The German Further Education Bill passed in the spring of 1998, should force the German higher education system towards a more market-orientated approach. A decade ago the British university system underwent similar changes in governance and functioning. The legislative changes in particular, which have taken place in Britain since the mid 1980s, have a major impact on the functioning of the higher education system. The most radical legislative changes can be found in the Further and Higher Education Act (1992), which awards university status to polytechnics and implements Funding Councils. These Councils fund all higher education institutions in Britain by the same regulations, which is referred to as a unitary system, and
have a quality assurance role. The funding, which is formula-based, and the quality assessments heavily influence the functioning of the university system. The objective
of this paper is to describe the governance and functioning of the British university system today, including the changes which the system has undergone.