AN ACTION plan to increase innovation and help businesses succeed has been unveiled by Trade and Industry Secretary Patricia Hewitt.

Competing in the Global Market: The Innovation Challenge, follows a review of innovation policy, led by science minister Lord Sainsbury.

The report identifies the UK's excellent science base and track record in invention, but warns that more should be done to exploit this for commercial benefit.

It features examples of successful innovation projects from the south-west region, including Inspire South West, a regional programme which will use European Regional Development Fund innovation action's funding to create greater demand for innovation among regional enterprises.

Another project highlighted is Business Link Wessex's innovation services, including the virtual company - a team of experts who work for virtual shares, which become real shares when the company takes off.

The report predicts that the UK will find it increasingly difficult to compete in the global market against countries with low labour costs.

Future success will be won through the exploitation of new ideas, particularly in technology.

The report contains a number of proposals, including a national technology strategy to provide a framework for policy priorities, underpinned by £150 million, and an increased role for the Small Business Service to promote innovation.

An innovation programme will provide advisory services on intellectual property rights, assistance with research and development grants and brokering collaboration between companies and higher education institutes.

Ms Hewitt said: "Innovation is the successful exploitation of new ideas.

"We want to get ideas out of the lab, into the factory and on to the balance sheet to help British businesses compete in the global market. For the economy as a whole, innovation is the key to higher productivity and greater prosperity for all.

"To hold our own in modern manufacturing we will need to innovate strongly by creating new high-tech manufacturing industries and upgrading traditional sectors such as steel and textiles.

"At the same time we need to raise the level of innovation in our service industries."

Lord Sainsbury said: "We want the UK to be a key knowledge hub in the global economy - a country with a reputation not only for outstanding scientific and technological discovery, but also for turning that knowledge into new and exciting products and services, a country that invests heavily in business research and development and education and skills, and exports value-added goods and services around the world.

"The innovation report sets out what we need to do as a country to meet the innovation challenge and secure future economic success."