12.1 Taking the University and the colleges together, Oxford's total income in 1995-6 was £391.5 million, comprising £272.3 million received by the University and £119.2 million by the colleges. As outlined in Chapter 2, these totals are made up of income derived from various sources. University income in 1995-6 included £84.6 million in grants from HEFCE; some £35 million in fees; £104.5 million in external research grants and contracts; £17 million from endowments and other investments; and just over £31 million from other sources. College income comprised some £38 million in fees; about £34.5 million in charges for accommodation and board; £42.7 million in income from endowments; and about £4 million from grants and donations.
12.2 Several points should be noted about these figures. First, income from endowments forms a relatively modest proportion of the total: for the collegiate University as a whole it comprised some 14.8 per cent of all income. For the colleges the proportion is higher (34 per cent on average, although the proportion varies from one college to another), while for the University it is much lower (about 3.7 per cent). Income from endowments is thus of importance, but it does not free Oxford from the kind of financial pressures which face higher education as a whole.
12.3 Secondly, the use to which some of the income from endowments in the totals quoted above can be put is restricted. Over 20 per cent of the endowment income identified in the college accounts arises from trust funds which can be used only for specific purposes. Over half the income from the University's endowments is also similarly restricted. Most of this restricted income is applied to academic activities in the narrow sense, although there are some trusts whose purposes are also of considerable historic and cultural importance, such as trust funds reserved to support college chapels or other buildings.
12.4 Thirdly, Oxford's endowments are modest compared with those of North American universities with which it is in many respects in competition. For example, as at 30 June 1996, the capital value of Yale University's endowments was estimated to be $4.8 billion (£3 billion), and it has recently announced the success of a campaign to raise a further $1.6 billion; the capital value of Princeton's endowments was $4.5 billion ((£2.7 billion); and that of Harvard $8.8 billion (£5.4 billion). The capital value of Oxford's endowments, taking the University and the colleges together, was approximately £1.5 billion. We also note that the rate of return on investments being obtained by Oxford is, if anything, higher than that on the investments of the North American universities we have mentioned: Oxford received income from college endowments at a rate of 4.59 per cent in 1995-6, compared with rates of between 4.1 and 4.3 per cent per annum for the North American universities. In any case, rates of return on investments of even the latter order are high. In present economic circumstances, and given the long term nature of Oxford's liabilities, we are clearly of the view that Oxford's current rate of return could not reasonably be increased without incurring significant danger of eroding the capital value of assets.
12.5 Our general conclusion is that, while Oxford is fortunate by comparison with many UK universities in that it enjoys a relatively diverse range of income, including substantial income from endowments, its financial position must be considered in comparison with those other major international universities with which it competes for staff, for research funding, and increasingly for students (especially able graduates). Moreover, in comparison with many North American universities Oxford is seeking to maintain excellence across a very wide range of activity: its teaching and research spans most academic subjects, and it seeks to combine research and advanced graduate teaching with a large, high quality and often labour intensive undergraduate programme, with undergraduates being taught by those at the forefront of research in their fields. In these circumstances its total income per student is low compared with that of North American institutions. The existence of a wide range of scholarship schemes in the USA increases average fee levels because, in effect, those paying full fees help to subsidise those who do not. Thus, tuition fees for undergraduates at Harvard, Yale, Stanford and Chicago are, for example, all currently over £13,000 per annum, compared with the average income from public funds to support the education of an Oxford undergraduate (i.e. tuition fees plus HEFCE teaching grant) of about £6,000 per annum.
II: The Dearing Report and the future funding of Oxford
12.6 The Dearing Report has reviewed the present state of higher education funding in the UK and has made several potentially far-reaching recommendations. First, it acknowledges the need for additional spending on higher education, and argues that any significant further erosion in the level of funding for students across the system as a whole will damage quality. Secondly, the Report recommends that the UK higher education system should remain one which is supported from public funds, and recommends that public funding for higher education should increase with the growth of Gross Domestic Product. Thirdly, the Report also recommends that graduates in work should make a greater contribution to the costs of higher education in future, and proposes an income contingent mechanism to enable those who have graduated to contribute to the payment of a proportion of their tuition costs. Thus the current mix of public and private funding of higher education in the UK may change.
12.7 The government's broad response to the Dearing recommendations has been to accept the need for a direct contribution from students towards tuition fees, currently fixed at a level of £1,000 per annum (see paragraph 2.21 above); this will be means-tested. The government has also decided that student maintenance grants will be phased out, to be replaced by loans. Loans to students are to be repaid on an income contingent basis. Whilst, at the time of writing, these are known to be the broad lines of the government's approach, much of the detail remains to be confirmed, notwithstanding the fact that the new arrangements are planned to come into effect next academic year. Nor has any guarantee been given that the funds generated by the new fee to be paid by students will, in fact, provide an equivalent increase in the funding of universities. We are clear that, in terms of both equity and need, the fees should be used for the purpose of providing such additional higher education funding, and that the sooner the detailed arrangements for the new fee system are announced the better for universities, students and their parents.
12.8 Although Oxford shares the concerns of all other universities over the current uncertainties relating to the funding of higher education, there is one issue stemming from the Dearing Report which particularly affects the funding of Oxford (along with that of Cambridge). This is the question whether the fees charged by colleges to students will, in the case of Home/EU students, continue to be paid from public funds. Recommendation 74 of the Dearing Report states:
'We recommend to the Government that variations in the level of public funding for teaching, outside modest margins, should occur only where:
- there is an approved difference in the provision;
- society, through the Secretary of State or his or her agent, concludes, after examining an exceptionally high level of funding, that in relation to other funding needs in higher education, it represents a good use of resources.'
The Report continues: 'the college fees in Oxford and Cambridge represent a substantial addition to the standard funding for institutions of higher education. We propose that the Government reviews them against the two principles we have proposed'. 
