Brown's enterprise flagships

Higher education is to spearhead a revitalised enterprise culture in the United Kingdom with a package of measures designed to turn scientific discoveries into jobs.

In his autumn pre-budget statement on Tuesday chancellor Gordon Brown announced a series of measures designed to build stronger links between higher education and industry. It means an injection of cash and business know-how into universities for them to market inventions and developments vital to prosperity.

Mr Brown, who said the government's policy was "pro-skills and pro-science", announced eight new institutes of enterprise in universities. The government will plough Pounds 25 million into these.

"More than ever innovation is the key to higher productivity. So we must see that inventions which are created in Britain are developed and manufactured in Britain. The first step is a higher quality and quantity of research," he said.

Trade and industry secretary Peter Mandelson said: "There will be an essential pool of expertise and resources both within the home university and its surrounding region."

Despite a predicted downturn in growth, to between 1 and 1.5 per cent for 1999, Mr Brown made it clear that there would be no retreat from the Pounds 19 billion investment in education set out in the comprehensive spending review.

Diana Warwick, chief executive of the Committee of Vice-Chancellors and Principals, said: "The chancellor is clearly acknowledging the vital role universities can and should play in the prosperity of the UK economy."

David Triesman, general secretary of the Association of University Teachers, said: "New funding indicates that the government is beginning to realise that the economic strength of the UK lies in our brains and our research."

David Auckland, professor of science business creation at Manchester University, said: "The government is exactly right. Universities may think they are entrepreneurial but they are not."

Mr Brown said that the government will consider new incentives to encourage larger companies to invest in high-tech, high-risk start-up companies. He pointed out the UK has only 6 per cent of the early-stage high-technology venture capital of the United States.

"We will consult on and consider new incentives, including how we can encourage our most successful companies to invest in start-ups and provide new sources of venture capital and management expertise for entrepreneurs."

Former telecoms watchdog Don Cruickshank will examine in detail the levels of innovation, competition and efficiency in the banking industry. The government is keen "to look, for instance, at whether there is more the banks could do to build on their partnership with growing businesses".

Mr Brown promised to re-examine planning regulations and building control so that Britain might emulate "hi-tech clusters and corridors" like Silicon Valley in the US.

The chancellor promised to consult small businesses on supplementing the tax relief for research and development with a "more effective" tax credit. He also said that businesses would be able to claim tax relief for employees seconded to schools and colleges to impart their expertise.

The University Challenge Fund, announced in the last budget, has attracted an overwhelming response from universities, Mr Brown said. The fund, to boost university research with commerial applications, offered Pounds 20 million from government, Pounds 20 million from charities and Pounds 10 million from the successful university bidders. The chancellor called for more private sector companies to invest in the fund.

Ministers on-message, page 3