As to a University Grants Committee, the Government rejected the plan of a committee with some high-ranking officers appointed by the Government and some persons appointed by Senate, the committee reporting direct to Cabinet. In January 1948, therefore, the Senate appointed a committee comprising the chancellor, the vice-chancellor, and five other members, two of them representing the business world, whose first report was presented to Senate in January 1950. As well as visiting all the colleges, the committee had discussed with representatives of the colleges and of the Education Department the two questions of outstanding importance at the time — the need for (a) periodic “block grants” to meet the recurring annual expenses of the colleges, and (b) an improved salary scale to attract men of good quality to the understaffed colleges. A formula for a “block grant” for arts, science, and general for the quinquennium 1950–54 was negotiated taking into account (a) a “student number” and (b) a staff-student ratio of 1 to 14. Cost of staff was calculated on the basis of ratios of 3, 4, 5, and 6 for professors, senior lecturers, lecturers, and assistant lecturers. The best the committee could get in the way of salary increases was a special grant, to be administered by the committee in consultation with college councils, to supplement the salaries of a proportion of staff in senior or key positions or to attract specially qualified recruits. (Some colleges refused to cooperate in this plan and it was abandoned.)

Thus the foundations were laid; and the committee reporting next year (1951) was able to say it had secured “a notable advance in university salaries … professorial salaries rising to £1,700 and those of senior lecturers to £1,200 … approval was secured for the building of a new dental school at Otago; for a new chemistry and general purposes building at Victoria; for the general development of the new Riccarton site at Canterbury; and for the move of Auckland University College to its site at Tamaki”. The report ended on a note of confidence, looking forward “to further provision for university education … Government grants are now on an established basis and colleges may plan ahead with assurance”.

In subsequent years quinquennial grants for all the special schools were negotiated on the basis of assessed progressive needs, and the methods of computing grants for arts, science, and general were defined. Thus the grants secured in 1960 for the on-coming quinquennium contained several elements: a basic sum common to all colleges; a varying amount computed on student numbers and a staff-student ratio (the ratio professors … to assistant lecturers had meanwhile been altered to three, five, five, three); a sum for technical assistants, in the ratio of one for each four full-time staff members; a sum for a proportion of junior administrative officers to aid staff; and sums for a study-leave fund, for equipment and for libraries. Nevertheless, the grant came into the hands of the college as a block grant, for disposal at its discretion, but subject to certain conditions imposed by Government, the more important being an agreement by colleges not to vary salaries from the approved scale, and not to increase fees (which form a part of the calculated grant); and, further, that the block grant having been accepted for the quinquennium, no increase be asked for except under changing conditions affecting all institutions alike.

Changes took place from time to time in the constitution of the Grants Committee. For a short time the academic heads of the constituent colleges were included, without vote, and the principals of the agricultural colleges were co-opted without vote on matters affecting their finances. In 1954, however, the statute was again altered, the academic heads being excluded as well as persons connected with the administration of any institution. A representative of the Treasury, as well as one from the Department of Education, was invited to attend as observer. The committee appointed in 1954, comprising the vice-chancellor (Dr Currie), G. E. Archey, E. C. Fussell, H. L. Longbottom, Sir Arthur Nevill, and L. J. Wild, remained in office until it was reconstituted as a Government-appointed committee under the Act of 1960.