Mr Baker, the most influential education minister of recent years, has also called for the age of secondary transfer to be raised to 14 and urged a huge expansion of the technology colleges programme.
The former Conservative chairman and architect of the national curriculum, who is to retire at the next election, set out his controversial agenda for the next decade in a speech at the Institute of Education in London, sponsored by The TES.
Mr Baker elaborated on his idea of investing lottery money in education - in the week when Camelot revealed first-year profits of Pounds 77 million and local authorities estimated that Pounds 3.2bn was needed simply to keep existing school buildings in use.
He said he welcomed the Government's Private Finance Initiative but added that it could not generate enough cash to maintain and develop primary and secondary schools, colleges and universities.
"The proceeds of the lottery now going to the Millennium [Fund] will have provided by the year 2000 some Pounds 1.7 billion. After the Millennium, I think that that money should be made available to the education system . . . as opposed to the NHS or other parts of public life because education is essentially an investment in the future. While some of the lottery goes very sensibly now to preserve and cherish the great monuments of the past, some of it should also go towards enhancing the opportunities of the future."
Although neither of the two main political parties has felt able to pledge public money to tackle the problem of crumbling schools, Mr Baker's lottery cash idea was ridiculed by Labour and the unions.
Shadow schools minister Peter Kilfoyle said: "We would welcome any fresh funding going into education infrastructure, but would be extremely wary of the provision of those funds being subject to the fluctuations of lottery revenue. "
John Sutton, general secondary of the Secondary Heads Association, said lottery money should not be used to buy the basics.
Mr Baker, the architect of the national curriculum, argued that 14 was now the natural age of transfer because exam board syllabuses largely determined the nature and content of schoolwork after that age. He acknowledged that changing the transfer age would cause chaos and was probably too much to ask for at present but said the education system should reassess its approach to post-14 studies.
Those choosing the more academic route could be encouraged to study a wider range of subjects, including classics, history of art, politics, geology, zoology and anthropology. Those opting for a more practical, vocational route should, however, also be offered a greater variety of subjects, particularly up to the age of 16.
City technology colleges and technology schools had shown what was possible, and it was time their approach was made available to many more young people. "At present there are 180 technology colleges, with a further 70 planned for next year. This means about 5 per cent of secondary schools, rising to 7 per cent, will be technology colleges. We should set a target of 20 per cent, that is to say about 800 by the Millennium."
These institutions should offer computer studies, communications technology, design technology, environmental technology, media studies, marketing, business studies, including law and accountancy, all aspects of information processing, and all types of engineering.
It would make better sense for the age of transfer to be 14 for the specialist colleges, Mr Baker agreed after his lecture.
He also suggested Premier League football clubs could be persuaded to sponsor 12 new "magnet" sports schools while some media conglomerates could be induced to invest in schools specialising in the arts and the media.
Technology colleges, page 10 Peter newsam, page 16