Budget to put NHS before education

Universities could benefit from chancellor Gordon Brown's pre-budget package in terms of both working with industry on research and spinning off their own companies.

But despite the research and development tax incentives announced in Mr Brown's pre-budget statement on Tuesday, many are concerned that the chancellor made only one fleeting reference to education and said nothing about higher education or its growing importance in developing a knowledge economy.

Instead, the chancellor appeared to alter Tony Blair's top investment priority, summed up in his mantra "education, education, education", by setting the stage for massive investment in the National Health Service in the next few years, possibly involving tax increases.

Liberal Democrat education spokesman Phil Willis said: "He cannot promise an extra penny for the £1 billion per year that our universities need now. He cannot promise an extra penny for the half a billion pounds that further education colleges require to avoid a massive exodus of both students and staff."

Mr Brown did announce measures designed to boost research and innovation in larger companies and to stimulate investment and growth in small companies. These included:

* Research and development tax credits for large companies by total volume of research, due to be implemented in April 2002

* Extending R & D tax credit on intellectual property and goodwill to large companies calculated by volume of research

* Expansion of the 10p corporation tax band

* Simplification of VAT collection, designed to save 300,000 businesses £1,000 a year

* £50 million of early growth venture capital funding made available for small companies

* A 25 per cent community tax investment credit matching every £100 million of private funding with £25 million of public money.

Peter Cotgreave, director of Save British Science, said the measures would help the growth of high-technology businesses. But he warned that a good supply of scientists is needed to carry out the research that will be promoted by Tuesday's announcement. He said the spending review had to find the cash to attract the best scientists into the UK science base.

Natalie Fenton, president of the Association of University Teachers, said:

"The proposed new research tax credit must be directed at encouraging business to invest in university-based projects. The chancellor has given the education sector encouraging signals about the forthcoming budget by his clear commitment to continued high levels of investment in public services."