But some of the ambitions for a better educated and trained workforce have not been met. The goal for 85 per cent of 19-year-olds achieving NVQ level 2 is nearly 10 percentage points adrift of target. A key government aim of reducing the number of young people not in employment or learning has not yet delivered results. Almost 220,000 people aged 16 to 18 are still outside the system. Nearly a quarter of all employers are unable to fill positions because of skills shortages.

Since the early 1980s the economy has changed, as technology and global competition put increasing pressure on enterprise. Workers who have not adapted are being left behind and stuck in precarious, poorly-paid jobs.

Yet policy has been in a rut. Politicians have berated employers for poor investment in skills. Business leaders blame government for failing to deliver the essentials of school-based learning. Not all employers will train, but government has been reluctant to induce and encourage employers, whilst keeping the share of public spending on training low by many international standards.

An effective skills strategy must create the right framework for employers to identify their industry requirements and collaborate. It must achieve a shift in power that strengthens vocational learning. It must listen more to market signals.

Substantial spending is needed to fix basic skills. The Learning and Skills Council’s target to help 750,000 people overcome their barriers by 2004 represents barely 10 per cent of the seven million people who need the help - those stuck at the bottom of the labour market, experiencing spells of poorly-paid and insecure employment. Only half of this group is employed, compared with more than three-quarters of the working-age population that are skilled to NVQ level 3.

Effective delivery of basic skills needs imagination and flexibility. Firms desperately want these attributes, but an oer-formal testing regime alienates employers and puts many potential learners off.

A radical shake-ups of the employer-led national bodies is needed to get relevant training. We need to accelerate the process of researching skills requirements. Then we need to fund training with a mix of public and private money.

Where public money is the main source of funding, we need minimum bureaucracy and a level playing field. Learning needs to be funded on the basis of a realistic understanding of costs and employers’ contributions.

The last government recognised its need to invest in its suppliers. A pound;10m standards fund has been announced for boosting the quality of work-based providers. However, with a more market-led, responsive system of choice for learners, many private and voluntary sector providers will bring in capital to invest in innovation and improve quality. A mixed economy is needed so the customers of learning drive the system, not the suppliers. Foundation degrees do not need to be delivered by traditional institutions. Employers and learners need to control the funding.

The funding regime gives little encouragement to providers and employers in the service sector. Yet these employers and providers work hard to include many young people who have opted out of the system, or adults with no qualifications. Recent research shows work-based learning in this sector has been the most effective way of engaging non-learners and achieving qualifications.

While public funding of special needs provision has improved recently, these learners need a progression route into real employment. Retail, hospitality and personal services have the strongest growth prospects yet are characterised by firms least able to train their staff.

The next government must ensure there are incentives for young people to participate and for providers to commit substantial growth in their capability to offer more than half a million extra learning opportunities that are required to genuinely deliver higher productivity and wider social inclusion.

Paul Convery is a member of the Association of Learning Providers (ALP) board