Oxford colleges have built up combined endowment wealth of more than £l.6bn but nearly half are in deficit, figures released this week will show.
Standard audited accounts are being published for the first time this year by all 36 of Oxford university's independent colleges, in response to enormous political pressure to increase transparency and disprove accusations of inefficiency at the ancient institution. The documents, seen by the Financial Times, reveal enormous variations between the richest and poorest - a hierarchy of wealth reaching from St John's, with £202m in endowments, down to Templeton and Harris Manchester, with only £lm each.
Ministers want Oxford and Cambridge, the UK's oldest and most famous universities, to lead the way in generating more of their own income to supplement government grants for teaching and academic research. A recent government-commissioned report said universities as a whole could raise at least £600m more every year if they imitated the US Ivy League in persuading former students to give more generously to endowment funds. Harvard, for example, can rely on income from £10bn endowments.
The Oxford accounts for 2002-03 show a return on investments of 8.9 per cent, which bursars said was a good performance that would be "a real challenge" to maintain over the coming years. About 4 per cent was spent and 4.9 per cent added to capital in an attempt to combat inflation of up to 2 per cent above the retail price index. College finance chiefs warned it would become increasingly difficult to meet the rising costs of tuition and academic salaries - currently very low - without an injection of more money from donations or without drawing down more than 4 per cent of capital. In spite of independent wealth that makes them the envy of other British institutions, 15 of the colleges are running a deficit. College chiefs said this was due to the gap between government funding for undergraduate teaching and the real cost of a college-based degree programme that depends on one-to-one tutorials.
"A lot of us are depending on legacies and partly on hiring out premises for conferences to balance the books," said Dame Fiona Caldicott, principal of Somerville and chairman of the conference of colleges, the body which co-ordinates policy between the institutions. St John's said its own deficit was due to large contributions to central funds which pay for poorer colleges' central university departments, as well as the costs of funding new research and teaching posts.
The accounting reform is part of wider attempts by both Oxford and Cambridge to convince the government that the two ancient universities can manage their public funding and private wealth efficiently. One of Labour's first acts after winning the 1997 election on a promise to "modernise" was to re-examine the extra money the taxpayer provides to Oxford and Cambridge to teach its undergraduates. Lobbying by voices as influential as the late Roy Jenkins, then Oxford's chancellor as well as mentor to Tony Blair, managed to preserve the college fee, as it is known, until 2008, when the arrangements will be revisited. But political pressure on the two ancient universities has grown steadily.
"People felt quite misunderstood, because we all try quite hard to apply our income to the business of education," said Dame Fiona, remembering how the college fee debates prompted today's abandonment of idiosyncratic accounting procedures set up in the 1960s in favour of standard audited financial statements. "But this gets into some fundamental questions about how we educate these very bright young people."
Alongside constant scrutiny of Oxbridge admissions procedures and the social background of its students, the universities face calls to improve their management. Last year a Treasury-commissioned review of university-business links by Richard Lambert, former editor of the FT, suggested that neither Oxford nor Cambridge would be equipped to compete in the new global market in higher education and research unless management and governance was reformed and more private money was raised. Fund raising to increase endowment wealth will be important. Cambridge has a large programme planned, to coincide with its 800th anniversary in 2009, although Alison Richard, Cambridge vice-chancellor, has warned it won't be a "magic bullet" to solve all financial problems. Oxford colleges said yesterday they were "just starting" to learn better ways to tap former students for cash, and the accounts show fairly modest donations.
Moves to share expertise on fund raising would help all the colleges build up healthier endowments, said Dame Fiona, and demonstrate to the outside world that co-operation would help Oxford maintain the strengths of its college structure and meet rising costs: "Together we are much stronger than we were in a looser arrangement," she said. "We value our 800 years of tradition but were not saying that's how we'll continue to do it."
