NESTA is calling for 'a new conversation' about economic growth and its new plan sets out the direction it believes the UK should be travelling in.
Since 2008, the UK's economic debate has largely been about short-term recovery. The argument has focused on which of two options will end the recession: Plan A or Plan B, austerity or stimulus. But neither addresses the UK's longer-term growth prospects, NESTA claims. Decades of research have shown that innovation is the most important driver of long-term productivity and prosperity, and that innovative businesses create more jobs and grow faster.
Professor Brigitte Andersen, director of 'global open innovation hub', the Big Innovation Centre, said: "The only chance we have to recover from the recession is through action to support innovation.
"Public and private organisations need to find new ways to work together to unlock potential of new technologies and forge new wealth-creating markets," she added.
Charles Levy, senior economist at the Work Foundation said: "I feel the only way to bring this country out of recession is through innovation.
"It's about sustaining growth as well. This can be achieved by creating new knowledge and new ideas," he added.
NESTA's 'Plan 1' sets out 12 recommendations to kick-start sustainable, innovation-led growth, and move beyond the typical economic policy that has dominated in the UK for the last decade:
Financial architecture: A £200 million fund for early-stage ventures; freedom to raise money for the Green Investment Bank, and a 'new business' bank to lend to growth sectors, including advanced manufacture and life sciences.
Rebalance government spending towards innovation: Invest the proceeds of the forthcoming 4G spectrum auction – estimated at £4 billion – in science, technology and innovation.
Government innovation procurement: Establish innovation spending to channel £1 billion of government procurement through innovative businesses.
Infrastructure investment: Relax planning restrictions around innovation clusters.
Collective intelligence: Higher education funds for radical inventions around knowledge creation – putting design thinking at the heart of the new Catapult centres.
Incentives for innovation: A £25 million 'challenge prize' fund to inspire the nation to tackle big technological challenges.
Measurement, data and standards: Reshape the tax credit system to recognise hidden innovation and R&D.
Boosting innovation across the UK: Supporting innovation clusters where they are already thriving.
Innovation in the labour market: Link procurement to local jobs, training and apprenticeships and encourage innovation around micro-jobs and micro-franchises. Support innovative projects such as Studio Schools/establish norm of one apprenticeship per £1 million turnover.
Public and social innovation: Demonstrate the most effective models and approaches to tackle the severest social challenges, with cross-government funding commitment for public service incubators to share the most effective models.
Education: Create the next generation of digital makers, giving all teenagers the chance to make, code, design and program.
Remove barriers to entrepreneurship: Change the immigration cap to welcome skilled foreign graduates and entrepreneurs, and recast regulation to encourage new market entry.
A follow-up plan from NESTA with more detailed proposals will be available later this year. It plans to issue a Manifesto for the Creative Economy in early 2013.
