Establishing a closer and more direct relationship between Universities and industry has been a significant and increasing governmental policy trend for many years. In the UK, this trend has now been heavily stressed in the recent (and somewhat controversial) publication by the Department of Education and Skills (DfES) of the government White Paper: 'The Future of Higher Education' (2003). Within the section on 'Expanding higher education to meet our needs' the Paper states 'We want the bulk of the expansion to come through new types of qualification, better tailored to the needs of students and the economy'. One such new qualification is the Foundation Degree, described by the Minister of Higher Education as 'a new qualification for a new age'. Foundation Degrees are vocationally oriented two-year degrees, designed to equip students with the technical skills, academic knowledge and the transferable skills that employers say they increasingly demand. They are also designed to attract students from a wider range of backgrounds than previously and address the government's 'Widening Participation' target of 50% of 18 - 30 year olds in higher education by 2010. Core features of the Foundation Degree include employer involvement in the identification, design and review of the degree programmes; the development of technical and key skills; work-based learning as a key component of a programme; credit accumulation and transfer; and having an identified progression route to an honours degree. Funding to develop and pilot prototype Foundation Degrees was made available in 2001, and 40 prototypes programmes were introduced into the national higher education framework provision in September 2001 in order to identify effective implementation, and generate good practice for future dissemination. The introduction, and subsequent concretisation in the White Paper, of the Foundation Degree signals a serious shift of curricular emphasis in higher education and predicts significant funding leverage for a changing relationship between higher education (HE), further education (FE) and industry. This paper reports on research and evaluation undertaken during the introductory year of the Foundation Degree within the wider context of policy and curricula change in higher education as a consequence of HE/industry fusion for purposes of national and European wealth creation and future economic competitiveness. In particular, it examines and discusses issues of curriculum; industry/HE partnership and collaboration; student employability and skill enhancement; student motivation, recruitment and retention; widening participation; work-based and work-related learning; attempts to dissolve the traditional academic/vocational divide; funding challenges; and quality assurance and teaching and learning. The paper concludes by speculating on the longer-term implications of policy changes in higher education as exemplified by the philosophy underpinning initiatives such as the Foundation Degree, and also how this new degree provision sits within the Bologna Declaration, which plans a more standardised pan- Europe HE qualification framework by 2010.