Training and education for young people and adults is failing to address the country's skills shortages, inspectors warn.

As much as 60% of on-the-job training available in England is inadequate, the Adult Learning Inspectorate (ALI) said in its annual report.

We are now looking to the providers in the sector to deliver change

Margaret Hodge, Minister for Lifelong Learning and Higher Education

And up to a third of young people starting a modern apprenticeship - for example in hairdressing or plumbing - appear never to complete their qualification, the report says.

Of the 300 training providers inspected, just one was judged to be outstanding and over a half had poor leadership and management.

ALI inspectors - who oversee all publicly funded work-based training for people over 16 - are concerned that the 300,000 young people and adults training for apprenticeships are being ill-prepared for employment.

The ALI report revealed that key skills - communication, numeracy and computer skills - are the biggest single cause of youngsters' failure to succeed in a modern apprenticeship.

Unpopular with learners and training providers alike, these areas were often left to the end of the programme or left out altogether.

Many people who go into work-based training often have poor basic skills, but inspectors reported that many training providers are poor at identifying these weakness and do not have basic skills teachers in place.

This country needs more vocational training, better work-based learning

David Sherlock, chief inspector

But the report is not all bad news, with the ALI finding evidence that more than 70% of providers with an unsatisfactory area had improved within a year.

ALI chief inspector David Sherlock said: "We must not make apprenticeships a soft option, or betray the young people and their parents who see an apprenticeship as preparation for a career, not just a job - but we do need to be realistic in tackling things which do not work."

"This country needs more vocational training, better work-based learning. We must not allow an apprenticeship system similar to those which work well in other countries to founder," he warned.

Blow to government

The findings are a blow to the government which is keen to address the skills shortage and improve basic skills among adults and young people.

The Minister for Lifelong Learning and Higher Education, Margaret Hodge, said the report re-enforced the need for reforms in work-based learning and in further education.

The report says the country's skills shortage is not being addressed

"Improvements are needed in the delivery of work based learning and we are working together with the Adult Learning Inspectorate and the Learning and Skills Council to make the necessary changes," said Mrs Hodge.

"We are now looking to the providers in the sector to deliver change. They need to be clear about their strengths and focus on these."

The government would take action against those providers who refused to "move in the right direction", she added.

Margaret Murray from the Confederation of British Industry said young people who did not want to go onto university were not being given enough information at school about the options open to them.

"A bright young person who comes in who is motivated and well-trained can add enormous value to a business," Ms Murray said.

Adult Learning Inspectorate

The ALI was established in April 2001 under the Learning and Skills Act 2000 to raise standards of education and training in England.

ALI inspectors are responsible for inspecting all publicly funded work-based training for people over 16 and learning for post-19 year olds.

The ALI is also responsible for inspecting learning in prisons, all adult and community education and e-learning via "learndirect" provided on-line by the University for Industry.