Until very recently, nearly the whole of the tertiary education system, including the staff of universities and their infrastructure, their research, and the undergraduate and postgraduate students, were all supported by central and, in some European countries, local government. Indeed, in some countries such as Germany, the academic staff members of the university are government employees. Government funding of a particular university amounted to as much as 85 percent of the university's income until the early 1980s. This funding has always been supplemented for research with grants from individual government agencies on a competitive basis, and governments of different countries have continued to support research in a collaborative manner through the European Union (EU).
In general, within Europe, the spending of gross domestic product on research is less than that spent in the United States and Japan, although there is a considerable variation within Europe and the gap is narrowing somewhat. However, one feature within the countries of the EU is a trend from high- to low tax economies. Such a shift has made it harder for governments to justify funding the costs of student tuition and subsistence and the direct and indirect costs of research from which companies, rather than individual taxpayers, are seen to benefit. The United Kingdom, in particular, has experienced this change, and it has culminated in the introduction of student fees payable by individual students from the United Kingdom and even higher fees for overseas students. At Imperial College the transition has been such that, in place of 85 percent of the costs of the university being met by governmental direct funding, the figure is now below 40 percent, as illustrated by Figure 3.1, and has not been matched by an increase in the sums available competitively for research funding from government agencies. In some Southern European countries, this trend has been much less pronounced.
The direct consequence of this reduction is threefold depending on the nature of the university. For those universities with little research, a dramatic increase of student numbers (home or overseas) funded by fees and/or the central government can assure financial viability. Other universities with large independent endowments are cushioned against hard times by their assets and given the opportunity for further growth. For Imperial College, the relatively small endowment and the impossibility of a substantial growth in numbers of high-quality students has meant that the college has to focus its