The UK is not alone in trying to find the best way to fund and carry out research. The Times Higher looks at how other countries are tackling the problem.
Germany invests about €53 billion (£35 billion) a year in research - almost a third of which comes from federal and regional government coffers.
But, despite Germany's impressive record in science, research has stagnated over the past decade, according to comparative studies.
Although individual institutes are succeeding, in particular the Max Planck Society, which has produced ten Nobel prizewinners since 1984, colleges and universities continue to form the backbone of the German research system.
Edelgard Bulmahn, Education Minister, believes the research system is not efficient enough. "Germany does excellent basic research and despite that we have to sit and watch while results aren't made use of," she said.
She has made great progress. The ministry says her most successful initiative has been merging the Fraunhofer Society and the Society for Mathematics and Data Processing, resulting in Europe's largest research institution for information technology.
While the majority of research is carried out in its more than 300 universities and colleges, a number of academies and institutes are gaining in recognition, not least the Max Planck and Fraunhofer centres. Myriam Hoenig, spokeswoman for the Union of German Science Academies, said: "What is needed now is closer cooperation between the universities and the academies."
She added: "The ties between them must be strengthened to make the best use of Germany's resources and to ensure that all areas are covered."
The seven academies in the union focus on humanities and cultural sciences, but have in recent years branched out into natural and applied science. Ms Hoenig said that closer collaboration with universities in these fields could help.
"Handing over certain areas of research to universities or other institutes would create pockets of excellence that could be invested in and built upon, rather than each institute spreading itself thinly over a variety of research areas," she said.