Education: Investments place Oxbridge in big business league

Oxbridge colleges say government proposals to cut their public subsidies will mean they will have to charge top-up fees to students. But do they really need to? Ian Burrell reports that their wealth - invested in shares, farmland and property - rivals some of Britain's best known companies.

Lord Butler, the former master of Trinity College, Cambridge, once felt moved to state to a visiting ambassador: "Do you realise, your Excellency, that this college has produced more Nobel prize-winners than your entire country?"

Trinity can now add a further boast which concerns financial, rather than academic, achievement; the college has accrued wealth which outstrips that of listed companies like Iceland foods, Allied Carpets and Dairy Crest. Its pounds 310m investment portfolio rivals that of the Body Shop.

But Trinity is not alone among Oxbridge colleges in its opulence. St John's, Cambridge, Christ Church, Oxford, and St John's, Oxford, are each worth pounds 90m. Between them the Oxford colleges have assets of around pounds 1bn.

The two universities are lobbying to retain their additional pounds 35m grant which they receive from the taxpayer to support their medieval collegiate system and individual tutorials.

The subsidy equates to pounds 5,800 of public funds for each Oxbridge student, nearly pounds 2,000 more than other universities. The system is being reviewed by the Higher Education Funding Council for England which will report this month.

Sir Christopher Ball, who was influential in negotiating grant increases for Oxford from the Government during the 1980s, has said he now regards the fees as a "form of corruption" and a "disproportionate investment in a small number of already privileged people".

But many of the Oxbridge colleges argue that every penny of their wealth is accounted for and that the loss of their additional grant would mean they would be forced to become more elitist.

The accounts filed by Trinity - all Oxbridge colleges were obliged by law to publish their accounts this year, although most already made them public - show how the college has learned to manage its finances wisely, since its founding by Henry VIII in 1546. The investments generated an income of nearly pounds 19m last year.

But until as recently as 40 years ago, Trinity's assets were only pounds 3.2m, which in today's prices is less than a fifth of their current value.

One of the key decisions which transformed the college's fortune was a deal negotiated by former bursar Tressilian Nicholas to buy farmland near Felixstowe during the recession of the 1930s. It included a dock which has grown into Britain's biggest container port and generates pounds 2m a year for the college.

In the 1960s, John Bradfield, who succeeded Nicholas as bursar, purchased land in Kent, which has been developed into a business and science park within easy reach of the Channel tunnel.

In the 1970s, Bradfield was responsible for turning college land near Cambridge into a science park for young hi-tech companies. The success of the park was pivotal in persuading Bill Gates to announce this year that he was setting up a Microsoft research and development centre in Cambridge.