COLLEGES and businesses should work closely together to improve skills of British workers, according to Education Secretary Ruth Kelly.

Speaking to a specially invited audience of 100 business and education leaders at the University of Bolton, Ms Kelly said: "We face huge challenges to improve the skills of our workforce at all levels if Britain is to compete effectively in the gobal marketplace."

Ms Kelly said there needed to be "much closer collaboration" between academia and commerce if Britain was to catch up with fast-emerging economies such as those in Korea and China.

"India and China each produce two million IT graduates per year. For Britain to keep up with such a trend, the need for more effective collaboration between business and education is critical.

"We are making progress in improving the skills of young British people entering the workplace, but not rapidly enough. By 2012, two-thirds of all new jobs will require qualifications of A-level and above."

Ms Kelly was told about a new initiative from the Greater Manchester Chamber of Commerce, Bridging The Gap, to examine how higher education can provide better-prepared workers. The initiative comes after a survey by the Chamber which revealed that companies wanted graduates who were quick learners with strong communication skills, among other qualities.

Paul Norris, of the Bolton chamber, said: "Universities should consider the skills that need to be nurtured within students to enable them to hit the ground running when they graduate and take up employment.

"They also need to focus on business engagement so that the local busines community knows what services are available, so that student placements can be sourced and closer ties developed."

Ms Kelly said that new vocational style foundation degrees would play a vital part in the process.