Read Demos 'Open Access' licence terms

The growing importance of knowledge means a more direct connection between educational attainment and economic prospects, and a blurring of the boundaries between work and learning. Across the business world there is a much wider involvement in learning and inquiry - basic labour market skills are higher than a generation ago - and workers are increasingly called on to contribute collaboratively to continuous improvement in production, new product development and communication.

The knowledge economy represents a more fluid and uncertain organisational environment, calling for new generic skills and qualities, such as information management, self-evaluation, managing risk and "learning to learn". In this context, learning to develop individual aspirations and balance them against other concerns and responsibilities will become even more important. Citizens also have to deal with new social and ethical challenges - from protecting personal privacy, to developing responsible citizenship and balancing work, family, learning and leisure.

Against this background, the emphasis on raising standards in schools has encouraged a form of "test mania", which means that the development of creative abilities has often been squeezed out. As Tom Bentley, the director of Demos, says: "There has been a danger of throwing the creative baby out with the trendy teaching bath water in the drive to improve standards. The test mania of recent education reforms has meant that teachers are 'teaching the test' instead of developing pupils' genuine abilities."

Drawing on the experience of innovative schools across the world where this has not happened, What Learning Needs, which is published in partnership with the Design Council, provides a series of radical policy recommendations for reshaping the school curriculum and the way teachers operate. These include:

· Doubling public spending on education through a one-off tax
· Turning schools into 24/7 learning centres for their communities
· Overhauling the exam system to measure a wider range of capabilities
· Encouraging teachers to work on external projects
· Creating a "reserve army" of part-time teachers
· Cutting the curriculum in half to encourage depth rather than breadth of learning