements.

Obsolete laboratories

31. As part of the information on estate problems, we asked institutions to give the net space of obsolete laboratories.

32. The figures provided show that there are 62,000 m² of obsolete teaching laboratories, 50,000 m² of obsolete research laboratories and 150,000 m² of obsolete joint teaching and research laboratories. The estimated cost to remedy this problem is £234 million, of which pure research or joint teaching and research laboratories account for 77 per cent (£180 million).

33. These figures should be seen in the context of the Council's plans to provide £35 million a year for the next three years for laboratory refurbishment.

Major projects

34. The 1997 estates return specified a number of categories into which major projects might fall. Against these, institutions were asked to note the area affected by the project, its estimated cost and whether it was new-build or refurbishment.

35. As with the 1996 estates return, the most frequently mentioned projects were student residences (primarily new build) with an estimated cost of £445 million and providing over 423,000 m² of additional space.

36. In terms of space affected, student residences were also top of the list, followed by libraries, sports facilities, science projects, clinical and pre-clinical projects and energy management systems.

37. In terms of estimated cost, after residences the order was clinical and pre-clinical subjects, libraries, science-related subjects, sports facilities and general teaching accommodation. Although energy management systems fell within the top five in terms of area affected, the cost was very small at only £9 million for the sector. This may demonstrate the efficiencies which can be gained by installing new energy management systems at a relatively low cost.

38. The total project proposals for the sector amount to some £2.3 billion for the period 1995-96 to 2000-01. This is a reduction of 13 per cent from the total in the 1996 returns. This may suggest that less money is available for new major projects, although the need for such projects has grown significantly (see paragraph 19).

39. There is a wide variation in the size of major project proposals in individual institutions, as the following table shows.

40. There was also a wide variation in the cost of projects as a proportion of an institution's income. The following table shows that 25 institutions have major capital development programmes which exceed 50 per cent of their annual income. They will need to ensure that they do not overstretch their available resources.

Conclusion

41. The returns have provided valuable information about the sector, and have demonstrated that the estate is coming under greater usage pressure.

42. With the co-operation of the Association of University Directors of Estates and the Standing Conference of Principals Estates Group, we will continue to refine the estates returns to provide valuable information to the sector.