Vice-Chancellor's Oration

In that context, I touched on a number of matters that I believed were important for the future of the University. Three of them were already prominent on Council's agenda and have remained so throughout the past year. At that time, two papers—the first on Learning and Teaching, the second on academic strategy—had been the subjects of consultation within the University and further work was being undertaken in preparation for the publication of the Academic Strategy Green Paper. Council had also agreed to the terms of reference for a review of governance and had nominated a working party to undertake the review. The third matter, the financing of the University's activities and strategies, is perhaps the gravest and most persistent of the challenges that confront the University. This we must address positively and constructively as we seek an enduring resolution.

These are all large and complex issues and they have inevitably generated a great deal of work. I would therefore, at the outset, like to thank all colleagues who have so willingly and constructively contributed to the dialogue and debate about them. I hope that you will find, when you read the new document on governance and the Corporate Plan, that Council has considered carefully the submissions and views that have been received. Of course Council cannot please everyone. Indeed that is not its job. But the new proposals on governance have been very substantially modified and the academic strategy, as it is now incorporated in the Corporate Plan, is, for example, far more explicit in its treatment of Values and Objectives. Congregation will discuss the governance proposals this term. Council has accepted an amendment to the resolution about the Corporate Plan that emphasised the extent to which planning is an evolutionary and iterative process, a subject to which I shall return later in this address. As a result, I am pleased to confirm that Congregation has now adopted the Corporate Plan, without the need for a meeting. Alongside planning and governance, the University's financial position has also absorbed a good deal of Council's time and continues to be serious work in progress.

I raise these three matters at the beginning of this Oration because of their fundamental importance in supporting the University's future success. Good governance and related administrative processes are essential to ensure that the University's strategic, organisational, and operational risks are prudently managed. High quality, timely decisions at all points in the organisation depend on them. In my judgement we still have room for improvement. Collegial clarity about our academic and related strategies will ensure we are better placed to make appropriate allocations of our scarce resources. Unless we can procure the financial resources to fund on an ongoing basis the mission, strategies and operations of the University, including our very substantial capital requirements, it is plain that our future will not be as we plan. I shall have more to say about strategy, governance and finance later.

Before I do so, I would like to reflect on some of the past year's successes and developments. Barely a day passes when I do not see or hear evidence, from within and without, of the exceptional quality of the teaching, research and scholarship undertaken by colleagues at Oxford, and as a result, of the esteem in which the University is held. Not surprisingly, therefore, the achievements and eminent scholarly contributions of a significant number of colleagues have been duly recognised by Her Majesty The Queen, various distinguished societies at home and abroad, and by other public and private organisations. The sheer number and frequency must surely be seen as a distinguishing mark for Oxford. So, it is appropriate today that I should formally add the congratulations of Congregation to all colleagues who have received public and other recognition over the past twelve months. In doing so, I am sure you would want me to single out for special mention Professor Ed Southern, who was recently announced as the joint winner of the 2005 Lasker Prize for Clinical Medical Research.

In a year in which St John's College and Trinity College celebrated their 450th anniversaries, and Green College its twenty-fifth, four students from Corpus Christi College won the 2005 University Challenge final. This was the fifth year in the last ten that Oxford students have triumphed and we should take pleasure in congratulating Nick Sharp, Stefano Mariani, Charlie Oakley and David Whiteley. The Magdalen College Choir's recording of Gibbons' With a Merrie Noyse was nominated for a Grammy Award in the Best Small Ensemble Performance category. This year Oxford sports teams have performed exceptionally well. In rowing five of our seven crews, and in rugby five of our six teams, defeated Cambridge; the cricket spoils, however, were shared, the women winning at Lord's while the men were left to rue the earlier fall of the toss onto a greenish wicket, on an overcast, humid morning.

Many students were recognised for their scholarly achievements, among them Dr Ryan Egeland, co-founder of Oxamer within Oxford Gene Technology, who was named among the top 100 innovators of the world, Dr Michaela Scheuermann-Freestone and Dr Monique Robinson who won Young Investigator Awards from the American Heart Association, and Quantum Computation D.Phil. student Salvador Venegas-Andraca who won a Silver Award at the British Council's International Students Awards. Again, we offer Congregation's congratulations to all students whose academic, cultural and sporting accomplishments won special recognition in the national and international arenas. On a personal note, my dealings with our exceptional students, across the broad spectrum of their activities, have been especially rewarding.

Before I leave the subject of students, I should note that the Access Regulator approved the University's Access Agreement, thereby freeing the University to charge full top-up fees to students who will enter from Michaelmas Term 2006. At the heart of that agreement is the specification of the Oxford Opportunity Bursaries. We believe these bursaries are among the most generous on offer across the breadth of income range (up to £37,425 of family income) to which they apply. It is our hope that the Bursaries will be a valuable aid in our quest to ensure all students who have the ability and the potential feel encouraged to apply for entry to Oxford. I am particularly grateful to the Chancellor for agreeing to promote our Bursaries scheme by riding around the University on a suitably adorned bicycle. Old politicians never lie down.

