Raising the standard of education and training is one of the most important ways Britain can compete in the global economy of the next century and raise the living standards of the poorest third of the population, according to a wide-ranging report.
The Joseph Rowntree Foundation Inquiry into Income and Wealth discovered that the gap between rich and poor grew dramatically after 1977, reaching higher levels than any recorded since 1945, writes Susan Young.
The report, which was published this month, found that between 1979 and 1992, the poorest 20-30 per cent of the population failed to benefit from economic growth - despite the promised "trickle-down effect" - in contrast to the earlier post-war period. The growth of such inequality was faster in the UK than in any other country except New Zealand. These findings, however, have been criticised by right-wingers and the Social Market Foundation, a free-market think-tank which argued that the Rowntree report failed to consider benefits in kind, such as the NHS and education.
The inquiry team found multiple causes for the gap, including more dependence on benefits for single parents and unemployed people, and a widening difference between earnings and benefits income.
Differences in income from work had grown rapidly, they found, with hardly any real-terms change in hourly wages for the lowest-paid men. Education now had more of an effect on both wages and employment, and these differences increased in the past decade. The report says: "It is hard to overstate the importance of raising education and training standards in Britain for the problems we have described.
"Education and training may succeed in moving many further up the ladder of international competition in skills. But they will take time to have that effect, and as others will be trying to do the same, some of the extra effort will be required just for us to stand still."
Wider access to high-quality pre-school education, partly to allow children to break the pattern of their parents' low achievement, is cited as vital.
The report also wants recognised vocational qualifications valued both by employers and students. Despite recent increases in staying-on rates, Britain still lags behind its industrial competitors in the proportion of 16 to 18-year-olds in some form of education or training.
Members of the inquiry team, which included Howard Davies, director general of the Confederation of British Industry, also believe it is vital to promote education and training for adults. People in their 20s, who left school before the recent increases in exam pass and staying-on rates and are therefore disadvantaged in the job market, should be targeted.
Joseph Rowntree Foundation Inquiry into Income and Wealth Vol 1 and 2, Pounds 9 each. Published by the Joseph Rowntree Foundation.