Lord Leitch today published his final report, 'Prosperity for all in the Global Economy: World Class Skills', which examines the UK's long-term skills needs. It sets out ambitious goals for 2020 which, if achieved, would make the UK a world leader in skills. The report recommends and sets out a far-reaching reform agenda.

Publishing the report, Lord Leitch said:

"In the 19th Century, the UK had the natural resources, the labour force and the inspiration to lead the world into the Industrial Revolution. Today, we are witnessing a different type of revolution. For developed countries that cannot compete on natural resources and low labour costs, success demands a more service-led economy and high value-added industry.

"In the 21st Century, our natural resource is our people - and their potential is both untapped and vast. Skills are the key to unlocking that potential. The prize for our country will be enormous - higher productivity, the creation of wealth and social justice.

"Without increased skills, we would condemn ourselves to a lingering decline in competitiveness, diminishing economic growth and a bleaker future for all. The case for action is compelling and urgent. Becoming a world leader on skills will enable the UK to compete with the best in the world. I am optimistic."

The report is set against a background of economic strength and stability in the UK, with 14 years of unbroken growth and one of the highest employment rates in the developed world. The UK has significantly improved the skills base with rising school and college standards and strong growth in graduate numbers.

However, the report makes clear that in a rapidly changing global economy, with emerging economies such as India and China growing dramatically, the UK cannot afford to stand still. Despite having made good progress over the last decade, aspects of the UK's skills base remain weaker than those in other developed economies, for example:

  • out of 30 OECD countries, the UK lies 17th on low skills, 20th on intermediate skills and 11th on high skills;
  • 5 million adults in the UK lack functional literacy;
  • 17 million adults in the UK have difficulty with numbers; and
  • more than one in six young people leave school unable to read, write or add up properly.

Low skills levels can hold back productivity and growth and, if not addressed, will result in increasing inequality and the marginalisation of some groups within the labour market. The report projects that, even if current targets are met, by 2020 the UK's skills base will be inferior to that of many other developed nations. A radical step-change is necessary.

The report recommends that the UK commits to a compelling new vision - to become a world leader in skills by 2020. This means increasing skills attainment at all levels by 2020 so that:

  • 95% of working age adults have basic skills in both functional literacy and numeracy - rising from 85% and 79% respectively in 2005;
  • more than 90% of adults are skilled to GCSE level or to vocational equivalents - rising from 69% in 2005;
  • the number of Apprentices in the UK is boosted to 500,000 each year, with improved quantity, quality and esteem for intermediate skills; and
  • more than 40% of adults are skilled to graduate level and above - up from 29% in 2005.

'Economically valuable skills' must be delivered through a demand-led approach, facilitated by a new culture of learning, and an appetite for improved skills amongst individuals and employers.

To attain these goals, the system must become more efficient, responding to market needs, and Government, employers and individuals must all engage and invest more in skills development. The report identifies necessary institutional reforms and simplification.

Lord Leitch recommends radical change across the whole skills spectrum by:

  • Increasing skill attainments at all levels;
  • Routing public funding of vocational skills through Train to Gain and Learner Accounts;
  • Strengthening the employer voice on skills through creation of a new Commission for Employment & Skills, increasing employer engagement and investment in skills, reforming Sector Skills Councils who will simplify and approve vocational training;
  • Launching a new 'pledge' for employers to voluntarily train more employees at work. If insufficient progress has been made by 2010, introduce a statutory right for employees to access workplace training;
  • Increasing employer investment in higher level qualifications, especially in Apprenticeships and in degree and postgraduate levels; significantly more training in the workplace;
  • Raising people's aspirations and awareness of the value of skills, creating a new universal adult careers service to diagnose skill needs with a skills health check available for all;
  • Government to introduce compulsory education or workplace training up to age 18 following introduction of new Diplomas and expanded Apprenticeship route; and
  • Integrating the public employment & skills services to deliver sustainable employment, enabling more disadvantaged people to gain skills and find work, developing employer-led Employment and Skills Boards.

The prize for achieving this new ambition is huge - a more prosperous and productive society, with higher rates of employment, and lower levels of poverty and inequality. The report estimates a potential net benefit of at least £80 billion over 30 years, equivalent to an annual boost of £2.5 billion.

Lord Leitch concludes:

"Skills were once a key lever for prosperity and fairness. Skills are now increasingly the key lever."