The paper explores issues about the management and governance of publicly-funded universities. These are illustrated by reference to research on the UK higher education system whilst making clear the wider European implications, drawing on theoretical debates about new managerialism and public-service governance. The first part of the paper examines the public service role of higher education, with reference to recent research funded by the UK Economic and Social Research Council about perceptions of how UK universities are managed, utilising focus groups, interviews and institutional case studies. The values that underpin academic work and its management in higher education are explored, as are the ways in which publicly-funded higher education in Europe is managed today (for example in the prevalence of ideologies about performance management, targets, audit, performance indicators and privatisation), as public expenditure on higher education is increasingly scrutinised. The meanings attached to public-service higher education are in flux, especially in the context of competition from corporate and other private universities and in relation to changing definitions and conceptions of knowledge. There also remains the possibility of challenges to public higher education from the World Trade Organisation's General Agreement on Trade in Services or GATS (teaching has now been exempted but there is still the possibility that research and development will be included). The Bologna Agreement signed in 1999 set out a framework for bringing undergraduate and postgraduate education, credit transfer and quality assurance closer together across different European countries. Ostensibly it is not about management and governance but it is likely that it will have some impact on how universities are managed and how their role and purposes are interpreted in the future. The move away from elite to mass enrolment of students in higher education systems also brings other pressures to bear. In England and Northern Ireland a recent government White Paper (January 2003) has suggested that it will soon be possible to apply for university status without staff involvement in research or institutions having research- degree awarding powers. This challenges many historical notions of what a university is about and may distance higher education in England from its European neighbours. The second issue explored in the paper is about university governance and accountability of universities to their stakeholders. Traditionally, in much of western Europe, internal regulatory and control structures and processes have facilitated knowledge creation, transmission and exploitation and ensured institutional integrity both internally and externally. But there are increasing threats to traditional governance forms and patterns. In the UK in the 1980s and 1990s, two distinct models of governance developed, one in the established chartered universities and the other in the incorporated universities which acquired university status only in 1992. Recently however, these structures have begun to blur, partly as a consequence of common audit and funding mechanisms. However the 2003 White Paper may introduce new distinctions as universities are encouraged to concentrate on either research or teaching and not both. What Newman (2001) and others have described as the shift from traditional hierarchical forms of governance of public institutions, through neo-liberal reliance on markets as a form of self- regulation, to increasing reliance on networks for the promotion of individual self-monitoring and self-management presents challenges to many traditional notions of university governance. The question about new forms of higher education management and governance is whether they can enable academics to work creatively and effectively in the current conditions whilst still providing accountability and continuing to support knowledge creation, transmission and exploitation. This is a crucial question not only for UK higher education but for all publicly-funded universities in Europe.