The biggest names in British industry are backing Government plans to revolutionarise work-related skills training for school pupils.

The failure to ensure that young employees have mastered the basics accounts for a third of industry’s annual Pounds 30 billion training bill.

“The vast tail of under-achievement costs employers more than Pounds 10bn upskilling the ‘functionally illiterate’,” said Ian Pearce, education director of Business in the Community, founded by the Prince of Wales for “enlightened” industry.

Companies such as BT, Unilever, Marks Spencer, Tate and Lyle and the high street banks have expressed concern that millions of pounds set aside for education business partnerships in 1991 - the last government’s huge initiative to bring industry into schools and colleges - have too often failed to forge the public-private partnerships needed.

Overwhelming advice from industry and the Department for Education and Employment to Secretary of State David Blunkett is to link the work more closely to the national targets for education and training and direct company cash at specific numeracy, literacy and IT projects.

Education-business partnerships should link more closely with the careers service and results of successful schemes should be published widely, they say.

Mr Blunkett is poised to launch a new scheme - the biggest shake-up in education business links since 1973 - this summer. Schools, colleges and partnerships bidding for cash will have to prove the value of their schemes using indicators such as attendence and achievement. New initiatives will be piloted in Labour’s planned Education Action Zones. “Recent studies have pointed to a lack of coherence in education business link activities, too much duplication and a lack of clear objectives,” writes Mr Blunkett in today’s 32-page Business Links special report in The TES.

One model being studied by ministers is the Aim High awards, the “Oscars” of education business links. Created by BITC and sponsored by BT, schools and companies entering for awards must fulfil exacting criteria and submit themselves to rigorous inspection.

The results, which appear in the Business Links special report, have so far been impressive. Average reading ages of children at Leiston Middle School in Suffolk improved by up to 21 months in six weeks on a reading scheme with the local newspaper.

And in Mid Glamorgan, more than 400 borderline D-E students ended up with at least five GCSEs at grade A-C through revision weeks and homework clubs run by their local TV firm, Just Rentals.

Further highlighting the problem is today’s report from the Prince’s Trust and Employment Policy Institute warning that many young people lack the skills to hold down a job and have “little or no faith in the careers service”.

“There are also many more young people in difficulties in the labour market than the unemployment figures suggest,” says the report on interviews with teachers and training providers and 10 focus groups, held with 16 to 24-year-olds between May and September last year.

John Philpott, director of the EPI, said: “Many cannot read simple instructions or undertake basic arithmetic. Overall, some 500,000 young people are suffering serious distress in today’s job market.”

Full details in Business Links pull-out and FE Focus, page 33