The paper starts with a description of higher education in the United Kingdom and of reforms over the last 50 years. By reference to specified output measures, the performance of UK universities is judged to be good. The factors affecting this performance are postulated by comparing policies and approaches in the United Kingdom with those elsewhere (in particular in continental Europe). Three factors--the level of autonomy, the amount of competition, and the level of funding, combined with the universities' direct control over funding--are identified as important factors. The level of autonomy for UK universities is long-standing. So too is the level of competition for recruiting the best students--although the reform in 1991 to bring universities and polytechnics into a single sector has increased that competition. Competition for research has increased through the reform initiated by the University Grants Committee in the mid 1980s to introduce the Research Assessment Exercise for non-specific funds. Recent reforms have provided both additional funding and, through tuition fees for UK students, greater influence for universities over the level of funding.