Proposals to replace A-levels and GCSEs with a four-tier "diploma" drew a mixed reaction today from businesses and teachers.

The Confederation of British Industry (CBI) said firms needed "some convincing" that changing the structure of the exam system would produce more people with the skills needed.

The Government's working group on reform of education for 14 to 19-year-olds is chaired by former chief inspector of schools Mike Tomlinson.

Teaching unions said the proposal to reduce the number of external exams should not add to the workload of their members.

CBI director general Digby Jones said: "The Government must aim to raise standards, not simply change structures.

"What matters is not the exam system but what young people are able to achieve.

"It is right to stretch the most able students but we must never forget the unacceptable numbers who leave school without basic literacy and numeracy skills.

"This is so damaging to UK productivity. Half of 16-year-olds do not get a GCSE grade C or above in maths and 44 per cent fail to do so in English.

"About 80 per cent of jobs in this country require five GCSEs or equivalent but half of young people finish compulsory education without achieving this.

"We agree with the concentration on vocational training - government and employers should get behind this aspect. But any reform will be measured by whether it helps those at risk of being left behind and gives them a recognisable achievement.

"Firms will take some convincing that a major upheaval would not be a serious distraction from the main priorities."

David Frost, director general of the British Chambers of Commerce, said: "We are encouraged that greater emphasis has been placed on vocational routes.

"Business wants young people to have education and training, not education or training.

"The principle objectives of the 14-19 framework must be to promote excellence, ensure rigorous assessment and equip young people with the education and skills that businesses require in the workplace.

"It is essential the employers understand the value of qualifications. It would be disastrous if a system was produced where employers did not understand the value of different qualifications."

"There are more than five million illiterate people in the UK. The central barrier to higher UK productivity is the shortage of high-level skills."

TUC general secretary Brendan Barber said: "Today's report contains much to welcome.

"While it's true that lots of pupils do very well out of the current system, their success tends to mask the fact that over a quarter of our young people currently abandon learning by the time they are 17.

"This report is a brave attempt to address this imbalance. It will establish a broad-based curriculum that will meet the needs of all young people and raise the quality and status of vocational education.

"However, it is important these reforms are tested out and gradually phased in.

"The Government must consult closely with unions on any changes to the current system."

Wednesday February 18, 2004