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The strategy acknowledges that our universities are excellent in research, teaching and knowledge exchange. It also acknowledges that they can and do make a vital contribution to the effort to grow a different - more sustainable and globally competitive - economy. We look to businesses to create the wealth and jobs of the future that will make our living standards grow, and provide funds for critical public services. But we need a sound knowledge base to underpin the economy of the future, and universities are a vital part of that. The strategy also recognises that universities play a vital part in their local areas as centres for innovation networks and clusters; and that the world-class distinction of our universities draws innovators, entrepreneurs and researchers to these shores, as well as helping to develop our local talent.

The UK research base is recognised in the strategy for its high quality, productivity and impact. The dual-support system for funding research has driven these successes forward; with HEFCE funding for quality-related research (QR) providing the flexibility to underpin innovation and responsiveness in the research base. We will provide over £6 billion in QR over 2011-15 to support this. In conjunction with the other UK higher education (HE) funding bodies, we are introducing a new system of assessing research excellence, the Research Excellence Framework, which will provide a firm basis for our future funding to recognise and reward excellent research, including work that benefits the economy and society.

Success in connecting with business and the wider economy and society is recognised in the strategy: knowledge services provided by universities to businesses and other users totals over £3 billion. We are allocating £600 million over 2011-15 through Higher Education Innovation Funding (HEIF) to accelerate this success. We look forward to responding to the recommendations of the Wilson Review, which will address how relations between business and HE can be improved further, once it is published in 2012.

Sir Alan Langlands, Chief Executive of HEFCE, said:

'Graduates are highlighted as important contributors to innovation: 'innovation-active' businesses have double the share of graduates of other businesses. HEFCE is working to sustain the flow of graduates and postgraduates in the science, technology, engineering, mathematical and other key subjects that are critical to technological innovation, as well as the broader range of disciplines that contribute to innovation and growth, through the development of our new teaching funding policies.

'The role of universities and colleges in delivering the skills needed in an innovative economy is noted in the strategy. In relation to skills, HEFCE also welcomes the Government's growth review on education and training published on as part of the Autumn Statement on 29 November. This recommends that Sector Skills Councils and other employer bodies help develop robust accreditation frameworks that tell students about the courses employers really value. The Higher Education Public Information Steering Group will consider any proposals for inclusion in Key Information Sets (the bodies that will accredit courses from September 2012 already include the Society of Biology, Skillset and the British Computer Society). This development will help inform student choice: to extend that further we are talking to other accrediting bodies about inclusion in the 2012 Key Information Set.

'In these tough times, it is important to be positive and to emphasise the world-class innovation assets of the UK, including its fine universities and colleges. The Innovation Strategy, and the Government's overall approach to growth, places great responsibility on universities to deliver for our economy, society and the public, but it also opens up great opportunities to contribute. A vital message in the strategy is the importance of collaboration: between universities and business, between parts of the innovation ecosystem, and between funders. HEFCE supports the strategy and will work closely with other funders, partners and universities to deliver it.'

Innovation and Research Strategy for Growth