The government is set to spend more of national income on education, with universities and colleges likely to share the spoils, chancellor Gordon Brown announced in the budget.
Mr Brown reassured the education sector that it would not be left out of spending plans as he unveiled a £40 billion boost for the National Health Service over the next five years.
In a sign that higher education may benefit from this summer's government spending review, Mr Brown said that education would continue to receive additional cash to deliver "further substantial improvements" in schools and in universities and colleges.
The share of national income devoted to education will rise over the remainder of this parliament, he said.
Baroness Warwick, chief executive of Universities UK, said: "We urge him to back up his words with extra investment in the spending review."
Sally Hunt, general secretary of the Association of University Teachers, said: "I welcome the clear commitment to further investment in universities and colleges as part of this summer's spending review.
"The chancellor, however, missed a golden opportunity to put immediate funds into university research."
Mr Brown has already made it clear that any extra money for education will be produced on a something-for-something basis. And he said that while the government was committed to investing in public services this demanded responsibility in setting public- sector pay.
Tom Wilson, head of the universities department at lecturers' union Natfhe, said: "We have already delivered our something over the past decade and it is about time the Treasury delivered something in return. Our pay claim this year calls for 15 per cent as a stage towards closing a 30 per cent pay gap."
One of the chancellor's key themes was encouraging an entrepreneurial culture that will benefit universities spinning off their own high-technology ventures.
Large companies will be encouraged to invest more in research and development with £400 million of tax credits.
Mr Brown also said he would modernise the tax treatment of intellectual property, which he estimated would save business some £200 million a year.
He also announced the following measures:
* 1 per cent increase in national insurance for employers and employees (see above)
* Corporation tax cut by a penny to 19p in the pound for small companies and the 10p starting rate abolished for companies with taxable profits of less than £10,000
* VAT administration cut for businesses with annual turnovers up to £150,000
* Capital gains tax cut to 20 per cent for assets held for between a year and two years, and a 10 per cent rate for assets held for two years or more
* Exemption from climate change levy for companies using electricity from green technologies.