12.9 The Government has accepted this proposal and has asked HEFCE to conduct such a review and provide advice. Both Oxford and Cambridge have responded to invitations to address a range of issues relating to college fees, and have done so on lines which, we believe, indicate that both of the Dearing criteria can adequately be met. However at the time of writing this report we do not know the outcome of this review.
12.10 The clear message from all this uncertainty is that, for the future, Oxford must be in a position to react flexibly to changing funding arrangements. In due course, it may need to consider broadening still further the base from which it obtains its resources, and be prepared to modify its methods of operation and the assumptions which lie behind them. We have not sought to forecast all the new circumstances to which the University is likely to have to react; nor have we looked specifically at possible alternative sources of income to those which exist at present, or at possible revised resource allocation methods. It is almost inevitable that detailed prescription in these areas would rapidly become outdated. Oxford requires mechanisms which will enable it to react to particular circumstances quickly, to adapt to new conditions and to make the most of new opportunities. Our proposals on governance in Chapter 5 (especially those on planning and costing) are intended to form the basis for establishing such mechanisms, and their importance from the point of view of the raising and spending of income is thus fundamental.
12.11 In the remainder of this chapter, we focus on two issues which, regardless of the outcome of the present review of colleges fees and of decisions on the funding of higher education as a whole, will be central to future policy on the use of resources within Oxford. The first is how far Oxford should seek to rely on public funds; and the second concerns the effects of present variations in levels of resources available to different Oxford colleges.
III: Public funding in Oxford
12.12 It is only relatively recently in its history that Oxford has received substantial public funding to support its work. For example, permanent state support for Oxford developed only in the 1920s, following the report of the Asquith Commission;  while universal and mandatory public support for college fees dates back only to 1977s (although college fees had been charged for centuries before then).
12.13 However, Oxford as a whole now receives some £188 million a year from public funds. As we noted in paragraph 12.1, this includes £84.6 million HEFCE grant. The rest is made up from about £31.5 million in public support of the income for college tuition fees; almost £42 million in grants for research from the research councils; and about £30 million in public support for university tuition fees.
12.14 Despite the extent of this public support, Oxford, like other universities, is not a public sector body in the conventional sense. It is a private institution but it receives a large proportion of income from public sources on a basis whereby public and private sources of funding complement each other in a funding partnership. In recent years several developments have taken place which have led some to question whether Oxford should continue to rely so heavily - or indeed at all - on public funds. These developments include:
(i) increasing attempts by public funding bodies to attach conditions to funding which in the view of many go beyond what may reasonably be required to secure proper accountability for the use of public funds;
(ii) erosion in the real value of public funding per student, which means that it is less and less likely that the funding needs faced by Oxford (either capital or recurrent) will be met by government;
(iii) the imposition of severe restrictions on the pay rises which may be offered to university staff as a condition of public funding, as well as other interference in the terms and conditions of their employment;
(iv) the possibility - a real one at the time of writing - that a substantial proportion of public funding will in any case be lost if public funding for college fees is ended or sharply reduced.
12.15 It is not always clear what 'going private' means when such a course is advocated. At one extreme it might involve eschewing any public funding at all. But this situation does not apply even in the case of the University of Buckingham, which was established as the only 'private' university in the UK. Home and EU undergraduates at Buckingham have for some years been eligible for some public support for their maintenance. Similarly 'private' North American universities receive substantial amounts of public funding, for example through research grants. It is clear that Oxford would have much to lose from declining to accept publicly supported research grants as a matter of principle, especially given the high proportion of basic and strategic research in the UK which is publicly funded and the relative paucity of alternative funding sources in many subject areas.
12.16 When the idea of Oxford 'going private' is discussed, the focus is usually on whether it should cease to receive funding council (HEFCE) grants. At present Oxford receives £84.6 million a year in recurrent grants from HEFCE, and enjoys a high degree of discretion in deciding how to deploy this funding. In order to replace even this part of the recurrent income stream which currently comes from public funds, a substantial unrestricted capital endowment of the order of £2 billion would need to be raised, which we believe to be an unrealistic target in present circumstances. In particular, there continues to be a strong cultural expectation in the UK that the bulk of recurrent funding for higher education will come from the public purse, and the tradition of philanthropic funding of higher education which exists in North America has not been matched in the UK. For Oxford suddenly to change this position would be impossible notwithstanding the fundraising successes of the last decade. Much the greater part of the funds raised so far has been for specific research projects, particular building needs, or the endowment of identified posts. To raise the endowment sums needed fully to 'go private' would, on the experience of the last decade, take about 100 years.
12.17 Moreover, we believe that there are strong, positive reasons for Oxford seeking to remain, if at all possible, part of a publicly funded system of higher education. Oxford's policies to encourage wider access to its degree courses for all who have the potential to benefit from them (discussed in Chapter 3) would not be helped if public funds allocated to the University by HEFCE were no longer available to support students. It is also, we believe, important that Oxford should continue to take part in discussion and debate about government policies towards higher education as a whole, and being part of a publicly funded system of higher education along with other UK universities facilitates and legitimises this.
12.18 There is, of course, a real difference between a wholly 'private' system and a 'mixed' (part private and part public) one. The government's decision to introduce a means tested fee to be paid by students will edge the system more towards the private end of the spectrum. It has, of course, long been the case that many mature, part-time and graduate students have had to pay their tuition fees for themselves, as do many overseas students. Our conclusion is, however, that Oxford should seek to remain part of a national system of higher education in receipt of significant amounts of public funds. We hope that Oxford will not find it necessary substantially to shift further towards reliance on private funding, as might be required if the financial survival of Oxford and its collegiate system were threatened.
We recommend that Oxford should aim to remain part of the UK's publicly funded system of higher education, supported on the basis of a partnership of both public and private funds.
