Oxford University Gazette

College Fees: HEFCE Inquiry

Supplement (1) to Gazette No. 4452

Wednesday, 5 November 1997

Contents of the supplement:

Reply by the University to HEFCE's questions:

• Introduction
• Indicators of quality
• International competitors
• Use of fee income
• Costs specific to Oxford
• College endowments and returns
• Analysis of expenditure
• Ability to change
• Graduate colleges
• Increase in numbers
• `Access' considerations

To Gazette No. 4453 (6 November 1997)

To Gazette Home Page

Return to List of Contents of the supplement

The DfEE has referred to HEFCE a review of `the mechanisms for setting future funding for the universities and colleges of Oxford and Cambridge', having regard both to the points raised in the Dearing Committee's report and to the Funding Council's new funding method for teaching. The Dearing Committee proposed that the Government review college fees against the two principles proposed in recommendation 74: that variations in the level of public funding for teaching, outside modest margins, should occur only (a) where there is an approved difference in the provision, or (b) where 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 principle underlying HEFCE's new funding method for teaching, which was laid down before the Dearing Committee reported, is that `similar activities should be funded at similar rates'.

As part of its inquiry, the Chief Executive of HEFCE, Professor Brian Fender, wrote to the Vice-Chancellor on 8 October 1997, following a meeting with representatives of the two universities on 6 October 1997, requesting by 23 October 1997 various information. The letter referred to the Dearing Committee's recommendation outlined above and then raised a number of questions. HEFCE's questions and the collegiate University's response to them are summarised below for the information of members of the University. The response was prepared under the direction of the College Fees Group, set up on the authority of the University and the colleges to oversee the presentation of the case for the additional funding represented by college fees.

Return to List of Contents of the supplement

REPLY BY THE UNIVERSITY TO HEFCE'S QUESTIONS

Introduction

(1) That it was wholly appropriate to investigate the endowments and income of colleges before any decision was taken on funding, an exercise in which the collegiate University would be very ready to co-operate, since it would dispel the misconception that there were hidden sources of wealth, not utilised for educational purposes, which could compensate for a significant reduction in the income of the collegiate University.

(2) That standard funding, even if appropriate to the system as a whole, was not appropriate for the Universities of Oxford and Cambridge, since they, unlike all the other universities, were collegiate in their structure; that other institutions offered high quality provision, which should be recognised under the HEFCE funding formula for teaching wherever it occurred; and that HEFCE's existing policy of `convergence' of funding for teaching was at odds with the Dearing Committee's endorsement and encouragement of diversity.

(3) That the colleges of Oxford were not departments of the University, but independent, private, educational charities, each with its own royal charter and that their fees were not top-up fees, but had been charged for centuries, only in recent years being refunded to students out of public funds.

(4) That this University, like Cambridge and a number of other British universities, maintained the highest international standards in both teaching and research across as many subjects as possible; that this universality of high quality provision was not only part of the particular mission of Oxford and Cambridge but was embedded in and founded on the collegiate system; and that it was very much in the national interest that there be such institutions, expensive though they were.

Return to List of Contents of the supplement

Indicators of quality

The University cited the following.

(a) Average A-level scores for the intake at Oxford of 29, i.e. better than 2 As and a B, compared with a national average of 18.8, which showed the strength of demand for places from the best qualified candidates;

(b) A drop-out rate of less than 5 per cent, significantly lower than the national average (estimated at 17--18 per cent in 1994--5);

(c) Very high quality foreign students, e.g. from Europe, the Commonwealth and the United States, most notably Rhodes Scholars, who came specifically to take a second Oxford undergraduate degree because of its world reputation; at the graduate level, the quality of the University's students was demonstrated by its success rate in the ORS scheme;

(d) A rate of unemployment of students some six months after graduation of 2.6 per cent against a national average of 8 per cent;

(e) As demonstrated in the Hemmington Scott, Price Waterhouse Corporate Register 25 per cent of the UK directors and senior company officers surveyed were graduates of Oxford (and 28 per cent graduates from Cambridge); and

(f) a survey of professors working outside Oxbridge showed that a significant proportion graduated from Oxford or Cambridge by way of a first or subsequent degree.

The reply pointed out that it was largely the existence of the tutorial system, based in the collegiate structure, which enabled the University to attract candidates of the highest quality. Individual teaching enabled them to work on diverse assignments and to cultivate independence of thought, a distinctive preparation for lifelong learning and the more valuable kind of transferable skills. Students of such calibre required the kind of teaching which the tutorial system involved if they were to be stimulated intellectually and stretched to achieve their full development. Moreover, the demands of the University's syllabus had traditionally been such that it was only candidates of that calibre who could thrive and achieve full development within the University's courses. It noted that all colleges devoted significant resources to seeking out the students with the greatest academic potential, whatever their social or ethnic background, and drew attention to the fact that of those accepted by universities in 1996, just short of 16,000 scored 30 at A level (getting 3 As); just under 1,800 of these came from the three lowest socio-economic groups, of whom Oxbridge already took about one quarter of the total.

