The way funding for UK-based research is organised should ensure global investment in world-class researchers and create jobs in the short and long term, according to secretary of state John Denham.

In a key note speech to the science and research community at the Royal Academy of Engineering, Denham said UK society had to get smarter in the way it funds research through the £6 billion in public money the government will spend a year by 2010-11, as well as private investment.

Denham claimed the future success of the UK will rest on its ability to help resolve big global challenges, attracting inward research investment from globally mobile companies, as well as considering the impact of research in the context of the wider economy.

Denham, secretary of state for innovation, universities and skills, said: "As a country we face huge challenges. As if the global challenges of environmental sustainability, climate change, food security, disease and poverty were not enough, we have to re-shape our society - with a more diverse and more equitable economy, with greater resilience in terms of our energy and food supplies - all within an increasingly competitive world.

"Our ability to respond to those global challenges will be inextricably tied up with the way in which we re-shape our economy. Global co-operation and real partnerships in scientific collaboration, alongside multilateral funding, will be essential to address these challenges. But we are not alone in wanting to ensure that we benefit nationally from our success in doing so.

"And this simply cannot be done without the full and appropriate engagement of the research base. In part it means undertaking the fundamental research which will inform our responses. In part, it means undertaking the applied research and the translational research which enable the solutions to be developed for direct public and economic benefit. But it's more than that.

"The way we organise our research will determine whether home-grown companies can get started, grow and sustain themselves as global leaders. And, in turn, generate the tax returns from which future research can be funded.

"And the way we organise our research will determine whether we make the best use of the considerable pool of scientific and engineering researchers we now have in this country.

"We need to ensure that the research base is able to make its full contribution to this country's future prosperity and our ability to help resolve the big global challenges. In this work, fundamental research will be as important as applied or translational research. But we need to ensure that the research base is better organised to attract the best talent and inward research investment. We need to be more sensitive to the impact of research on the wider economy, including its contribution to our skills base. And government needs to be clear about its own responsibilities.”