IV: Differences in the levels of resources available to different colleges
12.19 Over time, there have been a number of significant shifts in the balance of funding in Oxford between the University and the colleges. This balance may continue to change in the future and Oxford will need to ensure that it is able to manage such changes effectively. Even so, there remains the separate issue of differences in resources between colleges, and we now address this.
12.20 Concerns arising from differences in the levels of resources available to different colleges have been the subject of much discussion in Oxford in recent years. The main concern is how far such differences lead to unacceptable variations in levels of provision between colleges, both in terms of educational provision and in terms of the conditions of service for academic staff employed under the joint appointments system (i.e. jointly employed by the University on the one hand and a college on the other).
12.21 The structure of Oxford as a collegiate university is reflected in the independence and autonomy of its 39 colleges and 6 permanent private halls. These societies were founded separately at various times over the last 700 years or so. The colleges are legally independent self-governing institutions each with their own statutes approved by the Privy Council: they are not departments of the University. Their independence is reflected in their financial autonomy. As was indicated earlier, all colleges have a number of different sources of income. Broadly speaking, these are tuition fee income; income from catering and accommodation charges levied on students; income from grants and donations; income from summer schools and conference activity; and finally income arising from endowments. The fees that are levied by colleges are not 'top up' fees in the way the term has been used in recent years: they have been charged for many centuries. As we noted above, only relatively recently have fees on behalf of Home/EU students come to be paid out of public funds.
12.22 The proportion of their income which different colleges derive from different sources varies considerably. Colleges differ in size: for example Keble has 606 students (445 undergraduates) but Corpus Christi has 309 (227 undergraduates). Some colleges are smaller still. College fees charged to students, however, vary by only 5 per cent of the weighted average for all colleges. College charges for accommodation also vary but again are clustered within ten per cent of the average. The principal cause of variation in income received from accommodation charges is the number of students who can be accommodated in college or college owned buildings. Differences in the quality, age and design of college buildings (for example, whether they have private bathrooms) have considerable effects upon the colleges' conference income. The composition of the student body also affects colleges' ability to raise income through conferences: rooms used by graduate students are generally not available to accommodate conference visitors because such students tend to stay in Oxford for almost the whole academic year. Graduate colleges are obviously most at a disadvantage here.
12.23 However, the main area where there are substantial differences in levels of college income is that of endowment income. This is illustrated in Figure 12.1, which shows the distribution of college endowment income using data taken from the published Accounts of the Colleges for 1995-6.
Figure 12.1: Distribution of College Endowment Income 1995-6
12.24 Since the colleges are autonomous and independent, some variations in the level of their endowments and in the overall level of resources available to them are inevitable and acceptable. However, it has long been realised that there are limitations on how far it is sensible to accept too great a degree of variation within a single university community, and measures to support the financial position of less well endowed colleges by drawing on the resources of the wealthier have been in place for over thirty years.
12.25 The original college contributions scheme, established in 1877-82, was designed 'to secure an income for an inadequately endowed University from the colleges, which were relatively wealthy'. In the mid-1960s, the Franks Commission proposed a major overhaul of the scheme, so that its purpose became instead the transfer of resources from the wealthier colleges to the poorer colleges. Franks' aim was to build up the endowment of the poorer colleges 'to the point at which they become economically viable and independent'.
12.26 Since the mid-1960s the college contributions scheme has gone through three phases. The first was the scheme stemming from the Franks Report, designed to bring the endowments of poorer colleges fully up to a target level, which was defined as an endowment capable of producing a statutory endowment income of £40k at 1965-6 prices. A second scheme ran alongside the first phase from 1978-9 to 1987-8, which was designed to establish an appropriate endowment for Linacre College and St Cross College, which had been established by the University and were not initially independent of it. A third phase began in 1987-8, and was designed to bring seven colleges (Keble, Lady Margaret Hall, St Anne's, St Catherine's, St Edmund Hall, St Hilda's and St Peter's) half way from their base position towards a desired target endowment of some £11 million in July 1993 prices. Pembroke was later also admitted to this scheme.
12.27 Over the years these successive schemes have achieved a great deal. It has been estimated that the total funds transferred to the recipient colleges under the schemes are over £70 million at 1995-6 prices. This is a substantial redistribution. Moreover, four of the colleges which were supported in the initial 'Franks' scheme were no longer in need of support by the time of the second scheme, while five other recipient colleges have since then also seen their endowments lifted to the point where they are no longer eligible for further support on the basis of the criteria applying to the third scheme.
12.28 The expiry of the third phase scheme prompted a review, which was conducted by the College Contributions Committee in 1995 and submitted to Hebdomadal Council in Michaelmas Term that year. The outcome of the review was a recommendation that the contribution scheme should continue, although with a number of changes to the details of its operation. It was also proposed that there should be closer scrutiny of the recipient colleges' financial position and of the uses to which income received under the scheme was put.
12.29 Two further points were also agreed. The first was that the longer term future of the scheme, and the possibility of more radical changes to present arrangements, should be reconsidered by Council once the Commission of Inquiry had reported, in the light of any recommendations which might be made. The second point was that the position of those colleges currently outside the scheme (namely Green, Harris Manchester, Kellogg, Mansfield and Templeton) should be referred to the Commission of Inquiry: each of these five colleges has, for various reasons, been excluded from participation in the contribution scheme hitherto, and it was felt that their position should be reviewed in the broader context of the overall future of any college contribution scheme.
12.30 It is clear from this brief summary of successive schemes over the last thirty years that they have made an important contribution to the position of the poorer colleges. However, the ultimate conclusion must be that they have certainly not succeeded in 'solving the problem' of the poorer colleges. Disparities in levels of resources and concerns about their effects continue to exist. We have therefore considered two broad issues. The first is the nature of the impact of differences in levels of resources available to different colleges in Oxford. The second is whether a redistribution scheme along the lines of the present one should continue and, if so, with what objectives; or alternatively whether it should be replaced by or supplemented with an additional scheme or schemes.