Once again this year, the University and the colleges have benefited enormously from the generosity of their benefactors. Those nineteen colleges that participated in the most recent annual fundraising benchmarking exercise, supported for the past five years by Mr Bruno Schroder, an alumnus of University College, managed an impressive improvement in the proportion of alumni supporting their annual campaigns. Indeed, the average of 13 per cent compares favourably with the outcomes achieved by major public universities in the US. The highest, around 20 per cent, sets a challenging internal benchmark. I shall refer to a number of other fundraising initiatives in due course, but the recent endowment of US$100m to establish and to provide continuing support for the James Martin Twenty- first Century School requires special mention. The University is deeply grateful to Dr Martin for his inspiration and generosity. Ten research institutes committed to investigating major challenges for humankind in the twenty-first century have already qualified for funding for an initial period of three years.

The University has a particularly active capital programme. Several new buildings and many refurbishments have been completed, occupied and opened during the year. The Richard Doll Building on the Old Road Campus, which houses the University's extensive clinical trials research activities, and the Information Engineering Building, sited in the Keble Road Triangle, are both major additions to the University's estate. Sadly, Sir Richard Doll, whose scientific genius so enhanced public health throughout the world, passed away a matter of a few weeks before that building's formal opening. Another major addition was the Manor Road facility for the Social Sciences that now houses the Multidisciplinary Centre for the Advanced Study of the Social Sciences and provides a home for Economics, Politics and International Relations, Sociology, the Centres for Criminology and Socio-Legal Studies, and the Social Science Library. Tubney House, the new rural headquarters of WildCRU, and the Khalili Research Centre for the Art and Material Culture of the Middle East in St John Street both owe their completions to the generosity of their respective donors, The Tubney Trust and Dr David Khalili. Several smaller projects have been undertaken at the John Radcliffe Hospital to aid the relocation of medical research groups from the old Infirmary and elsewhere. The Weatherall Institute for Molecular Medicine was further extended, while the Admissions Centre (Admissions 'i') is now accommodated in purpose-designed facilities in Little Clarendon Street.

Work has started on the new Classics Centre in St Giles', on a new garden building and link block in Norham Gardens for Educational Studies, and on a new building for e- Science in the Keble Road Triangle. The Pitt Rivers Research Centre will allow consolidation of that museum's activities on its main site when it is completed later next year. Planning for the major refurbishment and expansion of the Ashmolean Museum is also well advanced. Decanting of holdings has begun, although it is fundraising progress, which has been steady, that will ultimately determine the timing of work on site. The Innovation Centre and the Institute of Advanced Technology Building at Begbroke, once they have been occupied during 2006, will ensure facilities for a critical mass of research and third-leg (industry-linked) activities on that campus. Council has authorised the construction of a number of smaller projects, some to allow for the growth or relocation of existing activities, others, such as the Clarendon Building, to ensure the maintenance of the fabric of the institution's infrastructure, and yet others to accommodate new research and/or teaching facilities (such as the MRI scanner extension to the Henry Wellcome Building of Genomic Medicine and the refurbishments within the Dyson Perrins Building for Geography and Environmental Science).

Several major new projects have entered the detailed planning and funding phases. A new complex for Biochemistry, to be built in two stages, will signal the beginning of the redevelopment of the South Parks Road science precinct. Because we wish to ensure that future phases of investment in South Parks Road result in a more practically and aesthetically coherent estate, we have appointed consultants to work with us in developing a master plan for its future development. A new facility for Earth Sciences is also planned for South Parks Road, on the site of Central Chemistry. On the Old Road Campus a proposed building that will house cancer research activities has entered the design phase. The Knowledge Centre component of the Medical and Health Sciences library will be located in the same building. Should our current fundraising be successful, the building will be extended to accommodate bio-engineering research facilities as well. The University is scheduled to take possession of the Radcliffe Infirmary site late in 2007. Owing to options which the local Primary Healthcare Trust holds over approximately a third of the site, we may not know until part way through 2006 what final area of land will be in the University's long-term ownership. Nonetheless, because of the planning lead times that are likely, master planning consultants have been appointed for that site too. Rafael Vinäly & Associates, a US-based firm which also practises in the UK and has undertaken an impressive portfolio of university projects, have commenced work on their brief.

I wish to expand a little on the University's plans for the Radcliffe Infirmary site, but before doing so I will refer to the plans that the Bodleian Curators have placed before Congregation. These have been evolving in stages in recent years, following the formation of Oxford University Library Services (OULS) in 2000. The Bodleian's holdings represent a unique and invaluable scholarly resource. The University is strongly committed to the maintenance and enhancement of these so that the Bodleian retains its standing as one of the leading international university libraries. Thus, in developing their plans, the Curators have had to take account of a number of key issues: the high operating costs stemming from the physical fragmentation of the Bodleian's estate; the high short-term rentals and logistics costs caused by the lack of storage space; the poor state of many of the existing facilities; the serious risk posed by the unsatisfactory climate control in significant areas, including the main stacks under Broad Street; and the under-investment in electronic resources owing to the disproportionate amount of the annual budget that is absorbed by the high basic operating costs of a fragmented system.

