The New Designers show is ten years old. The brain-child of Peta Levi, who has since gone on to form New Designers in Business, and Andrew Morris, managing director of the Business Design Centre in Islington, this annual event has grown from an ad hoc display of fewer than 200 students’ work to the largest and most important of its kind anywhere.

More than 2,000 students from more than 80 colleges and universities were involved in this year’s two-part exhibition. With nearly Pounds 40,000 of awards and a record number of work placements, exhibitors have become increasingly sophisticated in the way they present themselves. But Morris points out that, “UK manufacturing industry still fails to seize the great opportunity the show offers to add value to their products I Too much talent is still lost to overseas organisations. If we are really to compete on the world economic stage, we must be radically more creative in our approach.”

Just how true his observations are was readily revealed in the first week. Our textile industry has very nearly died but textile design is as healthy as ever, whether it be the hand-drawn and painted, faux-naif imagery of Emma Tranfield (Staffordshire University) inspired by the nursery rhyme “The Old Woman Who Lived in a Shoe” or the abrasively high-tech, computer-generated prints of Sarah Marks (Loughbrough University) incorporating a battery of signs, symbols, typography, bar and binary coding. In fact, the range of materials and methods employed by young British designers in both printed and constructed textiles and the often witty ways in which they might be used are more than comfortably demonstrated by Loughbrough students alone.

Wit and invention were equally in evidence in other categories of design too. Paul Whitefield’s (Teesside University) polypropylene electric-powered taxi is a compact and environmentally sensitive solution to a complex problem. Tim Donnelly (Brunel University) meets the need for temporary public seating by employing a vertebrae-like action to raise and lower seats from beneath the floor.

And if the more fantastic, even downright whacky tendencies of recent years have all but disappeared, this has not left furniture or product design bereft of humour. Michael Simpsons’s (Manchester Metropolitan University) prize-winning Pink Piggy vacuum cleaner is meant to bring a little fun to a domestic chore while Rob Creer (University of Plymouth), another prize-winner, will surely have few difficulties marketing his delightful garden chairs assembled from disused spades, forks and hoes.

After two years absence, Fresh Art, the companion show for fine art students, now seems a thing of the past leaving New Contemporaries as the only near-equivalent. This show, however, is not college or university supported and is selective; a record submission of 1,600 applicants being reduced to 33 exhibitors. Richard Shone, one of the selectors, writes that there was no identifiable trend but noted the predominence of painting and a dearth of sculpture with photography as a recurrent source or influence (although very few good photographs as such) and past popular culture and autobiography prevailing over issue-based art. In the event, Shone and his two co-selectors opted for the amusing.

The overwhelming impression left by the work on show is one of retreat. Among the paintings, Alexis Harding’s possess a taut, formal dynamism in contrast to Chantal Joffe’s blatantly scurrilous images while Nicky Hoberman’s figures seem no better than colour-tinted adaptations of similar ones by Eugne Carrire and Alex Venness’s too close to their obviously photographic origins for their own good. Leeds United (a challenge to unique artistry in itself) are undoubtedly clever in their mocking tributes to current luminaries such as Michael Craig-Martin and Damien Hirst but for many people, parody will always be a secondary art form.

Unexpectedly, given the tedium experienced by the selectors faced with dozens of often very long, incompetent videos, they dominate the exhibition with Rob Hunter warning that, “Visual information regarding the viewer’s presence next to the installation is being relayed live to an external venue (an Esso service station) where a second audience has been equally implicated within the work.” Surveillance is an obsessive interest at the moment, explicitly so in Gary Perkin’s trio of variously observed model interiors, implicitly so in Hayley Newman’s erotically charged performances and wearily summarised by Anne Hamlyn, one of three winners of a new award for writing on art: “All is spectacle and everything is seen.”