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Invitation 98/72

Premium for old and historic buildings

Invitation to apply

To

Heads of HEFCE-funded institutions
Heads of DENI-funded universities

Of interest to those responsible for

Estates; Finance

Reference

98/72

Response

by 25 January 1999

Publication date

December 1998

Enquiries to

Andrew Smith tel 0117 931 7001
e-mail a.smith@hefce.ac.uk or
Stuart Cross tel 0117 931 7348
e-mail s.cross@hefce.ac.uk

Executive summary

  1. Purpose

  2. This document invites institutions with buildings constructed before 1914 to apply for a new premium which will be incorporated within the funding method for teaching.

  3. Key points

  4. Research indicates that there are substantial additional recurrent costs associated with old and historic buildings. We have therefore set aside up to £14 million a year.
  5. The premium will be derived from the total floor area of each institution’s eligible buildings. The following are not eligible: non-core holdings, the residential parts of buildings, buildings already funded as inherited liabilities, and buildings acquired after 1 April 1988.
  6. The premium is expected to represent about £15 per m² of eligible floor space. This level will be fixed when we know the extent of the sector’s stock of old and historic buildings. We may also need to introduce a qualifying threshold.

  7. Action required

  8. Applications, using the form at Annex A, should be returned by midday on 25 January 1999.

  9. Background

  10. Research undertaken by the HEFCE Estates team indicates that there are significant additional costs associated with operating in old and historic buildings. Two parallel lines of inquiry were pursued: a Delphi study using the experience of nine independent experts from outside the sector, and a survey of six institutions. This concluded that old and historic buildings have:
    • higher maintenance costs
    • higher refurbishment costs
    • higher heating costs
    • lower ratio of net (usable) space to the total
    • lower levels of potential occupancy
    • lower levels of space utilisation.
  12. The research looked at buildings constructed before 1914 and before 1840. The additional costs were quantified as around £30 per m² per annum for pre-1914 buildings, and slightly higher for pre-1840 buildings.

  13. Nature of the premium

  14. In order to recognise these extra costs, we have decided to introduce an additional premium into the teaching funding model. This will be distributed in the same way as existing premiums, for example for specialist institutions and those operating in London. The premium will also be used as a factor in calculating grant for the universities of Oxford and Cambridge. This follows the decision to incorporate within HEFCE funding the resources previously allocated through Oxbridge college undergraduate fees.
  15. We have set aside up to £14 million a year for the premium which will be allocated on the basis of the total eligible floor area at each institution.
  16. The premium is expected to represent about £15 per m² of eligible floor space. This level will be fixed when we know the extent of the sector’s stock of old and historic buildings. The premium will recognise only about half of the additional costs so that institutions still have an incentive to manage their building stock efficiently.
  17. We may need to introduce a qualifying threshold, which would reduce the benefit for those with relatively nominal holdings or in respect of buildings held on modern leases, as defined below.
  18. The premium will be calculated as an addition to institutions’ standard resource. Therefore only those institutions whose actual level of resource falls below the minus 5 per cent threshold as a result of introducing this premium will receive additional funding.
  19. We expect that the value of the premium will be indexed to inflation, and be supported by a data collection exercise every five years.

  20. Eligibility criteria

  21. Net space within buildings constructed before 1914 will be eligible if the buildings:
    • are core holdings for which early disposal or re-development is not a viable option
    • were acquired by the institution before 1 April 1988
    • were acquired by the institution after 1 April 1988 as a direct result of a merger with another institution that had itself met this deadline
    • were acquired by the institution as a result of the transfer of property provisions of the Education Reform Act 1988.
  23. The following are not eligible:
    • the residential parts of buildings
    • accommodation on NHS sites
    • buildings currently funded by the HEFCE as inherited liabilities.

    Definitions

  25. The reference to long-leasehold in Annex A means buildings held under leases with an original term exceeding 25 years and modern lease means buildings held under leases with an original term of 25 years or less.
  26. The reference to date of construction in Annex A should relate to the predominant part of the building, measured in terms of net space.
  27. The reference to mixed-use buildings in Annex A means buildings used for both residential and other purposes. Halls of residence would normally fall outside this group.
  28. Where residential accommodation is provided for staff, space used as a kitchen, bedroom or bathroom should be treated as residential. The remaining space used for teaching, research or related purposes is potentially eligible.
  29. The following definition of net space is taken from HEFCE Circular 9/97.

  30. ‘The net space is the gross internal area less the balance areas (see below). It is the floor area planned or provided for the primary function of the building, such as teaching, research, library or administration. It includes, for example, academic stores, service rooms, workshops, kitchens, chair and bar stores, changing rooms and showers, porters’ offices or kiosks, first aid and staff common rooms. Allowance should be made for these in assessing space needs. It excludes accommodation on NHS sites.

    Balance areas are planned or provided as part of the gross internal area to enable the building to function. They include corridors, stairways, entrance lobbies, foyers, lifts, lavatories, cloakrooms, cleaners’ stores, plant rooms, ducts, boiler houses, calorifier chambers and fuel stores.’

    Information requirements

  31. Institutions that wish to apply for this premium should return one hard copy of Annex A as well as a disk containing the information in Table 1. Files should be stored in Excel version 4 or Lotus 123.WK1 format.
  32. We may audit the data submitted.

  33. Date of return

  34. Information should be returned by midday on 25 January 1999 to:

  35. Ms Nikki Sutton
    HEFCE
    Northavon House
    Coldharbour Lane
    Bristol BS16 1QD

  36. Information posted first class and postmarked on or before 23 January will be treated as meeting the deadline.
  37. Copies of Table 1 are available in Excel version 4 from the publications section of our web site at http://www.hefce.ac.uk/

Annex A

Premium for old and historic buildings

Data submission

 

Institution name___________________________________________________________

 

 

 

 

Responsible officer____________________

(Vice-chancellor, principal or other member of the senior management team)

 

Signature______________________________

 

Position_______________________________

 

Contact Person_________________________

 

Telephone Number_______________________