At the core of the Curators' planning is the proposed establishment of a major, automated depository at Osney Mead, the co-location of the majority of the Humanities libraries in a new Humanities Centre on the Radcliffe Infirmary site, and the continuing consolidation of science libraries in the Radcliffe Science Library and Medical Sciences libraries at the John Radcliffe and the Old Road Campus. While no change is envisaged for the Old Bodleian, the New Bodleian will be refurbished for special collections and related scholarly activities. The Radcliffe Camera will continue to be used for scholarly purposes. The conveyor linking the New and Old Bodleians is to be modernised so that materials from either Osney or the New Bodleian can be securely transported to and from the Old Bodleian. As refurbishment of the stacks below ground-level is not an economic proposition, that area will be made available to meet other storage demands.

The proposed Osney depository will closely resemble the British Library's planned depository at Boston Spa. The project groups of both institutions are sharing their plans and expertise. Consultation is continuing within the Humanities Division and its faculties about the possibilities offered by the Radcliffe Infirmary site. It is expected though that the libraries and potential faculty facilities there would operate on similar principles to the highly successful Social Science Library and faculty facilities in Manor Road.

This brings me back to the Radcliffe Infirmary site. Together with the possibility of a Humanities Centre, there is a proposal to provide a new building for the Mathematics Institute. The Institute has outgrown its premises in St Giles' and now occupies properties at several other locations. At this stage there are no other specific proposals for the site except the possible relocation of the University's administration to the old hospital headquarters building and a supporting annexe. Consequently, master-planning for the site is proceeding on the basis that further buildings may be for such interdisciplinary uses that do not require wet laboratories or heavy equipment. From an estates planning perspective it seems sensible that we should confine wet laboratories to the South Parks Road and hospital areas. The possible interdisciplinary uses could easily be varied should discipline-specific proposals emerge. The Radcliffe Infirmary planning group's current thinking is that such buildings should be designed for the future and allow for flexible internal layouts, an increasingly common feature in new university buildings.

The scale and relative urgency of the University's capital programme has placed severe demands on the Estates Directorate and on our Building and Estates Subcommittee (BESC). I would like to thank the Director of Estates, Ms Wood, and her colleagues for their professionalism in juggling the completion of several difficult projects, the overhauling of the University's property planning, design and project management procedures, and the management of the large portfolio of projects in planning and construction. I also thank all members of the BESC, and in particular its chairman Professor Ainsworth, for the expertise and commitment they have brought to that committee's challenging mandate.

Before I move on from the University's infrastructure, I should like to mention information and communications technology (ICT). ICT is an integral component of the fabric of the University because it underpins our research, teaching, and administrative activities. Our current and continuing investment in ICT across these activities is significant and requires careful monitoring. In order to meet the relevant objectives in the Corporate Plan, an ICT Plan will be developed this year detailing the principles and processes necessary to deliver optimal, cost-effective ICT which will satisfy the University's performance standards.

The recent agreement between the University and Templeton College, whereby the University will acquire from Templeton its executive education business, will have long- lasting, positive benefits for both Templeton and the Saïd Business School. Templeton will continue as a graduate college with a business focus and with an aspiration to increase its student numbers. The fellows of Templeton will join the Saïd School, which will become a 'full-service' business school in the model of its major competitors. Any market confusion about Oxford's dual business brands should quickly fade, leaving the Business School well positioned to plan the next phase of its development. Council is especially grateful to the Fellows of Templeton and the faculty members of the Saïd School for their support of this important and timely initiative. Professors Hopwood and Earl, along with the Registrar, are also to be acknowledged for their leadership throughout the negotiations. Following the Saïd School's rapid early growth, which has included the successful establishment of a number of research centres, this integration will place pressure on the School's facilities. Various options for completing the development of the existing site, and their financing, are currently being evaluated.

The two University businesses responsible for furthering its mission through the translation of the results of research and scholarship for the benefit of its wider communities are Isis Innovation, which has responsibility for technology transfer, and Oxford University Press. Owing to a change in the tax regime that penalised founders of spin-outs by taxing them on their unrealised gains, 2004 was a quiet year for Isis's spin-out activities. This position was subsequently rectified by Parliament and Isis has resumed its previous momentum. This year's successful spin-out companies are: Surface Therapeutics, EKB Technology, Oxford Nanolabs, Oxford RF Sensors, and Oxbridge Pulsars. The directors of Isis continue to evaluate options for the early financing of technology companies based on intellectual property developed by members of the University. In addition, they are developing for Council's consideration some options designed to provide more rigorous management of the University's shareholdings in those ventures. In all, Isis has developed forty-five spin-out companies since 1997 and the University still has shareholdings in many of them. Improved management of these investments should be beneficial to the founders and investors of the companies, as well as giving reassurance to the University that the value of its investments and its reputation are being prudently protected.

