Pencil, ruler, fretsaw: The new National Furniture School hopes to provide skilled graduates for Britain's craft industry

Most students of furniture conservation would be pleased to get their hands on a Boulle marquetry cabinet from the 17th century. But for those at Buckinghamshire New University, there is a bonus. The side cabinet they are restoring is from the Royal Collection, acquired centuries ago by a British monarch. A unique scheme between the Royal Collection and the department of furniture at the university in High Wycombe has given students access to furniture in royal homes, including Buckingham Palace, Windsor Castle and the Palace of Holyroodhouse.

Students have worked on location to assist in the conservation of four royal thrones, including the present 700-year-old coronation throne at Westminster Abbey. They have also restored chairs from the guest suite at Buckingham Palace and furniture from Clarence House, which was used by the Queen Mother.

The Royal Collection of furniture and decorative objects includes priceless pieces from across the world, acquired by or gifted to successive monarchs over 500 years. The Queen and the Duke of Edinburgh have put a new emphasis on restoring the treasures and making them available to the public through exhibitions and access to the palaces.

"Everything has to be functional; it is restored rather than conserved. A chair has to be sat on, a desk has to be used. The Royal Collection is looking for restoration with a conservation bent so it retains its character and still looks nice and shiny," says Paul Tear, the former head of conservation at the Wallace Collection of antique French furniture, who now runs the BA course in furniture conservation, restoration and decorative arts.

David Wheeler, the senior conservator for the Royal Household, who hunts down suitable pieces, says he insists that students work on items that go back to the state rooms or are part of the working palace, and "not any old piece out of storage".

"We pay for the materials and contribute to the course. It benefits both because it means that the students get the chance to research and work on valuable and historic items, while we can increase the number of pieces which are restored and brought back into use," he says.

There is, according to Wheeler, renewed interest in the crafts and the restoration of period objects. "The crafts have survived in the UK but they need support and a much better attitude towards technical skills because there is still the deep-seated view that working with your hands is somehow a second-rate career," he says.

Although Britain's manufacturing base has been gradually eroded, the furniture industry has survived and there are still more than 12,000 companies in the UK making a wide range of products, from hospital beds and aircraft seating to one-off domestic commissions fetching well into five figures.

More affluent consumers are now fuelling a boom in bespoke and hand-made pieces in lighter woods. John Lewis has launched a range of hand-crafted light oak pieces from Ercol – the UK's largest manufacturer of solid-wood furniture – that is a reissue of the spindly English elm tables and chairs fashionable in the 1960s.

But there is a cloud over the success story: the lack of skilled workers, a shortage that has helped to fuel the trend for companies in this country to outsource work to factories abroad, notably in China. There is concern that craft skills, such as upholstery and wood machining, are dying arts among the younger generation, says Terry Watts, the chief executive officer of the Proskills Group, the sector skills council for manufacturing. "Despite the impact of the recession, our research has suggested many traditional bespoke, craft-based companies operating in niche markets have managed to maintain a good level of business," he says. "However, there is a real danger that the shrinking number of people with craft skills will damage the performance of this sector in the future as there will be nobody to replace the ageing workforce."

As so often, the finger points to schools, where woodwork and metalwork benches have been either dismantled since the national curriculum was introduced in the late 1980s or are used for making CD holders and pencil cases out of cardboard. In most schools woodwork, metalwork, needlework and technical drawing have been swallowed up by craft design and technology, renamed design technology and now "resistant materials".

The support of craft in schools is one of the key aims of the National School of Furniture, launched last month by Buckinghamshire New University and Oxford and Cherwell Valley, a further education college that provides courses in woodwork and other crafts. Together they will offer a full range of furniture-making and -conservation techniques, from City & Guilds certificates in furniture production, diplomas and apprenticeships to undergraduate and Masters degrees and PhD research projects. The new furniture school will liaise closely with the industry, raise the profile of furniture making and provide an umbrella for excellence, says Chris Hyde, the programme manager of Rycotewood Furniture Centre at the Oxford college.

The subjects that get young people interested in furniture design and making have largely disappeared and pupils often do not recognise it as a career option, says Lynn Jones, the manager of the university's furniture department and head of the new national school. "Recently, I was at a school where there was a well-equipped workshop and pupils were sitting at benches. When I looked more closely, they were making pencil cases out of paper and cardboard. I could not believe my eyes," she said.

Tying education up with the industry is the bottom line, so we are not producing the people that it doesn't need, she says. "In my day, the people coming into the industry tended to be those who loved making things; they were the children who made Blue Peter models. Now, it is rare to get someone coming in with technical drawing skills, even at postgraduate level, unless they have studied architecture. Universities have people turning up in droves to do graphic design, where there is a massive over-supply and not enough jobs. Furniture, on the other hand, has a very high employment record because there are far fewer graduates."

Despite the general loss of craft subjects, a few secondary schools continue to offer them, such as Princes Risborough School in Buckinghamshire, which is competing in My Big Furniture Idea, a schools competition being run by the new furniture school, for which pupils design outdoor seating for their schools.

All Princes Risborough pupils study wood products in the first year, then plastics the next and metal casting. All are expected to take a technology GCSE and, since the arrival of a new head and deputy of the department a year ago, product design has become the most popular technology option. "The figures are going up and the students enjoy making things by hand – when it works well, then they love it," says Charlotte Loveland, the head of department, an architect who retrained as a technology teacher. "Things are beginning to change, but a lot of parents still have the perception that craft subjects are not so important. The pupils themselves know they are no easy option."