The Commission's consultation
12.31 As a first step in reviewing these questions, we undertook a range of consultation. During Trinity Term 1996, a consultative letter was issued on behalf of the Commission to the heads of all colleges seeking views about differences in the resources available to different colleges, and on the nature and extent of the problems (perceived or actual) which might arise from this. Responses were received from 31 colleges.
12.32 Broadly speaking, these responses fell into three categories. First, there were those colleges which believed that inequalities in the resources available to individual colleges were causing Oxford as a whole serious difficulties, affecting the work of both junior and senior members. A second group, which formed the majority, believed that inequalities in resources did cause difficulties which should be tackled by Oxford as a whole, but in general they did not consider that the problems were as serious as did some of those in the first group. Within this second category, there were differences of opinion as to how substantial or significant the problems identified were, and about the steps that might be taken to deal with them. A third group - comprising only a small number of colleges - expressed a greater degree of scepticism about the argument that differences in the levels of resources available to colleges were causing or might cause any serious problems for Oxford as a whole. It was pointed out by colleges in this group that even the least well provided Oxford college could, in general, offer a high standard of provision for both senior and junior members; and it was also argued that differences in income and wealth between colleges did not have purely negative consequences in the sense that they allowed some colleges to make relatively generous provision in areas such as junior research fellowships which might not otherwise be possible. To that extent, it was argued that some colleges were in a position to make a contribution to the well being of the Oxford academic community in general, and that this contribution needed to be recognised.
12.33 A fuller summary of the results of this consultation appears in the supplementary volume to this report. We have taken careful account of all the points which were made in reaching our conclusions.
Improving information about college finances
12.34 In seeking to assess the impact of differences in levels of resources available to different colleges, the first conclusion which we have reached is that clear information, compiled on a consistent basis, is lacking. We believe that Oxford as a whole would benefit from improved information about differences in the levels of resources available to colleges, since this would enable a better understanding to be built up about what is the most important issue, namely the impact of such differences on the educational provision made by colleges and on other aspects of the lives of their members.
12.35 The most obvious way of assessing the impact of such variations might be to assemble evidence of levels of spending on different activities, from which one could infer differences in the level of provision. Although this is possible in certain respects, it became clear to us during the course of our discussions that hard evidence which would enable us clearly to answer questions about the levels of spending in colleges on different types of provision is very difficult to come by.
12.36 In part, this situation arises because the present format of the published college accounts does not easily lend itself to a systematic analysis of this kind. This format (as noted above) is determined by the University's statutes, the relevant statute having been passed following the Franks Report, the accounts being known as 'the Franks accounts'. It is now, however, some thirty years since the current statute was enacted, and, especially because the format of the Franks accounts was largely framed to enable assessment to be made of endowment income for the purposes of establishing liability to contribute to the college contributions funds, or to receive payments from such funds, it is perhaps inevitable that the Franks accounts do not reflect recent thinking on the most helpful ways of presenting financial information. The problem is not that colleges are in some way trying to hide information; rather the format in which they are currently required to prepare accounts for publication, and the kind of information which they keep for other purposes, needs to be reviewed and updated so that a clearer picture of college finances can be made generally available.
12.37 We believe that lack of clear information about the way in which colleges use their resources can lead to misunderstanding and misrepresentation. Both within Oxford and externally, a somewhat unhealthy mystique attaches to the way in which colleges spend their income, which we believe to be both undesirable and unnecessary. Greater openness in the way in which these questions are dealt with within Oxford would dispel much of the misunderstanding, and would blunt criticisms which are sometimes levelled at Oxford.
12.38 Our conclusion is thus that there needs to be a review of the present format of published college accounts. There are several points which we believe should be taken into account in the review which we propose. First, there is the desirability of presenting financial information on how colleges spend their resources in a way which provides a more informative picture of their activities. We have in mind, above all, the advantages which would stem from being able to determine overall spending on particular broad subject areas, or on particular activities such as teaching, research and administration. At present, information on college spending on these activities is difficult to obtain. Better information here would not only enable a clearer picture to be built up of Oxford's overall use of resources, but would also help to answer some of the questions raised above about the nature of the differences in levels of resources available to different colleges.
12.39 The new format of accounts which might emerge from the review which we propose should not merely facilitate the production of more informative published accounts. We note that the current Franks format is not one which many colleges themselves use for the detailed management of their own business. One of the aims of a new form of published accounts should be to enable colleges themselves to relate published accounts more closely and more easily to the more detailed accounts which they will themselves produce for their own internal management purposes.
12.40 We have also considered whether university and college accounts ought to be presented in a common format. The University's practice in this regard is now governed by the requirements of the Statement of Recommended Practice (SORP) for higher education institutions (and there is also a separate SORP for charities which may be of relevance to colleges). Whilst it is not clear whether the terms of the SORP for higher education in fact cover colleges, as opposed to the University, there may nonetheless be considerable benefit in presenting college accounts within the SORP format. For example, to do so would mean that both university and college accounts were produced on a similar basis, and this would enable consistent comparisons to be made between them, and would facilitate the assembly of integrated information about overall spending within Oxford. Such an approach would also make it easier to address some of the general difficulties about the production of financial and management information within Oxford which we discussed in Chapter 6.
12.41 Our broad conclusion is that adoption of a common SORP format would make a contribution to the improvements we seek. We have concluded, however, that Oxford needs to go further. Although the SORP is helpful both in providing a common framework and in requiring a statement of total assets, it requires relatively little detail to be published. The SORP guidelines could be taken further within Oxford by considering aspects of the presentation of accounts which are particular to the University and to the colleges, and which would be helpful to both.
12.42 Finally, the review of college accounts would need to consider the way in which endowment income should be treated. We recommend later in this chapter that the present college contributions scheme should continue, and this would necessitate ensuring that a proper basis exists for assessing liability to contribute. Assuming that the present basis for calculating contributions is maintained, then any new format of college accounts would still have to provide for statutory endowment income to be shown on a basis similar to that in the Franks accounts.
