The credit crunch is likely to put an end to the extreme dominance of financial and business services in graduate recruitment from Britain’s leading universities. This could give rise to much more competitive recruitment between the main professions, of particular benefit to education, engineering, the public services and industries beyond finance. Employers need to seize this opportunity to recruit the brightest and the best.

As an Oxford student and later tutor in the 1980s, I witnessed at first hand the dramatic shift in graduate career aspirations that took place as the City rose to preeminence in the salaries, esteem and excitement it offered to new graduates. Teaching, once the leading graduate career, was already in decline, as the spectre of the blackboard jungle in undersupported schools reinforced poor financial rewards. Between 1970 and 1995 the proportion of Oxford graduates going into teaching fell from about 10% to 3%. The annual number proceeding to law, accountancy, banking and management consultancy - mostly in the City - rose from about 300 to 900. “Only the management consultants, it seems, rival the glamour of the investment banks,” reported the Oxford careers service in 1994.

It wasn’t only teaching that suffered. Almost all nonCity careers - including the civil service, local government, postgraduate research leading to academe and other industrial sectors - were cast into the shade. In the early 1990s I recall Lord Dainton, the era’s great champion of engineering, regretting that the “enhanced engineering” courses he had pioneered to give engineering graduates project management skills had come largely to be taken up by engineers en route to management consultancy, not industrial management as intended. At the time, this flight to the City seemed an irreversible trend. It was exacerbated by the precipitate decline of the UK’s industrial base; by the neglect of the public services and of long-term public infrastructure investment; and by the failure to modernise the public service professions. For example, the continued requirement for state school teachers to undergo a long, unsalaried and often gloomily irrelevant training for a job still anachronistically presented as a “career for life” further undermined the appeal of the classroom.

Even in the era of City dominance, ambitious public service investment and reform could make a notable difference. Witness the remarkable success of Teach First in the past five years. A state-backed but independently managed and branded scheme that targets top graduates willing and able to teach for two years in city comprehensives, training them over the summer after graduation and supporting them intensively, Teach First last year had 2,000 high-flyer graduate applicants for 380 places. More than half of each cohort is staying in teaching, attracted by accelerated promotion opportunities in schools. The government recently doubled the places available.

Now is the time for public and private employers to follow suit, pitching for the best graduates with challenging training programmes. John Kay, the economist, writes of the wider social context: “The scale of resources the [financial] sector demands, its financial rewards and its political influence are all excessive. It sucks in talent that would be better employed elsewhere and distorts the value of whole societies.”

As a new generation of graduates revalue their expectations, employers can seize this crucible moment to establish themselves as careers of choice for the most able, driving a new British spirit of public service and industrial ambition.

I am glad to see Network Rail taking a lead. In the mould of Dainton, the rail infrastructure operator has launched a dedicated masters course for a new generation of railway project managers. Eighty graduates were recruited for the first year-long course just started (run in partnership with University College London and the University of Warwick); this has been increased to 120 for 2009 in response to the number and quality of applicants. This is a bold investment in talent in a field where Britain once led the world.

When I visited Japan last month to study its successful high-speed rail system, its transport minister told me that Japan’s first railways were built by Edmund Morell, a British engineer, in the 1870s. This is the time for Britain to seek to regain its world-class engineering skill base and to lead in new industrial sectors such as low carbon technology. This will happen only if pioneering companies recruit top talent now.

The civil service and local government must be similarly bold. Applications to the civil service fast stream are a third up on last year; as I see myself, the quality of new recruits is high. Yet neither the civil service nor local government have the confidence, esteem and esprit de corps they deserve as employers. Britain will not renew itself after the downturn without officials with a mission and capacity for public service to match the best in France, Germany, Japan and other countries that never suffered our public service decline in the 1970s and 1980s.

Lord Adonis is minister for transport

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive