Britain risks falling behind the rest of the world unless it makes a major investment in improving the skills of its workforce, a leading businessman has warned.
Lord Leitch has today published his final report into the UK's long-term skills needs, and calls for a major reform of the training and skills sector. Failing to do this would harm the economy, he warns, but success could boost it by £2.5 billion a year.
He says the government should look into forcing young people to stay in either education or training until 18, although he says this should be delayed until the new programme of vocational diplomas for 14 to 19-year-olds are properly established.
But in his two-year government-commissioned report, the peer argues there must also be radical change in the adult skills sector, to ensure the workforce of 2020 - 70 per cent of whom have already left school - are properly trained.
Five million adults lack functional literacy and 17 million have problems with numbers, of a working population of 29 million. The report warns: "Our nation's skills are not world class, and we run the risk that this will undermine the UK's long-term prosperity."
However, Lord Leitch says he is optimistic about progress, and sets a new target of equipping 95 per cent of working adults with basic numeracy and literacy skills, and 90 per cent with at least GCSE or equivalent qualifications, by 2020.
He says this can be achieved by a new investment by government, businesses and individuals themselves in the skills sector, and a new system of training that is focused on what skills firms need, rather than what ministers predict is required.
His report recommends a new Commission for Employment and Skills to ensure firms have a say in what kind of training is available, and says the Sector Skills Council (SSC) should be reformed to make it a guarantor of quality training programmes.
Lord Leitch calls for a large increase in the number of apprenticeships, to about 500,000 by 2020, and recommends firms make a voluntary pledge to train their workers to at a basic level. If this fails to work by 2010, he says the pledge could become a requirement.
The government spends about £12 billion a year on adult skills, of which about £5 billion is on further education. Lord Leitch says the Treasury should continue to pay for basic skills, but for higher qualifications, firms and individuals must pick up the bill.
"Without increased skills, we would condemn ourselves to a lingering decline in competitiveness, diminishing economic growth and a bleaker future for all," he said.
"The case for action is compelling and urgent. Becoming a world leader on skills will enable the UK to compete with the best in the world. I am optimistic."
The Confederation of British Industry (CBI) said most firms would "wholeheartedly endorse" Lord Leitch's focus on putting skills at the heart of the UK's adult training system.
Director general Richard Lambert noted that businesses already spend £33 billion a year on training and welcomed his emphasis on incentives to get firms to contribute, rather than regulation.
He concluded: "Lord Leitch's report provides a blueprint for reform that could, if fully implemented, put us on course to improve the UK's skills profile dramatically over the course of the next two decades. It is now up to government to deliver Leitch's vision."