The universities and science minister said at a conference in London yesterday that his target for institutions to grow their income in this area by 10 per cent over the next three years was ¡°reasonable¡±.

He told the Engage HEI 2012 conference that the target was ¡°essentially a reminder to universities that even when times are tough they have to keep on growing and sharing and drawing on their external income¡±.

¡°But it isn¡¯t an expectation that they can go back to the levels of external income they had during the boom,¡± he added.

¡°We went through the ?3 billion mark in 2010 and I urge the sector to keep on going, in what¡¯s an excellent record but where we can do even more.¡±

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Asked whether there would be any carrots or sticks for universities who meet or fail to reach the target, Mr Willetts said that the carrots had been set out in last December¡¯s Innovation and Research Strategy for Growth.

These include ¡°innovation vouchers¡± that allow small and medium-sized enterprises to purchase a certain amount of academic expertise from universities.

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The strategy says that ¡°at least¡± ?1 million worth of vouchers will be distributed in 2012-13.

Mr Willetts described this funding as ¡°modest¡± but said it would increase ¡°if the resources permit¡±.

He also spoke of his desire for more universities to run sandwich courses which give students time in industry.

¡°You¡¯d be surprised by the number of businesses and business leaders that talk about sandwich courses or industrial placements,¡± he said.

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The idea that knowledge exchange just referred to the physical sciences was ¡°wrong¡±, Mr Willetts added.

¡°There is some very interesting evidence that the level of interaction between academics in arts and humanities departments with businesses and other external players is at least as great if not higher than in the physical sciences departments,¡± he said.

david.matthews@tsleducation.com