We recommend that the Council and the Conference of Colleges should jointly establish a review of the current format of the published college accounts, with a view in particular to enabling both university and college accounts to be produced on a comparable basis, bearing in mind the terms of the SORPs for higher education institutions and, if appropriate, for charities, and the need to supplement these.
The impact of differences in wealth between colleges
12.43 Notwithstanding the lack of reliable data in some areas, we have carefully reviewed the information available to us about the impact of differences of wealth and resources between colleges. We have benefitted from the willingness of colleges to provide information where it is available, and we have also drawn on the results of the surveys of staff and students which we conducted in Hilary Term 1996. We have sought to address two sets of points in particular. The first is the impact on the provision which colleges can make for undergraduate and graduate students, in terms of educational and other provision, and the second is the impact on college fellows, in terms both of their remuneration and of the conditions under which they are able to undertake teaching and research.
12.44 With regard to undergraduates, it has often been observed that the Norrington Table results suggest that, over the years, there is a broad correlation between college wealth and academic performance, even though no causal link has been made. We ourselves have focused on the evidence available from our survey of undergraduate students from Hilary Term 1996 about the impact of differences in college wealth on undergraduate provision. This did not suggest that there were any major variations in basic teaching provision which could be attributed to the different wealth of colleges. For example, there was very little correlation between college wealth and the average number of tutorials received by undergraduates, and college wealth appeared to make little difference to the number of students in each tutorial. Students in poorer colleges tended to receive fewer one to one tutorials, but this may reflect differences in subject mix between colleges, and the fact that humanities students (who generally tend to receive tutorials in smaller groups) are more numerous in the wealthier colleges.
12.45 College wealth did appear to make a significant difference in respect of the types of tutors who taught undergraduates; students in the wealthier group of colleges had a better chance of being taught by a fellow or lecturer of their own college than did students at poorer colleges. This does not in itself, however, indicate any variation in the quality or quantity of teaching received.
12.46 Finally, although the survey revealed that there was considerable variation between colleges in the method and frequency of monitoring students' progress, the variation did not appear to bear any relation to college wealth.
12.47 Variations in levels of wealth between colleges did, however, appear to make a difference to the level of what might be termed academic support facilities available to undergraduates. For example, being a member of a wealthier college seemed to help considerably in obtaining financial assistance for the purchase of books. A higher percentage of students at wealthier colleges received financial assistance for book purchases, and the average amount of financial help received was significantly higher at wealthier colleges. A larger proportion of students at wealthier colleges made regular use of their college libraries, especially for borrowing purposes.
12.48 Although there was no evidence that any colleges had a policy of giving financial assistance for the purchase of an undergraduate's computer, the computing facilities provided within colleges clearly was significantly affected by wealth. This is evidenced both by the higher proportion of undergraduates at wealthier colleges who used college computing facilities and by the degree of satisfaction with college computing facilities expressed by those at wealthier colleges as compared with others.
12.49 The area where there was perhaps the clearest overall variation in the experience of undergraduates at different colleges was in the extent of their opportunity to live in college owned accommodation in their second year. Thus whilst it appears that almost all first and third year students who so wished could live in college owned accommodation irrespective of the wealth of the college, there were substantial variations in how far those in their second year could do so. Almost 80 per cent of second year undergraduates in the wealthier colleges were able to live in college accommodation, as compared with only 44 per cent for those studying at the poorer colleges. There was also some variation in the availability of college owned accommodation for third year undergraduates, but this was much less marked.
12.50 Recent changes in Oxford's undergraduate admissions systems have made these variations in undergraduates' experiences between colleges all the more significant. Many students now make no choice of college themselves, and are allocated to a college automatically by computer as part of the admission process. Similarly, all applicants now have no control over the selection of their second and lower choice colleges. These points make the differences in provision which students may experience the more arbitrary.
12.51 As regards graduate students, our survey of graduate students provided some evidence which suggests that there is a correlation between college wealth and the nature of provision made by colleges for their graduate students, although the relationships between different factors are by no means straightforward. For example, there appears to be no relationship between college wealth and whether or not graduate students undertook paid teaching. College wealth was clearly associated with the level of book grants, travel grants and conference expenses available to graduate students, and those outside wealthier colleges apparently stood little chance of receiving any financial assistance of this kind, although the levels of such support available to graduate students at any college were very modest. In general, the analysis in the graduate survey of college facilities available to Oxford graduate students does not suggest any major correlation between satisfaction with facilities in college and levels of wealth, although more respondents from wealthier colleges rated pastoral support very good or adequate than did those in the middle band or in poorer colleges.
12.52 In considering the effects of differences in the resources available to colleges on their fellows, a number of distinct issues need to be addressed. The first is that of the total level of remuneration (salary and allowances paid as part of salary) enjoyed by fellows; the second is that of differences in basic workloads; the third concerns differences in the levels of professional support costs which are available to fellows (e.g. basic research support, travel grants and conference expenses, and other allowances against expenditure); and the fourth is that of differences which might exist in the extent to which individual colleges are able to support fellows in other ways (for example by recruiting substitute teaching for those on sabbatical leave or holding college administrative offices).
12.53 The evidence available to us shows that the total remuneration paid as salary enjoyed by the fellows of different colleges can vary significantly, and does so because of several different factors. One is the rate at which fellows at different colleges proceed to the current joint maximum (i.e. the agreed maximum joint university/college salary payable to joint appointees). The evidence suggests that although variations in this factor are not dramatic, they are in some cases significant. A much more important factor in causing variation is the value of the housing allowances (if any) which fellows at different colleges may at present receive, and also the criteria for determining which fellows of a college are eligible for such allowances. Another important factor in this context is whether or not individuals hold tutorial fellowships.
