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Many in the liberal arts establishment would argue that the purpose of education is to broaden the mind and develop critical and analytical skills without reference to the world of work. Any benefits to the economy would come as a consequence of a generally well educated work force.

But government and business have begun to take a different line - seeing education as a primary tool for industry. Unless young people are specifically trained for the world of work, they argue, the British economy will fall behind the international competition.

In the music block at John Ruskin College in Croydon, south London, a group of 17-year-olds are rehearsing their band's latest composition. Not relying too heavily on being propelled into the charts by a brief appearance on Radio Four and BBC News Online, they're all working towards conventional careers.

One of them, Darren, sees his A level exams as part of an escalating process of education that will lead to a better future.

"You're guaranteed a better career if you go all the way," he says.

Bass player J S Lindsay left the college last year after studying music. He is now doing a modern apprenticeship, learning to install PCs and software.

And the choices facing 16-year-olds can seem bewildering. As well as A levels, there are vocational qualifications: GNVQs - a general introduction to sectors such as engineering or nursing - and NVQs - which provide specific skills by on-the-job training. And leaving school does not necessarily mean an end to education - there are further education colleges too.

Doing better

The Senior Research Fellow in the Centre for Economic Performance at the London School of Economics, Dr Hilary Steedman, says more and more 16-year-olds are staying in some kind of education.

"We used to stand out in Europe with half our young people leaving at 16," she said. "Now we have around three quarters continuing in full-time education and about another 10% continuing training of some sort. So we are not losing very many now at 16, about 15% who are either working with no training or are unemployed."

But are those who stay on being given what they need? A levels still have the prestige of an educational Gold Standard, but the Principal at John Ruskin College, Anne Smith, says they may not always offer the best preparation for work.

"It's not that A level students don't pick up skills," she said, "it's that nothing in an A level course at the moment invites you to identify the skills so that you can say: 'As a three A level student doing very academic subjects I nevertheless have learned skills which will be very helpful in the workplace'."

Those concerns were echoed by the Higher Education Minister, Baroness Blackstone, who said: "It is increasingly clear that the traditional model is wrong - both for young people and for the nation."

Curriculum changes

Some change is due in 2000 - to broaden the range of A levels students study - but not enough for Anne Smith.

"I would like to see education broken down at 16 into bite sized chunks," she said. "I think it's much fairer to a 16-year-old.

"And I would like to see them able to incorporate elements of GNVQ where that's appropriate for what they want to do, and tie them in with elements of the 'academic' package."

There are new ideas being tried out - education action zones introduce young people to the world of work much earlier in their school lives, and John ruskin is part of the Croydon zone. And a new qualification is being considered - an "overarching certificate" to give equal weight and status to both academic achievement at A level and working skills acquired on vocational courses.

In the meantime the government has one critical factor working in its favour: the enduring optimism of youth.

"I think everyone knows where they are going and what they want to do otherwise they wouldn't pick the courses that they're doing," says another John Ruskin student, Alex Adja.

"At the moment I think I'm in the middle because I know where I want to go, so it's just really doing the work and things to get there."

Recruitment problems

At the Flowserve factory in Worcestershire, they know the painful practical consequences of a skills shortage. They make control valves for the petrochemical industry, and the workforce ranges from labourers to computer operators. But they cannot get the workers they want, and are moving the plant.

Practical skills 'not valued highly'

Peter McGrath, the Operations Manager, says they tried to recruit skilled machinists last year but did not manage to get any over a six-month period.

"A number of the people that applied didn't have the skills," he said. "When we finally got round to interviewing people, we found that a lot of the employers that they already worked for in fact made a counter-offer and we found that we couldn't recruit those people."

As manufacturing become more sophisticated, more and more companies face that kind of problem. Dr Hilary Steedman of the London School of Economics says there are a tiny number of people with high level vocational skills.

"Young people in this country don't really value these sorts of skills highly although employers say that they need them. Somehow we need to get this message across."

Global comparisons

Some companies simply do the education themselves. But that is expensive, and while giants like the supermarket chain Tesco can afford it, many medium sized businesses cannot, even if managers like Peter McGrath would like to.

"We're quite happy to add to people's skills, but it's very difficult to recruit people with enough initial skills to be able to progress them satisfactorily through the business."

It is an area where Britain compares badly with some of its competitors in the global market place.

"When we look at Germany we see that - if you take young people - around two thirds of them enter an apprenticeship," says Hilary Steedman. "The Germans have somehow managed to balance the costs and benefits to employers so that the costs are not too high.

"In this country we haven't managed to do that. Employers on the whole will not offer apprenticeships unless there's quite a substantial government subsidy."

More training - or else

New Labour is putting government money into modern apprenticeships. It is also proposed a range of ideas for making it possible for people to update their skills throughout their work lives. There is the University of Industry - a database of skills courses - and government-subsidised Individual Learning Accounts to help people pay for education in later life.

After 30 years' experience, Brian Hayward is a highly skilled engineer at Flowserve. He says there would be a large pool of labour available - if people had more access to training.

"Generally speaking industry has tended to shed skilled men and go for semi-skilled men, or 'dilutees' as it's sometimes known - and now find that they can no longer compete," he said. "Unless we start getting those skilled people back into the industry, we won't survive."

His boss, Peter McGrath, has a grim warning about the consequence of failing to tackle Britain's skills crisis.

"The other option is to look at the things that we really need to make and only make those things," he said. "And what you find then are, components that we have traditionally made in the past, we go and buy from some other company and those companies are often not in the UK."