Chancellor Gordon Brown this week said he wanted to make Britain "the best location" in the world for science, research and development.
Delivering his pre-budget report to the Commons on Wednesday, Mr Brown announced plans to widen tax credits to encourage companies to carry out more R&D. He also promised to include unspecified "further improvements" to drive science and innovation in his next full budget, alongside the plans to increase financial support for universities.
Mr Brown said: "I want to build in Britain a shared national economic purpose, so that building on our historic strengths - Britain's scientific genius and creativity, Britain's global reach, Britain's stability - we become, in the era of globalisation, one of the world's most enterprising, flexible and successful economies."
Mr Brown also confirmed that a council for graduate entrepreneurship would be set up to help students and new graduates to get into business, and that workplace skills training would receive a ?190 million boost.
* The Higher Education Funding Council for England has launched a ?187 million fund to develop knowledge transfer between universities and business.
Hefce is inviting bids for the permanent third stream of funding, which is worth about ?90 million a year for 2004-06.
A centrepiece of the initiative will be the establishment of a network of about 20 knowledge exchanges, announced in January's white paper, which will receive up to ?500,000 a
year.
Last week's Lambert report says that the ?90 million a year fund should be increased to ?150 million.
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