It said that schools should be set a tough new target requiring them to get at least 70 per cent of teenagers to pass GCSEs in English and maths at grade C or better by 2007.

Digby Jones, the CBI’s Director-General, said that schools were letting down 130,000 pupils a year by failing to reach this standard. Only 46 per cent of school-leavers have gained at least a grade C in both subjects on average since 1997.

The employers’ organisation said that this meant that two million students had left school with inadequate levels of literacy and numeracy since Tony Blair took office. Many of them faced a future of unemployment or low-paid work because they could not read, write or add up properly.

Mr Jones called on Ruth Kelly, the new Education Secretary, to set the target in a government White Paper expected early next year in response to the Tomlinson report.

Mike Tomlinson, the former Chief Inspector of Schools in England, has proposed replacing GCSEs and A levels with a diploma for students aged 14 to 19.

The CBI opposes the reform, which is predicted to take a decade to implement, because it argues that schools will be distracted from the more pressing task of raising standards of literacy and numeracy.

“Business is yet to be convinced that reforming the exam system is the best way to improve basic skills. It wants assurances that reform will change what young people achieve, not just what qualifications are called,” Mr Jones said.

“The school system must produce people ready for the world of work in the context of a fiercely competitive globalised 21st-century economy. That means the right attitude, an appetite for hard work and at least being able to read, write and count. Our goal is higher standards, not new structures.”

The CBI plans to publish its own “basic skills action plan” in the new year, setting out ways to achieve the target.

This will include a call for ministers to extend the literacy and numeracy strategy from the early years of secondary school to cover pupils aged 14 to 16. The CBI said that the strategy should tell teachers what to teach and how best to go about it.

“High skill levels are the greatest protection that any of us can have from the challenges of globalisation. That’s why it’s so worrying that so many youngsters are being condemned to a low-skilled poorly paid future,” Mr Jones said.

“My fear is that many who cannot read, write or add up properly will find themselves unemployable and the problem is only going to worsen.

“This is a scandal but it is not a new scandal. It’s not a problem that has been created by this Government. Indeed, ministers have done a lot to chip away at the problem since 1997. But let’s be honest, no political party has cracked this one.” He said that the CBI intends to make basic skills a key theme of its lobbying with all parties in the run-up to the general election, expected in May.

“Business is not interested in the blame game or excuses. What we want is action with cross-party support. Let’s get together as a nation, put the illiterate and innumerate at the top of the agenda, and produce tangible results.”

The move comes after a CBI survey showed that 47 per cent of companies were unhappy about the level of school leavers’ basic skills. A spokesman at the Department for Education and Skills said: “The Tomlinson report proposed that all young people acquire basic skills in literacy, numeracy and ICT as part of a new diploma qualification for 14-19 year olds. The Government will respond in the new year.”

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