For people at work, such matters as literacy, numeracy, and social skills are warm-blooded and breathing, not dead pieces of parchment in an examination room. The problem with the woeful Teacher Training Agency computerised maths test, offering 15 seconds to do a sum while seated at a computer, is that it bears no resemblance to the context in which decision-making would take place in school. Hire a deputy head to jump up and down on trainees and swear at them if you want reality.

I remember a headteacher a few years ago who was an ace at solving on paper hypothetical problems in an imaginary school. The art teacher has fallen out with the cleaner? No problem. He was all sweetness and light, producing neatly crafted armchair solutions. Unfortunately he was a complete cretin when it came to running his own school: A plus for the armchair theory, D minus for the real world practical.

Now the Treasury has proposed that schools must prepare children to be entrepreneurs. This was followed by demands from enthusiasts that even young children in primary schools should run a business. My heart sank. Surely the wretched Acme Garden Gnome Company was not to be disinterred yet again. I thought it had been safely laid to rest.

For those with a short memory let me fill in the history. There was a craze, a few years ago, for primary children to set up a manufacturing company. Hours were spent crafting and painting hideous papier-mache gnomes, or other pieces of tasteless junk, which were then sold.

There would have been little wrong with this harmless activity, apart from the disproportionate amount of time some children spent on it, had it not been commercialised.

It was the pretence that this was real world business which spoiled it. Seven-year-old managing directors met earnestly with classmates to discuss whether to invest the meagre profits in opening another “production line” and make even more unwanted artefacts, or just blow the lot on lollipops and call it a day.

Gullible relatives, eager to help children and schools, performed a disservice to entrepreneurship by actually purchasing this debris. It was fun, but it was cushioned, not a genuine business at all: no rent to pay, no electricity bills, no charge for teachers’ time. In the cruel world of commerce the Acme Garden Gnome Company would have gone bust. As with pyramid selling and chain letters, you soon run out of friends and relatives.

In any case, customers of these futile companies could barely wait until midnight a few days later. In pitch darkness they tiptoed out and dumped their pointless products, as soon as was decent, on the nearest rubbish tip. There the gnomes lay, decomposing in a museum of failed capitalist initiatives, until the next junior entrepreneurial primary school gleefully removed and recycled them.

Real businesses must have a product or service that people feel they need and are willing to pay for over a longer period. I cannot see the point of giving very young people a largely false impression that they have acquired the key skills of the successful trader. Short of inventing a new acne cream, most young entrepreneurs would be better off developing their imagination and industry in school, and applying them later.

The solution, however, is quite simple. The Government must now give papier-mache gnomes privileged status. We should immediately set up Gnometrack, a national co-ordinating body for these diverse initiatives.

Then, even if the gnomes explode, melt, or cause global warming, huge government subsidies can be poured into the ailing companies. Seven-year-old directors will pay themselves massive bonuses, despite being technically bankrupt, and the European Union can establish a colossal multinational gnome mountain in a cave near Brussels. That’s what I would call developing key skills in a real life context.