Oxford University Press enjoyed another remarkably successful year, which was perhaps best symbolised by the award-winning publication of the Oxford Dictionary of National Biography. As Professor Stefan Collini observed in the London Review of Books '...the Oxford Dictionary of National Biography has refreshed and fortified our sense of what can still be meant by the collective endeavour of scholarship.' Many other publishing awards, including a third Pulitzer Prize for History in the past six years, recognised the exceptional quality of works published by the Press. All seven divisions of the Press met their financial targets. In several cases they were aided by the geographical diversity of their operations, which helped to compensate for short-term market vagaries. The Journals Division continues to be at the forefront of publishers in experimenting with new models as discussion about open access and institutional repositories becomes more vigorous in the research and political communities. Aided by the one-off contribution from the Oxford Dictionary of National Biography and by extremely disciplined fiscal control, the Press's surplus increased by 23.3 per cent to £74.7m. As a result, the annual transfer to the University for 2005–6 will be £24.7m. In recognition of the Press's location in the Sheldonian Theatre during the early years of its existence, the Delegates agreed to provide a one-off transfer of £1.6m to cover the cost of repairs to the theatre's ceiling.

The total of the one-off transfers and annual subventions made by the Press to the University over the eight years from 1997–8 is in excess of £244m. The one-off transfers have bolstered the University's Capital Fund, thereby facilitating important investments such as the purchase of the Radcliffe Infirmary site, as well as providing liquid backing for the University's current bank debt of £50m. The annual subventions have been used for the strategic development of the University and to bolster recurrent expenditure. In these contexts, the Press recently reviewed its policies on transfers to the University. It has confirmed its intention to continue the annual subvention at its current proportion of the operating surplus (30 per cent). Further, it has proposed the provision of one-off transfers over the next five years to aid the programme for reinvestment in the Bodleian Library and the relocation of Humanities faculties to the Radcliffe Infirmary site. It has also proposed that the Clarendon Scholarships be funded annually at a level of £5m, an increase of £2m.

Finally, the Press has proposed the establishment of a new, annual £5m research development fund, to be named the John Fell OUP Research Fund. John Fell was Dean of Christ Church, Vice-Chancellor (1666–9), and Bishop of Oxford. He was the 'father' of the modern Press and has been described as having been 'an awesome figure, fanatical in diligence, celibacy and learning'. The Fell Fund will add significantly to the money already available through the University's Research Development Fund. It will be used to assist scholars in their efforts to obtain new external funding to carry their work forward and will allow us to support scholarship and research in ways that have previously proved difficult. The specifications for the allocation of the Fund are still being refined. However, annual amounts will be made available for pump-priming of 'proof-of-concept' work to pave the way for larger initiatives and for providing dedicated 'research facilitators' and professional bid-writers to departments and faculties.

The University at large is hugely indebted to the Press for its success and for its beneficence. On behalf of all members of the University, I thank Dr Reece for his leadership, Mr Boning for his financial management, all of their colleagues for their formidable achievements, and the Delegates and members of the Finance Committee for their diligence, expertise and judgement in matters both scholarly and financial.

One outcome of the Government's 2004 Spending Review was the allocation of over £1bn in additional funding of the science base up to 2007–8. This followed the publication of the Ten-Year Science and Innovation Investment Framework. In part, the additional funding was budgeted to allow Research Councils to fund an increased share of the full economic cost (FEC) of research, along with increased levels of dedicated capital funding for research infrastructure. In keeping with the growth in levels of funding and the development by our faculties, departments, research centres and research institutes of more expansive research strategies, the University's research portfolio has grown strongly again this year. In total, £218m of new research contracts were awarded, up 23.3 per cent on the year before, while in the order of £185m of externally funded research was undertaken in the year. This was an increase of 7 per cent on 2004. Colleagues maintained a success rate of awards to applications at the commendable level of 51.5 per cent. From the third Science Research Investment Fund round (SRIF3) we received a total of £75.9m, split £8.2m for teaching infrastructure and £67.7m for research facilities. Each of these sums will be increased by contributions from the University.

A rapidly growing, externally funded research portfolio of around £200m per annum and currently containing 2,517 active projects and 875 in preparation and/or negotiation (of which 452 have been funded and 423 are as yet unfunded) requires considerable organisational support for its operations and growth. Here, we are extremely well served by Ms Quinn and her colleagues in Research Services. This year, in addition to handling the ever-expanding portfolio and supporting policy developments at the national level, most particularly the post-Lambert development of university–industry IP sharing protocols, Research Services has installed an impressive new research management system and guided colleagues through the introduction of FEC. The FEC project has been particularly demanding because of the relatively late availability of essential information from the Research Councils. May I thank all colleagues who have been affected by the introduction of FEC—the financial benefits will surely justify your efforts.

It would not be appropriate for me to touch on new information systems without reference to Isidore and Osiris. I am acutely aware that both projects have been the cause of additional work and stress for many colleagues, which I very much regret. But I also know that both projects are necessary. We must have IT-based student administration and financial management systems to administer the University to the requisite standards, and to manage and control the numerous risks associated with an enterprise of this size. A recent international evaluation of IT projects by a research firm, the Standish Group, ¹ assessed only 29 per cent to have 'succeeded' without cost and time over-runs. Although there is no comfort in this case in being with the majority, it does indicate how very difficult these projects are. Our immediate objective is to complete the committed phases of the two projects in progress. We must learn from these experiences, and processes are being established to ensure that we do so.

