For too long this has been the Cinderella of the system, while an "academic" education has been seen as a "must" for any bright student.
The Government's ludicrous target for getting 50 per cent of young people into higher education is a symptom of this misguided view. One of the consequences of this is that employers are faced with a plethora of graduates (many with degrees that do not help their employability) and a shortage of young people with good craft skills.
Another consequence is that many young people are let down by the current "one size fits all" system and drop out of school altogether. It is very different in Holland , Germany, Austria and Switzerland where they have superbly constructed and supported vocational pathways. Vocational qualifications in these countries are regarded as a real achievement - on a par with a degree.
And far fewer young people are let down by the system than in the UK. They simply do not have our disgraceful "long tail" of underachievers.
Last year, in a paper Education and training: a business blueprint for reform, I recommended the development of a robust vocational "pathway" in schools, from age 14, to run alongside the "academic".
The institute therefore wholeheartedly welcomes the government's commitment to improving the vocational pathway. We are especially encouraged by the comments (as we understand them) by exams chief Ken Boston that there should be more practical work in "vocational" GCSEs and employers should be more involved in setting standards and assessment.
Employers in small businesses may not feel able to get involved, but I have little doubt that large employers and trade associations would (and should) jump at the chance.
Ruth Lea is head of the policy unit at the Institute of Directors.