Regional collaboration and rewarding links with business and the community are likely to be the main focus of a strategic plan being developed by funding chiefs.
The plan will be informed by a discussion document sent to English vice-chancellors this week. Drawn up by the Higher Education Funding Council for England's strategic steering committee, it will be debated at next week's funding council annual conference.
Regional collaboration to better meet student demand while widening participation is popular with funding chiefs, who are keen to encourage initiatives such as the joint Medway campus of the universities of Kent and Greenwich and Mid-Kent College, to which they granted £4 million last month.
Stronger links between research-intensive universities and those that excel at attracting non-traditional students would also allow greater student mobility. Joint projects, such as the one between University College London, Westminster, London Guildhall and South Bank universities, the School of Oriental and African Studies, and the Royal Veterinary College, which aims to raise the aspirations of school children, would also be encouraged.
Plans are afoot to boost the status and financial reward of activities other than research. This funding stream would consist of two distinct strands, rewarding links with business and the community.
Funding chiefs are adamant that research-intensive universities with strong business links will not be permitted to mop up all the money and that links with the community will be better rewarded.
But cash for business and community links is not yet part of core funding for universities and is set to dry up after peaking at £90 million next year. Funding chiefs are concerned that any extra funding will probably not arrive in time for the 2004 allocations and are pressing for "significant" cash in 2005.
Hefce wants £150 million a year for links with business and the community and to move from initiative-based funding to core funding.
But the Treasury is demanding performance indicators - particularly for the harder-to-measure qualitative links with the community - before it makes any commitments.
The five-year plan, covering 2003-08, will be developed over the summer before it is published for consultation.
Higher education minister Margaret Hodge said in a speech to the Social Market Foundation yesterday that universities must focus on what they do best.
She said: "For some, that will be research of international importance, for others it will be excellent teaching to meet our widening participation agenda, for others engagement in their regional and local economies. These are not mutually exclusive objectives, but in reality not all institutions will do all these things well."
* Jane Glanville this week took up her job as head of post-16 learning at London First, which aims to link London's 40 higher education institutions with business and the community.
She said: "The funding council is hoping to develop regional plans to hit the 50 per cent target - and it won't happen unless there is collaboration. The consultation is clearly looking at building on the links between schools, further education and higher education."
Ms Glanville, who is on secondment from consultancy and accountancy firm KPMG, previously worked for Hefce for almost a decade.
* Homerton College's school of health sciences is to become a partner college of Anglia Polytechnic University.