The first stage of Isidore was implemented in time to support the new graduate admissions process. An initial review of that process will result in a number of improvements before this year's round commences. The next phase of Isidore comprises the core components of undergraduate admissions and student records. Direct up-dating of the records by colleges and departments will be possible from 2006–7. While this delay is unavoidable, it will have the benefit of allowing the system to be tested centrally before it is used more widely.

The change to Osiris from April 2004 has proved to be especially difficult. Much of the past year has been spent in stabilising the system so that accurate financial information can be produced. This delayed the production of the University's financial accounts for 2003–4, hampered our ability to provide proper financial control within the institution and highlighted areas where organisational improvements can be made. Fortunately Mr Kerr joined us as Finance Director at the beginning of 2005. He has been leading the major tasks of strengthening our Finance organisation, dealing with Osiris issues, and improving financial control, while continuing to fulfil his other duties. I thank him for what he has achieved in such a short time. While levels of familiarity with Osiris vary among its users, those who have mastered the technology are reporting its utility to be high.

One of the major benefits organisations obtain from enterprise-wide information systems is the re-engineering of their administrative processes to improve efficiency and effectiveness. This, however, does not follow automatically. It has to be prioritised and managed, and it can be difficult to achieve. In each administrative area we intend to examine our practices on a regular basis with a view to minimising the financial resources that are absorbed by administration, subject always to defined service standards, and to maximising their allocation to our teaching, research and academic services activities.

The University's financial position continues to cause concern. Dependence on a portion of the annual subvention from OUP to meet recurrent operating costs reduces the amount of the subvention that is available for the University's strategic development. Both the University and OUP intended the subvention to be used for strategic development, and Council would like to see it so used as soon as practicable. Further, we need to make adequate provision for the depreciation of the value of our capital stock, and to invest at the necessary recurrent levels in the maintenance of our buildings and other infrastructure. And, to be internationally competitive, we need the resources that will allow greater flexibility in specifying academic workloads and in setting levels of staff remuneration.

On the positive side, in recent years the University has been a beneficiary of a number of improvements in public policy. The Science Research Infrastructure Fund (SRIF) has provided a much-needed source of capital funding. The Higher Education Innovation Fund (HEIF) has supported the development of third-leg activities. Increases in Quality Related Research Funding (QR) have aided the leading research departments and have begun to address the shortfall in overhead recovery from charities' research funding. The introduction of full economic cost (FEC) research funding at the 80 per cent level should improve overhead cost recovery from our growing research portfolio, especially as the share of projects contracted on that basis in the portfolio increases over the next two to three years. And top-up fees will also provide a modest gain over the four years from 2006–7 as they are introduced for Home–EU students.

An examination of our funding reveals that it has two major deficiencies. The first has been created by the under-recovery of overheads on research contracts. At our current levels of activity, analysis using the government's transparency review methodology suggests this could be in excess of £70m per annum. The relative annual shortfall will reduce as the result of the current FEC regime changes and it may eventually diminish as a concern, should a proposal for higher rates of recovery become a reality in, or beyond, 2010. However, we need to be aware that higher rates of FEC recovery mean that institutions will recoup more of the annual cost of their capital infrastructure (depreciation) than before. In time, we should expect changes in Research Councils' and HEFCE's policies regarding the provision of capital for research assets because of these increasing rates of depreciation recovery. Institutions ought then to be better resourced to manage their own reinvestment in facilities and equipment. Consequently, we need to be taking action now and making appropriate and necessary adjustments to our internal capital budgeting, asset management and depreciation policies. This is a project that Mr Kerr will be leading. Its recommendations will inform the work of the Planning and Resources Committee (PRAC) and the Joint Resource Allocation Mechanism Working Group (JRAWG).

The second deficiency in our funding is caused by the amount we receive for teaching Home–EU undergraduates. The size of this problem depends on a range of issues including assumptions that are made about workloads, student preparation and contact hours, academic support, and competitive levels of remuneration. If one assumes an average shortfall of £6,000 per annum per Home–EU undergraduate (of whom there are around 10,000) and that this is split roughly equally between the colleges and the University, then when all Home–EU undergraduates are paying top-up fees (in 2009–10), this 'shortfall' will be reduced only by around 20 per cent, as approximately a third of the increase in fees received is to be invested in 'needs-blind' support and other access initiatives.

