British employers have long complained about poor standards of literacy and numeracy among school leavers. There can now be no doubt that they are right. A growing body of evidence suggests that Britain has a bigger problem with inadequate skills - among both young people and adults - than any other industrialised country except the United States.

The latest study of the skills gap, the International Adult Literacy Survey, carried out and published by the Office for National Statistics, shows Britain to be lagging far behind the four other West European countries in the study - Germany, Sweden, Switzerland and the Netherlands. Across Europe, around 10 per cent of the population falls into the low skills category; in Britain the figure is more than 20 per cent.

British employers may complain, but they are compounding the problem. NVQs - “competence-led” vocational qualifications developed in the 1980s - were strongly supported by business because they gave employers responsibility for defining standards and controlling assessment. They provided a means of tackling one of the pressing problems facing British companies in the late Eighties: training unskilled or semi-skilled employees to operate new equipment and to adapt to the discipline of work.

But employers ensured that the more general skills of literacy and numeracy would not be assessed in the award of an NVQ. By supporting this “no frills” qualification model, British business was sending out a message that, as long as workers could do the job, employers were not interested in general literacy skills. This was short-termism on a grand scale, and is partly to blame for Britain’s failure to shrink its low-skilled group to the size of those in other European countries.

This situation is a true paradox. Almost a quarter of the adult population has unacceptable literacy skills by European standards, and employers wring their hands. The new government promises a campaign to involve all adults in lifelong learning. But government and employers continue to promote vocational qualifications that do not require the development or testing of literacy or numeracy. Is there a way out of this contradiction?

The Dearing Report on qualifications for 16- to 19-year-olds argued, and won, the case for providing courses in basic literacy and numeracy and other basic skills in all publicly funded programmes of education and training for 16- to 19-year-olds. But NVQ qualifications remain untouched by this new policy, and the Dearing recommendation does not, of course, apply to the adult population.

NVQs have many weaknesses, apart from a lack of attention to key skills; weaknesses which can and should be remedied. But they also have strengths. They have the support of an important constituency of employers, and they develop skills and competences that are relevant to the world of work in this country. For many in work and preparing for work they are therefore worth studying for. Broadening their content to include literacy and numeracy skills would undoubtedly have the effect of motivating many adults to acquire those skills.

The aim should be to include within the NVQ framework the key skills that are currently outside it. This needs to be done without burdening employers with the cost of providing and assessing additional training. As is the case in all other European countries, the costs of acquiring general transferable skills should be shared between the individual and government.

It might be more realistic to require the full NVQ award to be dependent on the individual taking and passing an externally set test of basic literacy and numeracy - similar perhaps to those developed for the IALS survey. The initiative for preparing for the test could rest with the individual rather than with the company (along the lines of the theory paper that is now part of the driving test). Suitable courses and other help with learning could be available from a variety of sources, including the University for Industry, the workplace, or a local college. The test could be attempted as many times as necessary for a pass and administered in a variety of local centres.

The new government has wisely not closed the door on further development of NVQs and has promised “a continuing process of improvement”. Its response on the issue of key skills for all will show whether it is prepared to defend the long-term interests of adult learners. This means ensuring that insistence on the development of key skills is not confined to qualifications aimed at young people. Improving the ability to understand and communicate must become a major objective of Britain’s vocational qualifications.

Hilary Steedman is a programme director at the Centre for Economic Performance, London School of Economics. Tel. 0171 955 7789. Fax 0171 955 7595