UK universities are becoming more business-oriented and better at linking research to the needs of the private sector, according to the latest annual report on spin-out activity in the country's higher education sector. A survey of 164 institutions carried out by the higher education funding council for England (Hefce) reveals that the number of patents granted to universities increased by 26 per cent in the academic year 2002-03. Furthermore, UK universities created one spin-out company for every 25 million euro spent on research, compared with a ratio of one company for every 87 million euro invested in the United States. According to the higher education-business and community interaction 2002-03 survey: 'Overall the survey data show a continuing improvement in HE-business interactions. There is evidence of growing ownership by HEIs [higher education institutes] of their own distinctive approaches to contributing to the economy and society [and] an increase in the commitment to supporting small and medium-size enterprises (SMEs) and meeting regional skills needs.' The combined turnover of the university spin-out sector totalled 520 million euro, and provided employment to some 13,000 full-time equivalent staff. Universities also reported a significant increase in their income from consultancy work, up 38 per cent from the previous year to around 244 million euro. Sir Howard Newby, chief executive of Hefce, said: 'This year's survey shows that universities and colleges are continuing to take forward their contribution to the economic and social development of the country. It is good to see such a wide spectrum of interactions covering innovation, training, and - this year - recognition of their community-based activities.' Kim Howells, the UK Higher Education Minister, added: 'Universities have a key role to play in stimulating local enterprise and regenerating regions through their innovative work. The results of today's survey show that they are continuing to boost UK productivity.'