For the Netherlands and England, higher education (HE) is of particular importance. Their knowledge-intensive economies would not remain competitive without highly qualified human resources and innovative research. Despite the importance of higher education in public and political debate, both England and the Netherlands spend a lower percentage of their Gross Domestic Product (GDP) on research and teaching in HE than the Organisation for Economic Co-operation and Development (OECD) average. However, it would be difficult to deny that both countries have relatively successful higher education systems. This calls for a more detailed look at how the funding systems of both countries compare in order to see whether one can identify significant differences in planned and actual outcomes. The main argument of this paper is that both countries try to achieve similar goals through their funding system but that they take different approaches. (Contains 1 table and 5 figures.)