Higher Education 16:581-602 (1987) 9 Martinus Nijhoff Publishers (Kluwer), Dordrecht - Printed in the Netherlands 581 Degree quality: An investigation into differences between UK universities JILL JOHNES 1 and JIM TAYLOR2 1Department of Operational Research, and 2Department of Economics, University of Lancaster, Lancaster LA1 4YX, UK Higher education competes for scarce resources with all other branches of the public sector and must therefore endeavour to use the resources which come un- der its control as efficiently and as effectively as possible. Measuring efficiency, however, is a notoriously difficult task in all organisations, even in those which are involved in producing goods and services traded directly in the market place. Measuring efficiency in organisations such as universities is hardly likely to be any easier. Nevertheless, the Government has decreed that the higher education sector should look more closely at what it is doing and how much it costs to do it. According to the recent Green Paper on The Development of HigherEdu- cation into the 1990s: So long as taxpayers substantially finance higher education ... the benefits have to be sufficient to justify the cost (p. 10). It is with this in mind that the Government is urging the higher education sector to improve its efficiency: The present arrangements for planning and management in universities were developed in a period of increasing real resources. Now that resources are no longer expanding and the number of students is expected to decline in the 1990s, changes are needed if universities are to be able to concentrate to best advantage the limited public funding likely to be available to them (p. 30). Moreover, Sound management is based not only on efficient use of resources (inputs) but also on the effectiveness of results achieved (outputs). This argues the need to develop and use measurements of performance. The DES is currently examining, in the light of helpful outside work, how reliable measures of per- formance might be established ... The Government believes there would be advantage in the regular publication of a range of unit costs and other perfor-