There is a huge difference between undergraduate and postgraduate courses - as many have said, it is standard for these (largely unfunded) postgrad courses to go to the few, of whatever nationality, that can afford them. Rich students who wanted to take a postgrad course have always been able to buy advantage to some degree over better qualified candidates who simply couldn't afford the fees.
But we are talking about UNDERGRADUATE courses here - it is nonsense to suggest that Oxbridge undergrads are composed primarily of rich but less bright foreigners. There are some international undergrads, certainly, but as the previous poster with experience of admissions panels has said, they are no less bright, probably brighter. Undergraduate courses have been funded for a reason - to enable us to have a workforce and populace comprised of the best and brightest and not just those with rich parents.
Anyone who thinks you can just magically 'create' thousands of extra places at Oxbridge has not the faintest idea of how the universities work. They are organised on a collegiate system, which are extremely limited in terms of space (few undergrads live in college for all their course). You cannot just create loads of extra huge modern college buildings in central Oxford or Cambridge - there is no room and planning permission would not be granted. Whatever the Tories claim, the reality is that either (a) the dons would refuse to admit the richies or (b) poorer but brighter students would miss out on places so that the one whose parents could afford to pay more got the place.