12.54 The payment of housing allowances to fellows who do not live in college accommodation originated in the period after the second world war, when colleges developed a wide variety of housing benefits in order to recruit and retain staff of high calibre in a university city in which housing costs were rising rapidly. Gradually, over the last 20 years or so, variations in the level of housing allowances paid by different colleges appear to have increased, as those colleges which have been able to do so have offered increases in housing allowances in order to compensate for the continuing erosion in the real value of basic academic salaries, and as a means of seeking to ensure that Oxford can continue to attract the best academic staff.
12.55 The outcome of this development is that many holders of joint appointments - and especially those with tutorial fellowships - receive a significant addition to their pensionable salaries through housing allowances. The total levels of remuneration which result are, however, still modest when compared with salaries available to those pursuing analogous professional careers within the UK. Nonetheless, variations in the rate at which housing allowances are now paid have in our view become too great, with (as we noted in Chapter 7) a range from about £2,000 per annum to as high as £8,000 per annum. In effect, this means that at least a proportion of the fellows of one college can receive a salary for doing the same type of job at the same level which can vary by as much as £5,000 or £6,000 a year in comparison with those at other colleges. Moreover, not all categories of holders of joint appointments are eligible to receive housing allowances: in particular, university lecturers with non-tutorial fellowships (ULNTFs) tend not to be. In addition some colleges - notably graduate colleges and those most recently established - do not find themselves able to pay any housing allowances at all.
12.56 We have concluded that the present extent of the variation in total salaried remuneration which arises from variations in housing allowances is unacceptable, since in effect it means that individuals at different colleges are receiving different levels of pay for essentially similar work. We believe that, on grounds of equity, steps need to be taken to equalise the total pensionable salaries payable to fellows of different colleges who are undertaking similar levels of duties. We note that this was also a conclusion reached by the Franks Commission in the mid-1960s, which recommended '...that housing allowances should be continued...but that the aim should be to standardise these at a moderate figure...'.
12.57 We have also considered other ways in which variations in the resources available to different colleges might affect the conditions of employment of their academic staff. We considered first of all the question of workload, drawing on evidence provided by the survey of academic staff which we conducted in Hilary Term 1996. The evidence here did not suggest that there was any great variation in the hours worked as between members of wealthier colleges and poorer colleges. There was some indication that the average working week was slightly lower for those who were fellows of wealthier colleges (50.9 hours), as compared with those in the least wealthy colleges (where 52 hours was recorded), but these differences are very small and we do not judge that any great weight can be placed upon them. Moreover, the pattern of variation between different colleges did not necessarily hold within each faculty, so that for example in Social Studies and Music the length of the average working week appeared to increase in proportion to the relative wealth of a college, rather than vice versa. Nor did we find any significant differences in the amount of annual leave taken by fellows of different colleges. Our overall conclusion is that the results of the staff survey do not indicate that variations in the levels of resources available to colleges have any significant bearing on fellows' workloads.
12.58 There are, however, variations in other benefits enjoyed by fellows of different colleges. For example, many colleges are able to provide some assistance to certain categories of fellow with house purchase, either in the form of a subsidised loan or a capital sharing scheme. Another point of variation is how far and in what form colleges are able to make available to their fellows professional support in other ways - for example through payment to assist book purchase, travel to conferences or to undertake research, and allowances for entertaining students. In some cases, allowances of this sort are payable against cost, whereas in other cases they are paid as a standard allowance and sometimes integrated, in effect, into salary payments. There are also significant variations in the levels at which these elements of support costs are available.
12.59 Finally, we may note that the additional stipends paid by colleges for holding college office (e.g. that of Senior Tutor) also vary quite considerably, as does the extent to which (if at all) any remission from other duties is granted. Some colleges also buy out teaching time to enable their fellows to spend more time on research.
12.60 The broad picture which emerges from the evidence available to us is that there are significant variations in total levels of remuneration, including both stipend and the various allowances, enjoyed by tutorial fellows at different colleges for undertaking broadly comparable duties. Moreover not all categories of fellow are eligible to receive allowances. Within a single university community the existence of these variations in levels of total remuneration is inequitable in itself, and cannot be justified in the face of the conventional prohibition on sideways moves between similar posts at different colleges. The variations are particularly unacceptable in cases in which several joint appointments in the same subject are advertised together, with the successful applicants at the different colleges in effect being appointed on different terms and conditions of employment. It is our view that measures must be taken to reduce the extent of the variations which exist in the total remuneration available to fellows at different colleges under the joint appointments scheme.
Conclusions and recommendations
12.61 Our arguments thus far may be summarised as follows. First, despite the achievements of successive college contributions schemes in redistributing resources from wealthier colleges to poorer colleges, significant variations continue to exist in the levels of resources which are available to different colleges in Oxford. These variations arise for a number of reasons, but the most important is that different colleges have access to different levels of endowment income.
12.62 Variations of this sort are not in themselves a problem. They reflect the independence and autonomy of individual colleges, and enable many of them to support work which is of benefit to Oxford as a whole and to the wider academic community. Two rather different examples are the employment of junior research fellows across a wide range of subjects, and the maintenance of important specialised library holdings.
12.63 The important question concerns the impact of the variations in resources between colleges, and we have concluded that there are some problems in this area. In the case of graduate and undergraduate students, we have seen that the evidence from our Hilary Term 1996 surveys suggests that there was some relationship between college wealth on the one hand and, on the other, levels of academic support available to students in terms, for example, of IT provision and libraries. There is, however, no clear evidence that basic academic provision - for example the amount of tutorial teaching available to undergraduates - was significantly affected. Perhaps the single most important correlation between college wealth and the student experience concerned the availability of college accommodation for second year undergraduates: it appears that, in the poorer colleges, a much lower proportion of second year undergraduate students are able to live in college-owned accommodation. We have concluded that, although the differences in provision for students are not as great as some have claimed, they are of significance. It is, in our view, important to continue with measures which will enable the poorer colleges to tackle such differences.
