The BCC, which represents 126,000 businesses in the UK, is urging a radical rethink of learning accounts.

In a submission to Chancellor Gordon Brown ahead of his pre-budget statement on November 9, the BCC warns against government plans to discount IT and basic skills courses by 80 per cent to learning account holders. It says unscrupulous providers might be tempted to push up fees.

“There is a danger that providers will simply raise their prices to absorb the benefit. A discount will also distort the market.”

The BCC is opposing the abolition next year of tax-relief on work-related training. It also wants a new system of training tax credits introduced. It suggests that individuals could be encouraged to invest in their own training through tax rebates.

Learning account holders receive money from the Government in return for a small personal contribution.

Employees of small firms - potential beneficiaries of learning accounts - find it difficult to take advantage of training opportunities, the BCC says. They do not have enough staff to take advantage of modern apprenticeships and national vocational qualifications and in effect “pay twice” for training - the cost of the course plus the cost of losing a member of staff from a small team.

In its submission, the BCC repeats the call of the Government’s skills task force for the under 25s to be entitled to free publicly-funded training to level 3 - the equivalent of A-level.

It estimates that this would cost pound;300 million but would pay for itself in increased competitiveness and employability. It adds: “Trying to remedy a lack of these foundation learning skills later in life is ultimately a lot more costly.”

It is also calling for better identification of training shortages .

A BCC spokesman said: “Why fix what’s not broken? We were happy with vocational tax-relief which was shown to be providing real benefit. We want the Government to take a second look at ILAs, what they can offer and where they can be most effective.”