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14INNOVATION UK The Fund meant that 50,000 people and 12,000 busi-nesses were able to benefit through short targeted courses, training vouchers for the unemployed, and work placements and internships for graduates. Universities are also in a unique position to enhance the UK economy because so many of the successful indus-tries we have in this country are reliant on high levels of knowledge, skill and innovation. These are sectors such as low carbon, digital commu-nications, life science and the creative industries. If we are to continue to lead the way in these areas we will need to take advantage of the research taking place at UK universities. Only by looking at these specialist areas and the part they play in an emerging economy can we make sure that we are putting in the necessary work to make them thrive. Encouraging inovation Outside of the courses and training they provide, indi-vidual universities are already doing a considerable amount of work to encourage innovation in their local areas. Many across the country, including Exeter and Bournemouth, have their own Innovation Centres, connecting students and individuals with local and national business. These centres offer impressive facilities and support serv-ices to promote enterprise, as well as talks and events to provide direction to companies. Most importantly of all, they link our higher educa-tion sector - and the critical thinking on government, education and economics that that entails - with the industry that keeps this country in such a competitive position worldwide. I was impressed to see this being taken to a more international footing earlier in the year by the Stu-dents in Free Enterprise ( SIFE) team at the University of Southampton. As well as looking at UK issues, SIFE provides an international network of university students work-ing in collaboration with both business executives and academic leaders. These students have been devel-oping sustainable projects, including rice growing in Sierra Leone and micro- lending to enterprising farmers in Madagascar. The result is two- fold, meaning that while students gain valuable experience of economic work they also introduce tangible benefits to local communities throughout the world. This is innovation in its most valuable form. Linked to this is one of the fundamental strengths of the UK's higher education sector: research. A huge amount of the science and innovation work that has been taking place in the 21st century has been within our universities. We need to encourage this as much as possible, at the same time as making sure that universities are exploiting the intellectual property that they generate and are benefiting from it, both financially and reputationally. This government recognised the importance of national research with the launch of the Innovation Investment Fund this summer, as part of the Building Britain's Future initiative. The Fund is intended to assist growing small businesses and spinouts - which are likely to come in the first instance from universities. We hope that over the com-ing 10 years this Fund will grow to over £ 1bn and I'm extremely proud that we have been able to invest in such a worthy scheme. There is still much more potential for industry to work with university researchers, as businesses often do not realise that this resource is open to them. In fact it is research that underpins the UK economy and enables us to compete abroad. responding to the chalenges World- class research and knowledge exchange from higher- education institutions are crucial for responding to the challenges and opportunities of globalisation, which is why the government has been working hard to drive up the economic impact of the research we fund in universities. Every year through the Higher Education Innovation Fund, we invest over £ 100m in universities' capacity to engage with business and public services to help transfer knowledge and support innovation. We are also working with the Higher Education Funding Council for England to change the way that research in universities is assessed and funded. The new Research Excellence Framework, which is the new mechanism used to allocate the £ 1.6bn research block grant, will for the first time explicitly assess and reward the impact of university research on the economy and society. Innovation in all its forms is a central part of 21st century Britain and, backed by record investment and supported by universities, will continue to be a lynchpin of this country's economic development. British Innovation David LAmmy MP, minister of state for higher education and intellectual property

INNOVATION UK15 As one of the largest- ever technology funds in Europe, the Innovation Investment Fund is giving the UK's venture capital industry a shot in the arm A boost for Britain Forming part of the government's strategy for Building Britain's Future, the UK Innovation Investment Fund was set up back in June to invest in technology- based businesses with high- growth potential. The new fund will focus on investing in growing small businesses, start- ups and spin- outs, in digital and life sciences, clean technology and advanced manufacturing. The Department for Business, Innovation and Skills, along with the Department of Energy and Climate Change and the Department of Health, will invest £ 150m alongside private- sector investment on an equal basis known as pari- passu. It is the government's belief that this could leverage enough private investment to build a fund of up to £ 1bn over the next 10 years. Announcing the fund, Prime Min-ister Gordon Brown said: " This fund will help build Brit-ain's future by investing in key sectors. It will provide crucial support for our most promising start- ups and existing small companies just when they need it most. Venture capital finance is the lifeblood of innovation and crucial to ensuring the commercialisation of the discover-ies coming out of our research base. The fund will boost future UK competitiveness." Fund Structure A Fund of Funds structure proved most attractive to institutional investors, as it creates a portfolio approach that spreads the investment risk across a number of different technology fund management teams. The government will seek to appoint an expe-rienced Fund of Funds manager with a proven track record in technology investment. They will be regu-lated by the Financial Services Authority ( FSA), and will require the necessary authorisations to operate in the UK. The Fund of Funds approach also enables the govern-ment to support the growth of the market without distorting or competing with existing fund manag-ers and ensures that the fund complements existing public- sector interventions such as Enterprise Capital Funds, RDA European Development VC Funds as well as tax measures. This is not a novel approach and builds upon the previous UK High Technology Fund structure that was announced in 1998. This was £ 125m " fund of funds" and invested in a number of specialised technology funds such as Advent, Amadeus, MTI and Scottish Equity Partners. The government provided an invest-ment of £ 20m and the Fund Manager was able to lev-erage an additional £ 105m from the European Invest-ment Fund, UK pension funds and a French bank. The UK Innovation Investment Fund will be one of the largest ever technology funds in Europe. Lord Mandelson, Secretary of State for Business, says: " In our New Industry New Jobs strategy we identified access to venture capital as one of the critical factors in developing innovative new companies in Britain. The UK Innovation Investment Fund will be a shot in the arm for the British venture capital industry. It is also a British Innovation Innovation Investment Fund