12.64 As regards the position of college fellows, we have noted that there are variations in the levels of remuneration for those holding college administrative offices, and in the extent of remission of duties available to individuals whilst holding such offices. We think that some variation in these respects between different colleges is legitimate, especially when it is a function of conscious policy choices made by autonomous college governing bodies. We do not, therefore, wish to make specific proposals to address such variations. Nor have we found any clear evidence that differences in wealth between colleges lead to significant variations in the workload of academic staff.
12.65 The main issue which we have considered in this context is that of the variations in the additions to basic academic salaries which different colleges make, and in the different levels of professional support available to college fellows. We have concluded that the current considerable variation in levels of total remuneration which arise from payment of housing allowances at different rates is not acceptable, particularly given that such allowances are not currently payable to all fellows of colleges undertaking similar duties at the same level of performance. Like the Franks Commission, we believe that measures should be taken to equalise levels of salary payments made by colleges. We also believe that there should be a broad equalisation in the levels of professional support available to fellows at different colleges, and in particular in the academic and research allowances which are paid to them.
12.66 We do not think that the poorer colleges will be able to achieve the objectives set out above in relation to students and in relation to staff, without additional financial support. In order to meet these objectives, therefore, we wish to make two sets of recommendations which will provide for financial support for the poorer colleges from the wealthier. The first proposals concern the existing college contributions scheme, which we believe should continue. The second proposal is for a new redistributive mechanism to operate through the joint appointments scheme; this has the aim of enabling the poorer colleges to meet the additional costs to them of the equalisation of salaries and other support which we are proposing. The mechanism would involve some redistribution of income from the wealthier colleges to the poorer (although there would be no net additional costs to colleges as a whole, other than transitional costs), and some reallocation of existing university funds in order to meet the costs of bringing those fellows who do not currently receive supplementary salary payments within the overall scheme which we propose.
12.67 Our first proposal is that the present college contributions scheme should continue. We think that, for the time being, the scheme should be envisaged as having as its primary purpose that of increasing the permanent endowment of the less well endowed colleges, although it should be possible for support to continue to be made available to allow borrowing to build student accommodation, coupled with the continued possibility of making income grants in certain circumstances.
12.68 Given that we propose below an additional redistributive mechanism to supplement the present college contributions scheme, we do not believe that, as long as the present arrangements for funding colleges remain largely unchanged, there is currently a case for increasing the rate at which contributing colleges transfer resources into the present contributions scheme. In terms of the operation of the scheme, we agree with the recommendation made by the College Contributions Committee when it reviewed the scheme in 1995 that there should be more detailed and regular scrutiny both of the general financial position of a college seeking support from the college contributions fund, and of the use subsequently made of grants provided.
12.69 We see our recommendation for the continuation of the present college contributions scheme as aimed primarily at enabling poorer colleges to make improvements in provision for undergraduate and graduate students, especially in terms of IT and other academic support, and of accommodation for students. It is in these areas in particular that we believe that the present scheme can make its most effective contribution in terms of the redistribution of resources to the less well endowed colleges. One further possibility which we believe should be considered by the College Contributions Committee would be to make grants to poorer colleges clearly conditional upon their use for these purposes.
We recommend that the current college contributions scheme should continue on the basis recommended by the report of the College Contributions Committee to Hebdomadal Council, in Michaelmas Term 1995, and with the prime objective of enabling the poorer colleges to improve their provision for undergraduate and graduate students. The College Contributions Committee should also consider making grants conditional on their use for these or other specified purposes.
12.70 We should stress that our recommendations are framed on the assumption that the resources available to Oxford through college fees continue to be available. The position would need to be reconsidered if changes in public funding meant that certain resources flowed into Oxford through the University rather than via the colleges. In such circumstances it would be necessary for the University to increase its financial support for joint appointments, and we would expect such support to be applied differentially between colleges, so as to reflect differences in college endowments rather than merely reflecting previous patterns of college fee income.
12.71 We have also considered the position of the five colleges currently ineligible to participate in the college contributions scheme. Whilst we understand the circumstances in which these colleges were originally excluded from the scheme, we do not think it any longer practicable or reasonable to prevent them from enjoying its benefits and bearing its responsibilities. Nor do we think that in future the University should agree to the establishment of new colleges without at the same time including them in any college contributions scheme.
We recommend that:
- (a) the five colleges currently ineligible to participate in the college contributions scheme (namely Green, Harris Manchester, Kellogg, Mansfield and Templeton) should be brought within it; and
- (b) in future the University should not agree to the establishment of any new college without its immediately becoming eligible to participate in the scheme.
12.72 The second set of recommendations which we wish to make relate primarily to addressing the differences in the total remuneration and other academic support enjoyed by fellows of colleges and the way in which the costs of the changes we propose can be met. We indicated earlier our view that the present position is unsatisfactory, and we believe that the principle of equal reward for work of equal value should be applied to all holders of joint appointments. Application of this principle should take account of the total duties owed by fellows to their college and to the University together, and of their total salaried remuneration from both sources (i.e. basic salary plus pensionable allowances). This approach complements our recommendation in Chapter 7 for the introduction of a new form of joint contract.
12.73 Our first proposal is that housing allowances currently paid to those fellows who do not live in college accommodation should be abolished. They should be replaced by a new joint maximum salary, higher than the present one, which would apply to the salaries of all joint appointees. Any other additions to salary should be discontinued in their present form. The figure at which the new joint maximum should be set would need to be considered, but as an initial proposal we suggest the addition to the joint maximum of a sum equivalent to the weighted average of the present range of housing allowances, which would be approximately £3,650 a year. This additional element would not be payable to those fellows who continue to live in college accommodation (of whatever type) who would be regarded as receiving payment in kind.
