Vice-Chancellor addresses the challenges facing Oxford

The Vice-Chancellor of Oxford University, Professor Andrew Hamilton, used his annual Oration to the University today to set out a number of challenges facing the institution. He described these as falling into three areas: 'Funding Oxford, Diversifying Oxford, and Digitising Oxford'.

One of the challenges he addressed was the funding gap in Oxford's provision of undergraduate education.

The Vice-Chancellor outlined that to safeguard the future of Oxford's world-class education system, the institution must do all it can to address a shortfall of more than £70m every year in its undergraduate teaching income, while ensuring that Oxford remains accessible to all, regardless of background.

An Oxford education costs at least £16,000 per undergraduate every year. Only around half of this total cost has ever been met by the combination of fees and government funding, and the new system put in place in 2012 did relatively little to change things in terms of the financial position of the University. Most of the money from increased student contributions offsets cuts in government spending on teaching, rather than providing new income to the University.

The Vice-Chancellor noted that Oxford, like most universities, had set tuition charges at the maximum permissible: £9,000 a year. 'The idea of a market (and that is what is ostensibly being created) in which every item, virtually regardless of content and quality, is the same price seems, well, a little odd,' he argued.

'On the other hand, given the great diversity of the institutions in our higher education system, the notion of different universities charging significantly different amounts doesn't feel inherently unnatural. It is the current situation that seems out of kilter. What matters surely is that an institution's charges are clearly aligned with what it offers and that they are demonstrably not a barrier to student access. In other words that robust and generous financial support remains readily available for students who most need it.'

He pointed out that Oxford graduates are a good investment in terms of loans from the public purse, but said there must always be the strongest guarantees for needs-blind admission and loan repayments pegged to ability to pay. Oxford already has the most generous financial support for the lowest-income students of any university in the country with one in six students receiving a reduction in their fees and a quarter receiving a bursary.

The Vice-Chancellor concluded: 'So a system of tuition charges more closely related to the true cost of the education provided, but with the strongest guarantees that price can be no impediment to talent and that loan repayment is pegged to financial capacity, is something that I believe in the longer run will have to be considered.'

Professor Hamilton was clear that the funding gap the University faces needs to be addressed in a range of ways – including philanthropic giving.

The Vice-Chancellor also highlighted the challenge of financing long-term investment in the facilities necessary for a 21st-century university, where changes to capital funding have made it much harder to plan and build strategically.

Professor Hamilton said: 'Many, indeed most, of our peer organisations internationally – confronted by broadly similar challenges – have opted to borrow. The favoured way of doing so has been to issue a bond.'

He added: 'None of this means that such a course of action is necessarily right for Oxford and any substantial policy of borrowing – whether as a bond or some other form of loan – would require very careful reflection and planning in order to establish clarity about priorities and processes – including how interest payments would be structured and met.'

The Vice-Chancellor then turned to the diversity of Oxford staff and students. On ethnicity, he said Oxford is a much more diverse community than many might suspect. In the total student population, over one in five students of known ethnicity is from an ethnic minority background, and the proportion of UK undergraduate students who are BME (black and minority ethnic) compares favourably with other selective Russell Group universities.

'But I do not claim that this deals with the challenge of under-representation in the context of student ethnicity. We are currently looking closely at our undergraduate admissions data,' explained the Vice-Chancellor.

He said: 'Oxford is totally committed to selecting the very best students, regardless of ethnicity or any other factor. It is entirely right that this should be the case and also entirely necessary for our own future as a world-leading centre of academic excellence. That is simply undeliverable unless we are doing everything possible to attract and nurture the most able students and staff.'

The Vice-Chancellor finished his Oration by saying the University needs to consider how digital technology can best be used in making Oxford's academic riches as widely accessible as possible, by building on its already very extensive online offering.

See a video of the Oration online.