The trouble is that education is rightly seen as the key to economic success - personal, in that people with degrees on average earn much higher salaries, and national, as a more highly qualified workforce raises productivity and living standards. The creation of a high-skills economy is at the heart of policy. It was highlighted in the Competitiveness White Paper published at the end of last year, for example. But upskilling the work- force has been a key policy aim for decades, which suggests that despite all the efforts to improve education and training there is something Britain is still getting wrong.
For example, a survey carried out early in 1997 by Skope, a skills and knowledge research centre at Oxford and Warwick Universities, found the level of educational qualification had improved since 1986 but too many people now hold intermediate level qualifications that over-qualify them for their current job. The proportion of jobs requiring anything above A-level had risen, but only from 20 per cent to 24 per cent. The proportion needing a degree rose to 10.8 per cent.
A fascinating new edition of the Oxford Review of Economic Policy (Oxford University Press, telephone 01865 792212 or e-mail firstname.lastname@example.org) addresses the links between knowledge, skills and competitiveness. In the introductory article Ken Mayhew and Ewart Keep note that part of the confusion is a haziness about what we mean by skills.
It is true that the British economy has been mired in a "low skills/low quality equilibrium" - a situation where many companies do not demand highly skilled workers because they produce low- value-added goods, and workers do not seek to improve their skills because there is no demand for them. Government policies since the late 1980s have addressed the supply side of this problem, trying to train more highly qualified employees, and failing to address the lack of demand for skills.
This problem is pressing. The authors say: "Though it is too easy to be apocalyptic about the consequences of competing at the low-skill end of the global economy and to over-emphasise the impact thus far on Britain of globalisation, the message for the future is pretty clear. A UK business which produces low-spec goods or services in a tradable sector is likely to be in competition with producers of similar goods not just in developed countries but in developing ones."
The problem of shifting from a low to a high equilibrium is more than a matter of better education and training. Skills and knowledge form one element in a web of factors needed for improved economic performance. One paper in the review, by David Finegold, analyses "high-skill ecosystems" in California, where skills are part of a package of environmental, cultural and structural conditions that permit high-productivity and generate enormous wealth. Everything from the political and legal framework to the road and telephone system matters.
This was recognised in the DTI's White Paper, which emphasised the importance of clusters - shorthand, really, for creating such high-skill ecosystems. The editors of the Review write: "For the first time in the last two decades there is an explicit recognition that there is an enabling ... role for the state." This includes a government role in rebuilding the UK science base and improving the corporate record on research and development.
And, of course, in providing through the education and training system the calibre of workforce needed by business. But the White Paper, and the policy debate more generally, shifts between two extremely different types of skill or knowledge. One is abstract, academic knowledge of the kind that the elite part of the university system has always been geared to deliver. This is the sort of classic educational achievement that enables a country to stay at the forefront of technological progress, especially now the frontier of the economy is so heavily knowledge-based thanks to the scientific and IT revolution. People with these abilities - not necessarily scientists, but anybody reaping the harvest of an elite liberal education - can become what Robert Reich, the former US Labor Secretary, has called "symbolic analysts". They are the professional elite of a modern economy.
On the other hand, in an increasingly service-based economy, the skills needed are not at all academic but interpersonal and communication skills. These might not need much in the way of conventional educational attainment at all. On the contrary, young people who rebel against the straitjacket of academic success and literacy hours could turn out to be precisely those who will do well in less totemic but hugely important parts of the weightless economy. They could be the personal trainers and designers, musicians and football stars of the future.
The lessons for the education system are clearly not straightforward. As Keep and Mayhew conclude: "As is often the way with academic commentators,we stand open to the accusation of having a problem for every solution."
And certainly, education is a central element in economic policy. There is no doubt that Britain has fallen behind in educational achievements of all kinds, academic and vocational. So in a sense it does not matter what sort of education policy the Government has as long as it really means it.
At the same time, it would be a shame to repeat in education in the 1990s the mistakes made in, say, industrial policy in the 1960s. Although we need all our children to be numerate and literate to a higher standard, Whitehall cannot plan and deliver the sort of workers the British economy is going to need.