OXFORD UNIVERSITY is planning sweeping reforms to close a £200 million funding gap and preserve its world-class reputation.

Academics will be told that Oxford cannot maintain its international standing unless it cuts losses on undergraduate teaching and improves income from research. Undergraduate numbers may be cut and loss-making departments will come under increased pressure to improve their performance as part of a “corporate plan” published tomorrow.

It makes clear that Oxford’s problems over the next five years will not be resolved by the rise in student tuition fees to £3,000 a year from 2006.

“The university cannot sustain academic excellence if it continues to make large losses on its core activities. The ability to improve reward systems for staff, to have competitive scholarship and bursary schemes, and to invest in improving facilities and services, is conditional on a substantial improvement in the financial position,” it says.

“This can be brought about only by pursuing the recovery of full economic costs on research, altering the size and shape of the student body to reduce losses on teaching, increasing income from commercial activities and spin-outs, more effective fundraising and the better management of financial and other resources.”

The proposals mark the latest efforts by the Vice-Chancellor, John Hood, to modernise Oxford. Dr Hood, who took office a year ago, has already ruffled academic feathers with plans to streamline decision-making. The plan is described as a “to do list” for Oxford. It states that its proposals would become “instructions” if passed by Congregation, the university’s decision-making body.

Oxford was losing £100 million a year on teaching and research while international rivals were “generating substantial surpluses and investing them to enhance their standing”.

The plan continued: “The scale of the challenge was made clear by the work of the Vice-Chancellor’s Financial Strategy Group in 2003, which identified the need to raise an additional £100 million per annum.

“Other work has suggested that the annual ‘vision deficit’ is as much as £200 million.”

The plan highlighted a lack of productivity among academics as a problem and said that individual departments could be “restructured” where there was “sustained underperformance” by staff.

It hinted that some courses and departments may have to close if they cannot improve, saying: “If excellence is to be rewarded and new initiatives nurtured, the funding available to transform the fortunes of less successful departments and faculties will be limited.

“It will be necessary, therefore, to use it selectively to support those units that are able to make the most effective and persuasive cases in terms of their research potential and the cost of realising that potential.”

The plan sets out proposals for tilting the balance of student numbers at Oxford away from loss-making undergraduates and towards more profitable graduate and international students.

Student numbers had grown by an average of 1.5 per cent a year in the past 50 years.

Academic divisions were arguing for annual growth of 4 per cent over the next few years.

But Oxford was losing at least £7,000 a year on every undergraduate and tuition fees would cut the deficit by only £1,000, it said.

“Under these circumstances, growing student numbers whilst maintaining a commitment to the quality of the student experience would lead to unsustainable losses,” the report said.

It added: “Oxford’s reputation for undergraduate education resides in the quality of its teaching, not the number of students admitted. Indeed, increases in the latter are capable of compromising the former.”

The university could set its own fees for graduate and international students, but not for British and European Union students. The report added: “When considering the issue of shape and size it will be necessary to take account of these financial considerations.”

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