But some elements of the document produced today will fuel suspicion among Oxbridge's many enemies that the colleges cling rather too determinedly to their ancient mysteries - St John's, according to notes accompanying its accounts, is "an eleemosynary chartered charitable corporation aggregate", founded in 1555 under a royal patent by Sir Thomas White. If its management falls short of expectations, the Bishop of Winchester, in his role as "visitor", has the power to enforce college rules. An auditor who has watched the university gradually reform its practices disagrees: "There has to be more of a corporate attitude to the university now, because they are only as strong as the weakest link."
| . | Income** | Operating surplus/deficit | . | Income** | Operating surplus/deficit | |
| St John's | £202m | -£869,000 | Oriel | £29m | +£1,000 | |
| Christ Church | £173m | +£1,000,000 | St Hilda's | £26m | -£521,000 | |
| All Souls | £129m | -£40,000 | Somerville | £26m | -£233,000 | |
| Magdalen | £102m | -£173,000 | Wadham | £26m | -£331,000 | |
| Nuffield | £101m | -£129,000 | Pembroke | £20m | -£414,000 | |
| Merton | £92m | +£290,000 | St Antony's | £19m | ***+£76m | |
| Queen's | £82m | -£233,000 | St Anne's | £18m | +£106 | |
| Jesus | £72m | +£508,000 | Wolfson | £18m | +£30,000 | |
| University | £63m | +£408,000 | Lady Margaret Hall | £17m | +£195,000 | |
| New College | £58m | +£833,000 | St Edmund Hall | £17m | ***+£208m | |
| Brasenose | £57m | +£387,000 | Keble | £16m | +£1.4m | |
| Trinity | £45m | +£254,000 | St Peter's | £16m | -£147,000 | |
| Balliol | £40m | -£678,000 | Worcester | £16m | +£27,000 | |
| Corpus Christi | £37m | +£204,000 | St Hugh's | £14m | -£801,000 | |
| Lincoln | £35m | +£338,000 | Mansfield | £5m | -£100,000 | |
| St Catherine's | £33m | +£348,000 | Linacre | £4m | +£159,000 | |
| Exeter | £29m | +£819,000 | Harris Manchester | £1m | -£24,000 | |
| Hertford | £29m | +£773,000 | Templeton | £1m | -£567,000 |
* This is simply untrue. As Akme followers will already know, the Oxford college accounts were in fact first published in 1997, when the 1993 Charities Act finally became law, obliging the colleges to make them available (see Sunday Times article, November 1997 and Akme index and explanation). The 2000/01 and 2001/02 figures (and for the five richest Cambridge colleges) were posted on this website in March 2004 (see Sunday Times report). It seems that what they are relying on here is that for the first time the accounts are in the Government-required 'SORP' format, bringing them more into line with conventional commercial practice. The colleges now provide written reports and valuations of their capital assets, although of course without lists identifying them (the estates and farms up and down the country, the docklands, the commercial and residential properties, the stockmarket portfolios etc.), these cannot be checked. Amazingly, Akme's guesstimates of the colleges' 2002 capital assets, which were casually inferred from their declared income streams and then quoted by the Sunday Times, have turned out to be roughly correct, as have Akme's league table rankings of the colleges' relative wealth and performance. The whole PR fanfare may even look like a direct response to Akme's Spring posting, but the timing is presumably coincidental. Still it is nice, for once, to feel oneself the triggering puppeteer rather than the peppered puppet.
** This is an FT mistake which should read 'endowment wealth' (a correction was subsequently published by the FT).
*** These must surely be Oxford mistakes, unless all those terrifically brainy alchemical researchers at St Antony's and Teddy Hall have found a way of turning Thameswater into gold.
CLICK FOR OTHER CONTEMPORARY REPORTS ON THE OXFORD COLLEGE ACCOUNTS:
The Daily Telegraph, 8/7/04, The Times, 8/7/04 (+ barmy table), The Guardian, 7/7/04 (+ table), The Guardian, 8/7/04, The Oxford Times, 9/7/04 (+ list). See also Sunday Times, 16/11/97, Sunday Times, 28/3/04, THES, 16/7/04 and THES, 1/10/04.
CLICK FOR AKME INVESTIGATION: THE COLLEGES' INVESTMENT PERFORMANCE, 1973-2003
Press release and Index, and Oxford Student, 26/5/05 on the failure of the college contribution scheme.