Leader: Brown looks on the bright side

Beyond the euphoria induced by the chancellor's promises to boost research and preserve funding levels in higher education in addition to the anticipated fee income, universities now face a number of fresh challenges.

The Lambert report, and the innovation review published last year by the Department of Trade and Industry have been followed this week by a cross-department review of science - with the Treasury clearly in charge - which offers the hope that significant money will be available throughout the next decade.

The review emphasises the need to build scientific and technological skills in the UK workforce and encourage British companies to do more research.

Science faces tough competition in the forthcoming spending review. But this approach is the right one and shows that the lobbying for government to take a long-term view of the problem has not been wasted. Politicians do not support research because they find novelty fascinating. They want the jobs, exports and economic growth that it brings with it. Ministers realise that there is little future in low-pay, low-skill jobs, and have not resisted the exporting of such work offshore. But competitiveness cannot exist in isolation in the advanced sector of the economy. Government research shows that effective economies are competitive across the board.

Farmers or shopkeepers who do not innovate are as damaging to national prosperity as manufacturers or government departments that remain in the past.

This means that encouraging universities to get involved in knowledge transfer across the economy is welcome. Its predecessor, technology transfer, assumed that academics could produce inventions for companies.

But management thinking and workplace practices need to improve too, and the public and non-profit sectors need to be involved as well as industry.

This means that the whole of the university, not just science and engineering departments, must connect with end users.

And although the UK is one of the world's top five economies, it cannot succeed on its own in out-competing the US, which is the unspoken subtext of the present debate. The European Union is proposing a Framework 7 research programme twice the size of the current Framework 6. The UK should play the biggest role it can in shaping it. Companies across Europe, not only those in the UK, spend noticeably less on research than their US competitors. The aim should be both to make firms spend more and to demand that governments do the same. We will have to wait until the summer to see the detail of the higher education settlement up to 2008. But while only medical research can be sure of an immediate cash uplift, Gordon Brown's words suggest that UK universities more broadly can hope to play their part in the quest for greater innovation.