For the sake of numerical convenience, if one then assumes that the average shortfall after the introduction of top-up fees will be in the order of £5,000 per annum and that the number of Home–EU undergraduates remains at around 10,000, then allowing for a 4 per cent payout after the maintenance of the capital value of our endowments, an endowment of £1.25bn would be required to fund that shortfall. Were we able to achieve greater flexibility with fee setting, subject always to meeting all of our access and equity standards, including the provision of adequate 'needs-blind' financial support, the value of the requisite endowment would decline. On this basis, a fee of £6,000, for example, would require us to raise an endowment in the range of £800m. ²

The foregoing analysis provides three clear objectives for the next five to seven years. The first is that we must be vigilant about the changes to the basis of research funding. The changes must continue to be designed to address the overhead funding deficit and not to compromise the dual support structure, which has proved so successful in rewarding research quality. In addition, we must ensure our internal asset management plans are designed to incorporate appropriate economic rates for depreciation recovery. The second is that we must continue to aim for greater flexibility with fees. If we are to be successful in this respect, we must be able to demonstrate that our access and admissions processes are uniformly transparent and fair and that our governance and administration meet all the needs of the institution as well as satisfying the requisite standards of those bodies that fund and regulate its activities. The third objective is that we must endeavour to raise by approximately £1bn the levels of college and University endowments that support our existing activities, while, at the same time, attempting to raise funds to satisfy new strategy-specific demands.

With the last of these objectives in mind the University and colleges have been developing new principles and protocols to improve the co-ordination of fundraising activities across the collegiate enterprise. These should be ratified during Michaelmas Term. The wealthier universities in the US have found that their investment returns have been even more significant in increasing the aggregate value of their endowments than new money raised from benefactors. This has caused us to examine the way we manage the University's endowment. A review group chaired by Sir Alan Budd, Provost of Queen's College, will report its recommendations during Michaelmas Term. Allied to this, a group that is chaired by Mr Marshall, Bursar of University College, has been investigating the establishment of a common investment fund that would allow greater aggregation of funds for investment from the colleges and the University. Given the importance of fundraising to the future health of Oxford, Dr Dellandrea has been appointed Pro-Vice-Chancellor for Development and External Relations. He has joined us from the University of Toronto where he has successfully completed a similar role.

At the outset, I stated that the University's gravest challenge is increasing the amount of money we receive to pay for the teaching, research and scholarship we undertake and for the academic services we provide. An aspect of this is the responsibility we have to allocate that money in a manner that aligns incentives across the Collegiate University and that avoids 'rent seeking, distortions and inefficiencies'. ³ The present system, that is a combination of the University RAM, a separate mechanism of academic services, the Quantum allocation to Colleges, inter-college contributions, and individual intra-college RAMs, does not satisfy that standard.

Let me here touch upon the Quantum and its settlement last year. All I wish to say is this. First, in our discussions I was sometimes reminded of A.J.P. Taylor's remark that 'history gets thicker as it approaches recent times'. Second, conscious of this history, and yet new to it, and at the same time carrying the responsibility of being the University officer responsible for accounting to HEFCE on the appropriate use of the resources we receive and on the financial integrity of the institution, I found myself in a particularly difficult position. If I appeared intransigent as a result, I am sorry about that.

As far as the future is concerned, there are two matters of importance. First, in the immediate future, we need to discuss the arrangements for next year. Second, looking further ahead, we need to design a resource allocation system that more obviously aligns incentives. We have called such a system a Joint RAM, or JRAM. The colleges are perhaps Oxford's most distinctive feature and are one of its greatest strengths. The graduate proportion of many colleges' student bodies is continuing to increase; so too is the research activity that colleges are sponsoring. Within the institution, parallel strengths are the research, scholarly and teaching activities undertaken in the Divisions, and the remarkable scholarly resources contained in our libraries and museums. Council's responsibility is to create an environment where all of these—colleges, divisional activities and academic services—can flourish. Such an environment will be facilitated by a well-designed JRAM. The working group charged with the JRAM's development (JRAWG), which includes college and University representatives, is planning its implementation for the 2007–8 year.

This brings me back to the Corporate Plan. The Plan provides a framework for the evolution and development of the University. Some of the strategies it contains have already been implemented and/or have resulted in the creation of new policy. Others are less developed. I would expect three of these, in particular, to attract considerable collegial engagement this year. They are size and shape, undergraduate admissions processes, and the development of a review process that is beneficial to career development. I shall expand a little on each of them.

The size and shape debate has many aspects, including the aggregate size of the student population and the relative proportion of graduates and undergraduates. This complex debate challenges us to think deeply about the nature and character of the University, about whether there should be a limit to the aggregate size of the student body and the reasons for it, about the composition of that body and our national obligations and international aspirations, about trends in demand for graduate education and the rapidly increasing graduate research opportunities that are being offered by our dynamic research portfolio, and about the short- and long-term economics of our enterprise. Recent and current growth in graduate numbers has increased the graduate component of the University, with considerable effect on the character of the institution. Further, we may be approaching the point where the growth of the student body has outstripped the ability of the University and the colleges to provide the infrastructure that will allow Oxford City's planning conditions to be met.

Because of graduate growth, and because of the strong growth in the numbers of contract research staff in the University (now outnumbering tenured staff by two to one), the very nature of the Collegiate University is, in a sense, being challenged. As relatively small, multidisciplinary and interdisciplinary communities of scholars—senior, JRF, graduate and undergraduate members—sitting within the wider University with its extensive scholarly and research resources, our colleges confer on Oxford a brilliant advantage for all members. However, the changing research and graduate milieu of the University poses for the Colleges a special challenge to ensure that the 'idea of the Collegiate University', evolutionary as it is, is richly sustained.

