Millions of people are illiterate and struggle with the basic maths needed to get by in life despite billions of pounds being spent on the problem, an influential committee of MPs said.

Even though GCSE achievement is rising, many teenagers are still leaving school without any qualifications in English and maths, according to a report by the Public Accounts Committee.

Edward Leigh, chairman of the committee, said that Britain faced dire consequences if the issue was not tackled. “This is a dismal picture, both for the many who face diminished prospects in what they can achieve in life and for the competitiveness of our country in the world economy,” he said.

Even if the Government met its targets, he said, Britain would still compare badly with other developed countries. The most up-to-date research, from 2003, estimated that more than five million people lacked functional literacy and nearly seven million were innumerate.

This is the equivalent of leaving school without a D to G grade GCSE in English or maths and being unable to read labels or count the change given when making a purchase.

The report said that, despite the Government spending £5 billion between 2001 and 2007 on trying to improve levels of literacy and numeracy, England still had an unacceptably high number of people who could not read, write or count.

It said: “The Department for Innovation, Universities and Skills has helped no more than one in ten of those with numeracy skills below the level of a good GCSE.

“Lack of up-to-date information on the skills of the population means that the department cannot be sure that its programmes are equipping people with the skills that the UK economy needs to remain competitive.”

The report found that more than 50,000 pupils left school in 2007 without achieving a grade D to G in maths and 39,000 failed to achieve this basic grade in English. It said that remedial action would be needed later in life to correct the deficiencies in skills. The authors of the report recommended adopting new approaches to recruiting maths teachers, such as targeting specific graduates and making it easier to train in different ways, including through distance learning.

The report also said that more effort should be made to help illiterate prisoners. “Only one in five offenders with very low levels of basic skills had enrolled on a course that would help them,” it said. “This represents a major lost opportunity.”

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