"We have a litany of concerns but that is the one that most worries us, " he said. He quotes a survey of his members last year which showed that 79 per cent of directors were concerned about the basic literacy and numeracy of job applicants - skills which should be regarded as the minimum requirements for employability.
They are concerned about the lack of rigour at all levels, GCSE, A-levels, and higher education. "How is it that A-levels have shown an increase in passes of between 21 to 25 per cent in the last five years? There has been no authoritative statement that standards have declined but the view of the business community is that they jolly well have declined, and you have to deal with that perception."
The IoD represents individuals rather than companies and says the shape of its organisation reflects broadly the shape of British industry. The majority of its members come from small and medium-sized companies.
Mr Melville-Ross says it is wrong that the distinction between academic and vocational studies has become blurred. "There is a distinction between two different types of ability and it is regrettable that people see the vocational route as inferior.
"There are different abilities and different needs and both are equally desirable and useful. Some students are better placed in a vocational environment and others more suited to an academic world. What is it you are trying to do by differentiating people? Society should value both equally, not necessarily by paying them equally."
He said that the vocationally qualified had deeper skills in more narrow fields, and these were needed by organisations.
"There is a huge cultural problem which is reinforced by industry but also by family, parents and schoolteachers. Business has a huge responsibility to explain what we are about. We need young people to be better informed about business and manufacturing so that choices can be made more objectively. "
He said both government and industry had to do a big selling job in explaining the difference between GNVQs, NVQs and other qualifications. "I think it is all a muddle. If you could have a single agency for work-based training or work-specific training at school or work, this would help solve the problem.
"The new government needs to set up a body to draw on the expertise of the private sector, the Training and Enterprise Councils, the Chambers of Commerce so that there is a mechanism for communication."