12.74 We have concluded that this new joint maximum should be payable (at a standard age point) to the holders of all joint appointments, including university lecturers with non-tutorial fellowships (ULNTFs). We also think that, in the light of this conclusion and of our recommendations in Chapter 7 on a new joint contract, the present interim scheme to supplement the salaries of ULNTFs which was agreed by Congregation in 1996 should be phased out. New appointments should be made on the basis of the arrangements which we now propose, and any existing ULNTF who wishes to do so should be able to hold his or her appointment on the basis of the new arrangements.
12.75 Clearly, it will not be possible to move immediately to the structure which we believe appropriate, and transitional arrangements will need to be put in place. We hope that it would be possible to make arrangements whereby all new appointees were appointed on the proposed new terms, so that staff turnover would contribute towards progress towards the new situation which we seek.
12.76 In proposing that any addition to salary currently paid to assist research or book purchase, or support entertainment costs, should be discontinued, we do not wish to argue that professional support costs of this kind should not continue to be available to academic staff. Support costs such as contributions to research expenses, book purchases, entertainment, and other allowances against actual expenditure should continue to be available in addition to salary, but they should be paid quite separately and be clearly distinguishable from salary. It is also important that academic staff in the same subject at different colleges have broadly the same access to grants for conference attendance and similar support.
We recommend that housing allowances currently paid to those fellows of colleges who do not live in college accommodation should be abolished, and that any other additions to salary should be discontinued in their present form. Instead, there should be a new joint maximum salary set at a higher rate than the present one, and we propose that the increase should be a sum equivalent to the weighted average of the present range of housing allowances. This new joint maximum should be payable to the holders of all joint appointments not living in college accommodation, including university lecturers with non-tutorial fellowships (ULNTFs), and the present interim scheme to supplement the salaries of ULNTFs which was agreed by Congregation in 1996 should be phased out.
12.77 We recognise of course that establishing a detailed scheme to put into effect the proposals made above will require considerable further work. Our proposals will also create some additional costs, but we propose that these should be met by redistributing existing resources so that there is no net requirement for any additional funds to pay for our scheme.
12.78 The costs which need to be met are essentially of two kinds. The first are the costs of bringing those joint appointees who do not currently receive housing allowances within the scheme which we propose, and we estimate this cost to be of the order of £1 million recurrent. We propose that these costs should be met by the University, which is appropriate since the majority of those involved are ULNTFs and owe almost all their duties to the University. We propose that the resources be found by reallocating to this purpose the funds currently used to fund the 'trade-offs' scheme operated by the General Board, and those used for supervision payments, both of which we have proposed (in Chapter 7) should be abolished under the new system of joint appointments set out in that chapter.
12.79 The second set of costs are those which would arise for some colleges as a result of the increase in net salary we propose in cases where a college currently pays below the average housing allowance. Our proposals for a new joint maximum salary should not lead to any net additional costs to the college system as a whole, nor (in the longer term) to any individual college, since the increase we propose is equivalent to the average of current housing allowances. Additional costs would only fall on those colleges which currently pay below the average, while those which pay above it would, once any transitional arrangements have been phased out, make savings through paying lower net salaries. There would, however, be transitional costs.
12.80 We propose that the additional costs of the new arrangements which would be faced by the former group of colleges should, in cases where a college did not have sufficient endowment income to meet such costs from its own resources, be met through a recurrent redistribution of income from the wealthier colleges to the poorer. We also propose that eligibility to receive income support under this scheme, and liability to pay into the new fund which would support it, would depend on the amount of endowment income per student received by each college. Of course a different formula, not based on student numbers, would be needed to address the position of All Souls College.
12.81 We estimate that the extent of recurrent income redistribution which would be required would be of the order of £750k a year, although this estimate would need to be confirmed. We also propose that agreement by a college to participate in this new income redistribution scheme should be a prerequisite for eligibility to participate with the University in the joint appointments scheme.
12.82 We have developed in Appendix C to this report a more detailed exposition of how the approach which we envisage could operate. This sets out more fully the broad principles behind our recommendations, and the financial arrangements which would need to underpin them. It also provides estimated costings, and explains how the arrangements which we have in mind are flexible enough to accommodate any significant redistribution towards the University of recurrent income at present paid to colleges through publicly supported tuition fees. It should be noted that the appendix does not cover the question of support costs, which should be divided between the University and the relevant college on the basis of three broad principles. First, the arrangements should be equitable between individuals, so that, for example, lecturers in the same subject at different colleges should have broadly the same access to grants for conference attendance etc. Secondly, the respective obligations of the employers to provide support should be made clear at the time of appointment. Thirdly, the University's contribution should be used differentially to complement that which can reasonably be expected from each college given the resources available to it. The detailed arrangements for the payment of support costs in the light of these principles would be a matter for discussion between the Council and the relevant inter-college committees.
12.83 We should add that the mechanism which we have proposed in Appendix C to enable redistribution of resources between colleges could, if necessary, be adapted or extended to meet objectives other than the specific one which we have considered. For example, it is, we believe, robust enough to be adapted to circumstances in which changes in the way public funds reach Oxford meant that the University might be required to meet a higher proportion of the costs of joint appointments, and to do so in a way which would not necessarily affect the balance of duties owed by individuals to the University or a college.
We recommend that the costs of the proposals summarised in Recommendation 92 should be met (a) by the redeployment of funds currently used by the University to pay for the General Board's scheme to relieve holders of joint appointments of college teaching responsibilities ('trade-offs'), and funds currently used to make payments to Oxford academic staff to undertake graduate supervision; and (b) by establishing a new mechanism for redistributing income from the wealthier to the poorer colleges, in order to cover the costs to the latter of equalising total remuneration received by joint appointees on the basis of a new joint maximum.
12.84 Subject to acceptance of the principles which we have sought to establish in this chapter, it would be necessary for the University's central bodies to discuss with the colleges the details of the arrangements which we propose and to consider how they might best be implemented. Any change in the level of the joint maximum for university lecturers which might be agreed would also require reconsideration of the salaries of professors and readers.