OXFORD and Cambridge universities were yesterday told to modernise or face government intervention in the way they manage their affairs.
The threat of state interference in the running of Britain's oldest universities followed a review ordered by Gordon Brown into relations between business and higher education. It said that their success was so vital to Britain's economic future that academics could not be allowed to avoid changes necessary to streamline decision-making and cut bureaucracy.
The review by Richard Lambert, a senior financial journalist and member of the Bank of England Monetary Policy Committee, questioned whether Oxford and Cambridge were capable of sorting out their affairs quickly enough to remain world-class universities able to compete with rivals in the United States and elsewhere. "Both universities are about to have new vice-chancellors. They face a leadership challenge of the highest order, and the outcome is a matter of public interest that stretches well beyond the confines of the two universities," the report says.
The review spoke of "a general sense of unease about the direction of both universities" among business and government agencies. Mr Lambert told The Times: "I think in an ideal world they will come up with a strategy which will lead to an acceptance of change and a certain degree of organisational and structural change. But there is a public interest in that happening and if it doesn't happen then I think there will be a case for outside intervention of some kind."
Both Oxford and Cambridge have looked abroad for their new vice-chancellors. Professor Alison Richard, Provost of Yale University will succeed Sir Alec Broers at Cambridge in October, while Oxford has appointed Dr John Hood, from the University of Auckland, New Zealand, to take over from Sir Colin Lucas in September 2004.
Mr Lambert, a Times contributor and former editor of the Financial Times, levelled particular criticism at Cambridge, where academics rejected Sir Alec's attempt to overhaul its management structure in January. He wanted to turn the vice-chancellor into a chief executive able to make decisions about finances and academic policies. Professor Richard enjoys similar authority at Yale. But dons mounted determined opposition, arguing that the changes would undermine academic democracy at Regent House, the university's 3,200-member governing body.
Mr Lambert said that Cambridge's internal management was "closed and inward looking" and had failed to capitalise on relations with business, despite high-profile partnerships with companies such as Microsoft and BP. Problems with the establishment of a research partnership with Massachusetts Institute of Technology (MIT) had "contributed to a general sense of malaise". The partnership, created in 1999 was backed by Mr Brown and received a £65 million government grant over five years. Apart from the benefits of academic exchanges and teamwork, it was hoped that some of the US university's entrepreneurial flair would rub off on its British counterpart.
But Cambridge dons feared that academic freedom would be stifled and their American counterparts worried that the partnership might be stymied by the commercial fastidiousness of the British. The concentration of research known as the "Cambridge phenomenon" has already produced the largest cluster of high-tech businesses in Europe, employing about 25,000 people in more than 1,200 companies.
However, the partnership was strongly criticised in a report in May from Sir John Bourn, the Comptroller and Auditor-General, who said that it suffered from "serious weaknesses" and that the Treasury had broken its own rules in helping to set it up. Internal controls at the Cambridge-MIT Institute were also "extremely weak". Now the Lambert review has concluded that Cambridge continues to punch far below its economic weight. The university declined to comment until it had studied the findings.
The report said Oxford had improved its organisation in recent years, but its financial management remained inadequate. Like Cambridge, it faced "critical and unresolved questions about its future strategy". The report concluded: "The challenge for Oxford and Cambridge, and perhaps more particularly for Cambridge, is this: how far can they modernise the way they run themselves without threatening the culture that has contributed to their success? If they do not modernise, will they remain world-class institutions?"
Mr Lambert said: "They both have big strategic questions to grapple with about the balance between research and teaching and the balance between the university and colleges." Sir Colin said that Oxford's procedures for protecting intellectual property rights and promoting technology transfer had become models for other universities, including in the United States.