Why is the University of Birmingham shunned by applicants?

Lucy Hodges talks to the man who aims to put that right

David Eastwood has an unenviable task – to make Birmingham University cool. To the cognoscenti, the original redbrick university may have one of the loveliest campuses of the Russell Group and its finances may be rudely healthy, but it remains unfashionable in the minds of students.

Its new vice chancellor is under no illusion that he has his work cut out. But he declares boldly: "I think Birmingham is the coming destination." He reels off a list of the amazing things about the place. It's a Renaissance city with new buildings, new bullring, al fresco dining and everything a student needs. It's the most ethnically diverse British city, with the youngest population of any city in Europe. "There's no reason why Birmingham shouldn't be as attractive a student city as, say, Manchester," he says.

Has Birmingham undersold itself, then? The answer is yes, and Professor Eastwood is going to change that. He has been in the post just over two months, having come from the top job in British higher education, chief executive of the Higher Education Funding Council for England (Hefce), and appears enthused at being his own boss once again. (In an earlier incarnation he was vice chancellor of the University of East Anglia.)

His departure from Hefce halfway through his contract led to speculation. Had he quit because he was fed up at having to do ministers' bidding, and was unable to shape events as he would have liked? Or was he seduced by the higher salary on offer at Birmingham? (In 2007-08, the vc of Birmingham earned £292,000.)

Eastwood doesn't respond to such questions. Whatever the reason for his departure from Hefce, Birmingham is lucky to have such a consummate political operator, who is well connected, well liked and well versed in higher education. "He is his own man," says Peter Williams, outgoing chief executive of the Quality Assurance Agency. "He's very able and has a political mind. And he has a kind of wry, ironic style about him, which I like. He's just the person you want for Birmingham."

At the tender age of 50, Eastwood is also relatively young. Indeed, observers find it difficult to imagine why he took the Hefce job in the first place and understand why he didn't want to stay. Compared with Sir Alan Langlands, Hefce's new chief executive and the ultimate bureaucrat – Langlands had been chief executive of the NHS before becoming the top dog at Dundee University – Eastwood appears hungrier for career development. "He is youthful and has drive," says someone who has worked with him. "He wants to get things done quickly and make an impact."

Talking to Eastwood you get the impression that he likes the academic world, something he would have missed in the funding council's orbit of policies, strategies and performance indicators. He enjoys political chatter, reads widely and is at home with ideas. Observers wonder how much he relished the behind-the-scenes role he played at Hefce where he may have been able to influence events, but only completely anonymously.

Life will be very different at Birmingham, where Eastwood will be a mega big cheese, able to use his powers of persuasion to good effect. The university has variously been called "a sleeping giant" and "a hidden gem". It has a lot going for it, not least its financial solvency bequeathed by the former vc, Michael Sterling.

Amazingly, Birmingham generates surpluses each year of £30m which is reinvested in the university. In fact it has been so well managed that in the last four years it has been spending £60-70m a year on capital projects without recourse to borrowing.

The watchwords have been "prudence with a purpose", a phrase beloved of Gordon Brown. Eastwood utters the words twice, knowing that he will have more luck with them than the Prime Minister. This year Birmingham is planning to make"efficiency savings", he says. There are areas that are not internationally competitive, he says. Where? "We're in the process of developing an academic strategy to identify the areas," he explains.

How much will they save? Again the question is deflected. The savings – cuts to you and me – will be similar to the 5 per cent chop at Leeds and the 6 per cent at UCL. "The reason I am being cautious in my answer is because we're making savings and investing simultaneously," he says. "The net position is one of an institution which is investing. But for that investment to be optimal we need to make savings in those areas which are less efficient and have lower impact."

You are left wondering whether he's being careful because he doesn't want to upset the unions, or whether it's a bit of elaborate spin to show the world that Birmingham is suffering like everyone else, but is actually jolly strong.

As well cutting spending, he plans to drum up more money for research. Birmingham should attract larger amounts than it does, he says, given its size and reputation. He intends to make this happen by ensuring that the academics are better at writing grant applications, and by identifying areas where the university has a real competitive advantage. One of these is cognitive neuroscience; another is computational robotics.

Between now and Christmas, Birmingham plans to put an extra £10m into research. The first tranche of £5m will be invested in the autumn. The rest will come later, from a combination of the money that the university saves and income from its surplus.

The university was reorganised into five colleges under Professor Sterling and Eastwood professes himself pleased that he doesn't have to engage in restructuring. "I can come in, the restructuring has been done and I can take its dividends, without having to pause while it's put into place – and the challenge is to lead the university beyond that."

Although Birmingham is better placed than most to ride out the recession he is worried about the future for universities and believes any government that cut the cost of teaching per student would be stupid.

"Any reduction in the unit of funding would have an immediate and significant effect on teaching quality across the sector," he says. "Higher education is one of the UK's few globally competitive sectors, and it would be folly to undermine this. Once lost, our international reputation would be near irrecoverable."

Gordon Brown, David Cameron, you have been warned.