British universities are, by most measures, doing well in their ability to perform internationally competitive research. But there's a widespread feeling that they could do even better. This week, the Royal Society has called for what it terms a “radical review” of the dual support system, whereby the universities get most of their operating costs from higher-education funding councils, and most of their research money from research councils.

The review is worthwhile, especially given the level of carping that surrounded the most recent attempt to track the performance of university departments, through the higher-education councils' Research Assessment Exercise. That exercise has played a useful role, but seems to have run its course.

So, what next? British universities have recovered from a serious crisis of confidence that reached its nadir about twenty years ago. Lately, their administrators' chief priority has been to emulate the American institutions that continue to poach faculty at a fair clip.

This has involved pestering alumni for cash contributions. Unfortunately, British university graduates with £1,000 to spare seem more inclined to buy a season ticket to watch Arsenal than to bail out their Alma Mater — even if the former isn't tax-deductible. Attempts to build private sources of funding for British universities — or even to establish private universities — have foundered, meanwhile, on the widespread assumption that university education (and, by extension, university research) is essentially a public function.

So which of the tools that built the US research university are really available to Britain? One that you don't hear much about is the ability of American states to back their own public universities to the hilt. In this way, the likes of the University of Wisconsin-Madison and the University of Arizona at Tucson have been able to build truly world-class departments that can compete for staff and research funds with longer-established institutions on both US coasts.

Despite early pledges from Tony Blair's first government, the English regions have no fiscal power to support vital institutions of their own, such as universities. Business leaders and politicians in and around Manchester, Leeds, Nottingham and Bristol, for example, would like nothing better than to build up local universities, as their counterparts in Germany and the United States are able to do. But they can't. The newly established Scottish parliament is already taking steps to boost its own university system. A similar mechanism is needed in England if the Oxford and Cambridge duopoly is to be replaced with a flexible and genuinely competitive university system.