Chancellor Gordon Brown this week announced the biggest potential shake-up of research funding in a generation.
In his 2006 budget speech, he said that the Government would merge the Medical Research Council and Department of Health research budgets to create a single jointly held fund - reminiscent of the National Institutes for Health in the US. The new body will distribute at least £1 billion of ring-fenced funding for medical research each year.
The Treasury confirmed that it was consulting on how the research councils'
"effectiveness and economic impact can be further improved". A separate government consultation will consider replacing the research assessment exercise after 2008 with a "metrics-based system for assessing research quality".
A working group, jointly chaired by David Eastwood, chief executive designate of the Higher Education Funding Council for England, and Sir Alan Wilson, Director-General for Higher Education at the Department for Education and Skills, will consult on the proposals from May until October.
A report setting out next steps in the Chancellor's ten-year strategy for science, published the same day, proposed that the Council for the Central Laboratory of the Research Councils could merge with the large research facilities operations run by the Particle Physics and Astronomy Research Council.
It also called for views on whether the funding of the physical sciences needed to be simplified further.
In his budget speech, Mr Brown announced the creation of a £1 billion energy and environmental research institute, funded by the Government and industry.
Control of the new joint medical research fund - which was a closely guarded secret until the night before the Budget was announced - remains up for grabs.
The Government confirmed that it would appoint a senior individual to advise on the best way to manage the new structure.
Colin Blakemore, chief executive of the MRC, said: "We have the chance through the combination of funding to build in this country something that is not just the equal of the NIH but is superior because of our world-leading biomedical research and the unified system of patient care and record-keeping in the UK."
Peter Cotgreave, director of the lobby group Campaign for Science and Engineering, said: "We welcome the creation of a national medical research fund, if it means that the National Health Service research budget will be used more effectively, but we will want to see the detail to ensure that the blue-skies research of the existing MRC is protected."
Mr Brown also used his budget speech to trumpet investment in education, saying that Britain could not afford to waste potential - but there was little mention of higher education.
In advance of the further education White Paper due next week, he announced that those wishing to study up to A level could do so free of charge up to the age of 25.
An extra £11 million will be available from 2007-08 for adult learning grants. An individual learning accounts scheme was scrapped in 2001 after widespread fraud and misuse.
Mr Brown pledged that in colleges, resources would be redirected from "failing courses" to those courses that employers wanted to see. He also extended the research and development tax credit.