Government's strategies to raise the standard of Britain's workforce are failing, Education and Employment Secretary Gillian Shephard admits in a leaked report this week.
The Labour party's leak of a draft document on lifetime learning will seriously embarrass ministers in the run up to the autumn Budget statement by Chancellor Kenneth Clarke next week.
Mrs Shephard's admission that progress towards national learning targets has been far too slow provoked a furious row at the Association for Colleges' annual conference this week. Principals said that they had issued repeated warnings of the damaging effects of Government policy.
In a further blow to the Government, Labour published what it claimed were official figures revealing Government plans to cut spending on key training initiatives over the next two years.
The leaked report says: "The scale of current lifetime learning remains well below the levels required."
It is a first admission of failure by the Government in the light of figures indicating the dramatic gap between targets for the year 2000 and the current level of education and training.
Only 40 per cent of the British workforce - two thirds of the target - have reached NVQ level 3 standard. Only 8 per cent of large organisations have been recognised as Investors in People, against a target of 70 per cent.
The document adds that only 7 per cent of people over 25 are pursuing qualifications, while 30-40 per cent of people of working age expect never to undertake any further education or training.
It also acknowledges a risk that growth in training spending by employers could "plateau" as firms which are reorganising their structures are expected to need fewer permanent workers in future. And there will be a greater proportion small and medium-sized firms who are less likely to invest in training.
The admission is particularly alarming for colleges as the Government had pledged to act following a 50 per cent slump in the number of employers taking up college day and block-release places for their young employees.
Mrs Shephard told delegates at the AFC conference in London that the lifetime learning targets were achievable. She stressed the need to "convince people that learning pays".
But AFC chief executive Ruth Gee insisted targets could never be met without more Government investment. "You can't just be pious about your aims. You have to have mechanisms for enduring change," she said.
The paper rules out the option of further cash support. It says: "The Government believes that current voluntary framework for employers' training is the right route to effective investment in schools and learning by business. "
Labour shadow education and employment secretary David Blunkett called the paper "a mouse of a document". He added: "While it may offer a diagnosis, the Government fails to offer the answer."
Labour training spokesman Stephen Byers said the Government plans to cut cash for Investors in People by Pounds 8 million. The Skills for Small Businesses scheme would lose Pounds 2 million.