The Admissions Task Force will deliver its report this term. I do not need to restate the importance the University attaches to transparency and equity in its admissions processes. While there are many examples of best practice, we must continue to examine, refine and improve our processes so that we consistently meet the high standards we have set for ourselves. I would encourage wide discussion and debate of the recommendations contained in the report.

Congregation was clear in its response to the proposed strategy for mandatory, regular, joint contribution reviews, as that strategy was framed in the Academic Strategy Green Paper. The subsequent response by the Senior Tutors' Committee that it would evaluate possible alternatives has been most constructive and its work will be helpful to the Personnel Committee's future deliberations. I believe it is desirable, both for individual members of staff and for the institution, that we succeed in devising a system for career development reviews that takes account of joint appointments.

During the past twelve months I have visited many colleges, departments, faculties and institutes. Invariably in my meetings with groups of staff I have been made aware of their views on our academic employment policies. Council established the Academic Employment Task Force, which is currently completing its consultation on its terms of reference, in order to address many of these issues. Once these are finalised, the Task Force will seek submissions from the wider University to inform its deliberations.

Congregation will discuss on 1 November the revised governance proposals contained in the recently released paper. The proposals have taken account of many of the concerns and criticisms of the Green Paper, as well as more recent legal advice. The proposals as drafted respond to probable amendments to the law and regulation of charities, to our obligation to ensure our governance and its related processes protect the financial and regulatory risks to which the University is exposed and yet provide the essential frameworks for the University's future development, to our desire that academic matters remain the preserve of academics, to the commitment to retain Congregation's powers, and to the express desire of Conference that it retain its mandate. In redrafting its proposals the working party has, I think, been most sensitive to these major objectives and has provided us with a sound basis to improve our governance in accordance with the interests and concerns of the University as well as its wider communities.

Quinquennial appointments have many advantages. However, a major disadvantage may be observed when the terms of a majority of members of a group end at the same time. This occurrence, combined with natural retirements and the adjustment of Pro-Vice-Chancellors' portfolios, has resulted in a number of new appointments reporting to me. Professors Iversen and Slack, both of whom generously extended their Pro-Vice-Chancellorships for a year to accommodate the change in Vice-Chancellor, have retired from their roles. Professor Iversen will continue part-time this year to assist with some research-related responsibilities in my office and as Acting Director of the James Martin Twenty-first Century School. Professor Slack, the Principal of Linacre College, has willingly accepted appointments as a Pro-Vice-Chancellor without portfolio and as Deputy Chairman of the OUP Delegates. I am deeply indebted to them both. Dr Macmillan, who has served as Pro-Vice-Chancellor (Academic) with vision and commitment, has transferred to become Pro-Vice-Chancellor for Planning and Resources. He will also assume responsibility for Academic Services and University Collections (ASUC) and for our international activities. Professor Fallaize has been appointed Pro-Vice-Chancellor for Education and Professor Thrift Pro-Vice-Chancellor for Research, a role he will fully take up once the future of the Life and Environmental Sciences Division has been resolved. Dame Fiona Caldicott, who has recently stepped down as Chair of the Conference of Colleges, has been appointed to a part-time role as Pro-Vice-Chancellor for Personnel and Equal Opportunities.

There have also been changes in Divisional leadership. Mr Hay, who was the inaugural Head of the Social Sciences Division, has retired and Dr Spence, most recently Head of the Law Faculty, has been appointed as his successor. Professor Burnett, previously Head of Physics, succeeded Professor Clary as Head of the MPS Division upon the latter's recent assumption of the Presidency of Magdalen College. Professor Clary succeeds Mr Smith as President. Dr Walker will step down as the Head of the Humanities Division when his successor, Professor Shuttleworth, arrives next summer from the University of Sheffield. On behalf of Congregation, I thank Mr Hay, Professor Clary and Dr Walker for their substantial contributions to their divisions and to the University.

I would like to make special mention of two pending retirements. The University's Registrar, Mr Holmes, will retire in April. He has served the University with commitment and distinction throughout the past eight years and I am delighted that he will continue to undertake assignments, on a consultancy basis, for the following two years. Mr Weale, our Secretary of Faculties and Academic Registrar, will retire in December after a dedicated and distinguished career, for the last twenty-one years of which he has been Secretary of Faculties. There will be future opportunities to recognise their impressive service, but I do want on this occasion to offer Congregation's gratitude to both of them for their major contributions. Dr Maxton, who will join Oxford from Auckland, will succeed Mr Holmes. Mr Sibly, Head of Planning and Resource Allocation, is Secretary of Faculties and Academic Registrar-elect.