Reference was made to, and extracts were quoted from, successive assessments under the HEFCE quality assessment procedures, which had emphasised the value of the individual tuition provided by the colleges in developing a thorough understanding of the subjects in question, along with independent thinking and oral communication skills.

These assessment reports had also noted that regular contact with tutors, and less formal contact with other senior and junior members of the college, also provided intellectual stimulus, close monitoring of student progress and achievement, and an excellent pastoral care system. The quality assessors had also commented favourably on the high quality of the library provision made by colleges and its convenience, particularly for late study.

Finally, it was noted that the net additional investment of £19m a year by the government was matched by some £43m of college endowment income, which was an admirable example of a private--public partnership.

Return to List of Contents of the supplement

International competitors

The reply noted that it was difficult to make comparisons with institutions which had evolved in other cultures with different value systems and socio-economic conditions. The only university in the US readily comparable with Oxford in teaching method was Princeton, though it was less than half the size of Oxford. Research universities in the United States were biased towards their graduate programmes, and most provided mass undergraduate education, a route which Oxford had chosen not to follow. There was, however, one very large contrast between Oxford and Princeton; the Princeton budget was $550m (or £341m), i.e. not substantially smaller than that of the colleges and University of Oxford combined for a university somewhat less than half Oxford's size. Universities closer in size to Oxford—Stanford and Harvard—spent almost £1 billion a year. Attention was also drawn to the levels of tuition fees at other US institutions, which showed that an undergraduate education at comparable universities in the United States cost over twice as much as that at Oxford (and in some cases considerably more, given that the norm was a four-year course). This suggested that not merely was the current level of Oxford's funding justified but that in terms of its international comparators an increase would be appropriate.

Turning to Europe (other than the UK), the reply indicated that teaching in other European universities at the equivalent of undergraduate level was predominantly by lecture to large audiences and that drop-out rates were high. The Dearing Report itself (para. 3.5 of Appendix 5) had estimated that it was about 30 per cent in Germany; in France, where similar teaching methods prevailed, `as few as 17 per cent of initial entrants emerge with a Licence (full honours degree)' (ibid., para. 2.2). It was also noted that the French Government had recognised the value to the country's economy of a highly-trained academic cadre by supporting a system of Grandes Écoles. By contrast with the rest of the French university sector, where very large-group teaching was the norm, students of the Grands Corps received a great deal of individual attention in small seminars and tutorials. State funding per student in such institutions was some Ff89,000 (£9,470) per head per year compared with the standard funding of university students of Ff35,000 (£3,725) per head elsewhere in the system. The Grandes Écoles were widely admired for integrating higher education with Government and industry, a policy which Oxford had pursued and was continuing to develop. One external indicator of the general quality of undergraduate education in France and Germany, compared with that offered by UK universities, was the level of applications to British universities for undergraduate places from Germany and France; in Oxford's case these had increased by 50 per cent over the past five years. The 354 German undergraduate and postgraduate students currently at Oxford were the second largest non-UK group (the largest being from the USA—618).

It was recognised that Japanese universities were very different. At two leading public universities, for example, it was known teaching was primarily by large lecture (up to 1,000 students), with some classes of 50 to 100 students, and seminars of between 10 to 30. It was difficult to cite universities in Japan comparable with Oxford, a university which regularly had appeared in international surveys as amongst the top ten world universities.

Return to List of Contents of the supplement

Use of fee income

The University supplied HEFCE with a copy of the consolidated college accounts for 1995--6, which were also relevant to the other financial questions posed, and a copy of the published college accounts for 1995--6. These accounts separated:

—the Endowment Account (Statement III), where endowment income covered premises costs, rents, rates and taxes, after some of these costs had been allocated against Statements IV and V;

—the Education and Research Account (Statement IV), where fee income was set against the direct and indirect costs of education and research;

—the Internal Account (Statement V), where charges to students and to conferences were set against the direct and indirect costs of catering and accommodation.

It was noted that statements IV and V were in deficit over the colleges as a whole, requiring subsidy from the surplus on the Endowment Account. HEFCE's particular interest was likely to be the Academic Account IV, and a breakdown of that expenditure was provided, showing (a) that part arising from the college teaching system, (b) that part arising from the complexity of a system based on thirty-five [1] independent institutions, and (c) a residual part, arising mainly from the research activities of the colleges. Parts (b) and (c) were regarded as the prime cause for the need for a subsidy from endowment, but the schedule also demonstrated that the costs of the college-based tutorial system absorbed the entire income from fees. Only in the sense that teaching fellows contributed to the research profile of the University could fees be said to be spent on research, and in that sense Oxford was no different from other universities. It was concluded that any diminution of funding would harm the whole collegiate structure and impact on tutorial expenditure, and that if further endowment income was consequently switched into tutorial support, the diminution of funding would severely damage research.

Return to List of Contents of the supplement

Costs specific to Oxford

Cost of academic staff on `permanent' contracts               £20.5m 
Cost of academic-related staff on `permanent' contracts       £1.1m 
Cost of support staff on `permanent' contracts                £7.3m 
Cost of all staff on fixed-term contracts                     £5.9m 
Academic and academic support non-pay items                   £9.8m 
Other non-pay items in Statement IV                           £15.2m   

Total                                                         £59.8m