The government should introduce 'innovation prizes' to persuade firms, scientists and organisations to come up with new technology, the Conservatives have urged.
A £10,000 prize to develop a new way of using waves to produce electricity, for example, would do more to encourage new ideas than any existing research grant, they believe.
The idea is one of those put forward by the Tories' science, technology, engineering and mathematics (Stem) taskforce, which is led by former science minister Ian Taylor.
In its interim paper published today, it suggests that innovation must be more demand-driven and less reliant on bureaucratic subsidy schemes if it is to flourish in the UK.
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"The British government spends £3 billion a year on science and innovation but £110 billion a year on buying goods and services. We need to find a way to use that huge spending on goods and services to boost British innovation," Mr Taylor said.
"The taskforce believes that government could encourage innovation not by trying to pick winners but by identifying a need and challenging scientists and engineers to come up with the right product or service."
As one example of an innovation prize, the task force highlights the 1714 Longitude Act, which offered a prize of £20,000 - the equivalent of £30 million today - for a method of measuring longitude accurately.
"We believe [this approach] could work again today. Why not put up a £10 million for the first company or organisation that can produce a workable system of generating power from waves?" Mr Taylor asked.
The task force argues that instead of subsidising certain firms to develop technology, government departments could also offer a contract for the end product, to allow the company concerned to seek its own funding from venture capitalists.
For example, while it notes the encouragement given to young people by National Endowment for Science, Technology and the Arts (Nesta) to develop their ideas, it says government support could be much more practical.
One of the ideas that came out of Nesta's youth programme was a fridge that operates without electricity. This could be useful for storing drugs in developing countries.
"How much more effective would it have been for the Department for International Development (DFID) to have placed a purchase order for 10,000 of these fridges with a tight performance specification?" the report notes.