The objectives of physical science teaching and research projects in higher education in Britain are reviewed as a means of stimulating debate. It is noted that in recent years, concern has been expressed over the quality of these efforts, and as resources stabilize or decline allocations must be made more carefully. A statistical profile is given of the research and resource situation, and a detailed model for decision-making is proposed. The ensuing discussion of issues focuses on three areas: (1) research objectives (economic, educational, cultural, and social), underinvestment, and science policy in the United States; (2) teaching objectives (the concept of human capital, and social, cultural, and economic objectives) and the development of higher education policy; and (3) funding agencies as interpreters of objectives. In the last section three agencies are looked at: the University Grants Committee, the principal government channel for government involvement in higher education; the five Research Councils; and the Computer Board, which coordinates computer use in the education community. Considerable historical and statistical information is provided, and enough explanation is made of the British system that nonnatives may easily use the information and models. (MSE)