Compulsory education or training to the age of 18 and a new right for employees to take study leave are needed to ensure that a “lost generation” of British workers can compete in the global economy, the Government was told yesterday.

In his two-year review of Britain’s skills crisis, Lord Leitch called for radical change in the way that young people and adults are trained.

“Without increased skills, we would condemn ourselves to a lingering decline in competitiveness, diminishing economic growth and a bleaker future for all,” he said.

Britain trails far behind countries such as France, Germany and the US in productivity and skills and is heading towards “undistinguished mediocrity” in these areas, he cautioned.

Training the five million functionally illiterate Britons and the seventeen million who can scarcely work out their change in a shop was vital if the UK were to compete effectively against the developing economic giants China and India.

Lord Leitch, a former chief executive of Zurich Financial Services, said that the benefits of his reforms to the UK economy would be worth £80 billion over 30 years.

While employers’ organisations, unions and education providers broadly welcomed the focus on employer-led skills, there were reservations from the Association of Colleges and Universities UK about proposed funding changes.

Explore Entrepreneur

• Start-ups

• SME