Sir Peter North, my distinguished predecessor but one, has retired after twenty-one years' service as Principal of Jesus College. I thank him for his many contributions to the University and am delighted to report that his expertise will not be completely lost to us, because he has graciously agreed to assume the Chairmanship of the Finance Committee of OUP. He succeeds Professor Iversen in that role. It is a pleasure to welcome several new Heads of House. Sir John Krebs has completed his chairmanship of the Food Standards Agency and is the new Principal of Jesus. Dr John Landers succeeds Sir Walter Bodmer as Principal of Hertford, while Professor Stephen Nickell has been appointed to succeed Sir Tony Atkinson as Warden of Nuffield, a position he will take up in 2006. In April Dr Richard Turnbull followed Professor Alister McGrath as Principal of Wycliffe Hall.

This year has seen the retirement of many distinguished colleagues who have contributed to the University's intellectual life over the years: Sir Jack Baldwin, Waynflete Professor of Chemistry; Professor A.F. Brading, Professor of Pharmacology; Professor A.H. Brown, Professor of Politics; Dr B. Bujic, Reader in Musicology; Professor J.A. Caldwell, Professor of Music; Dr A. Clark, Reader in Diabetic Medicine; Professor R.G. Denning, Professor of Chemistry; Professor G. Dudbridge, Shaw Professor of Chinese; Professor M. Frede, Professor of the History of Philosophy; Professor J.C. Gittins, Professor of Statistics; Professor J.J. Harding, Professor of Ocular Biochemistry; Professor T.V. Jones, Donald Schultz Professor of Turbomachinery; Dr D.G. Pattison, Reader in Spanish; Professor H.J.O. Pogge von Strandmann, Professor of Modern History; Professor D.J. Quillen, Waynflete Professor of Pure Mathematics; Dr M. Rezvani, Reader in Radiobiology; Professor G.C. Sills, Professor of Engineering Science; Professor Sir Ed Southern, Whitley Professor of Biochemistry; Professor D.N. Stacey, Professor of Physics; Professor N.J. Stone, Professor of Physics; Professor J.M. Titchmarsh, Royal Academy of Engineering/AEA Technology/INSS Research Professor in Microanalytical Techniques for Structural Integrity Problems; Professor J.A.D. Welsh, Professor of Mathematics; and Professor M.D. Yudkin, Professor of Biochemistry.

Other colleagues, whose service to the University deserves recognition, have retired from academic or research posts: Dr J.W. Arden, Mr J.A. Foster, Mr K.J. Grindrod, Dr J.D. Gurney, Dr J.U. Heyer, Dr P. Johnson, Dr J.G. Loken, Dr R.G. Lord, Dr L. Lyons, Mr R.C.F. McLatchie, Dr W.H. Newton-Smith, Mr C. O'Toole, Dr I.G. Palmer, Dr G.D. Peskett, Dr A.E. Pilkington, Dr R.H. Robbins, and The Revd Canon T.S.M. Williams.

I should also mention those colleagues who have retired from important administrative, library or service posts in the University: Mr C.P. Andrews, Mrs M. Coulton, Mrs S.M. Dickson, Mr I.D. Everett, Mr B.J. Knapp, Mrs M. Marzillier, Mr J.N.B. Mogg, Mr A. R. Moore, Dr J.G. Pusey, and Mrs J.M. Stevenson.

This year, the University community has lost valued colleagues whose early deaths have been a source of great sadness: Dr R. Bingham, Senior Optical Engineer in the Department of Physics; Dr M.J. Halsey, Head of the Research Services Medical Sciences Office; Professor R.O.A.M. Lyne, Professor of Classical Languages and Literature; Mr A.F. Orchard, University Lecturer in Inorganic Chemistry; and Miss G.M. Sands, Foreign and Comparative Law Librarian.

Finally, we pause to remember the contributions of those colleagues who have died in retirement over the past year: Mrs C. Adler, Miss P.H. Ady, Mr T.J. Binyon, Mr P. B. Carter, Dr R.A.V. Cecil, Sir Rees Davies, Dr R.L. Davies, Miss A. de Moor, Professor Sir Richard Doll, Miss N.V. Dunbar, Miss G. Edgecock, Professor C.H. Feinstein, Dr D.H. Gath, Mr M.B. Gearin-Tosh, Mr H. Hallam, Dr T.G. Halsall, Mrs J. Hart, Mr R. Harvey, Dr P. Hazzledine, Dr O.R. Impey, Professor G. Lowe, Dr P.R.S. Moorey, Mr J. Pailing, Professor C.M. Robertson, Mr R.R. Stuart, Mr P.D.L. Turner, Mr H.P.G. Unsworth, The Revd Professor M.F. Wiles, Dr A.W. Williams, Dr B. Wilson and Dr C.P. Wormald.

John Hood

4 October 2005

Footnotes

² This assumes that for each pound of fees increase over £3,000 forty pence is reinvested in support so that every thousand pounds of fee increase would reduce the requisite level of endowment by £150.
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³ 'Allocating the Collegiate University's Resources', David F. Hendry, Economics Department, University of Oxford, Internal Working Paper.
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Supplement (1) to Oxford University Gazette No. 4744. Wednesday, 5 October 2005.