The document, called Innovation Nation, argues that innovation is essential to the UK`s future prosperity and the ability to tackle major challenges like climate change. It says that the power of Government spending must be harnessed to create demand for innovative products and services.

The paper describes how the Government creates demand and new markets by spending £150bn on goods and services each year, alongside its regulatory responses to issues such as climate change.

The White Paper outlines several practical measures aimed at ensuring that businesses and people in the UK are well placed to benefit from the opportunities and prosperity created by the demand for innovation. These measures include:
º  an initiative to provide at least 1,000 "innovation vouchers" a year by 2011, helping to support and fund SMEs to work with universities or research organisations to develop new products or services;
º  expanding the network of National Skills Academies, with one academy for every major sector of the economy;
º  piloting an index to measure UK innovation; and
º  introducing an annual review to provide a comprehensive assessment of how innovation is being promoted in the public and private sectors.

Launching the White Paper, John Denham, Secretary of State for Innovation, Universities and Skills (above), said: "We must make the UK the best place in the world to run an innovative business or public service.

"It is the British people who will create a world-beating innovation nation and that is why we must unlock talent at all levels by investing in skills, research and the exploitation of knowledge," he added. "But we can achieve much more if we harness the power of Government as the UK economy`s biggest customer to create new markets and demand to benefit innovative businesses and people in Britain."