The terrorist attack on New York on 11 September 2001 caused considerable disruption to the US economy, and especially to the US financial markets. The initial reaction of the financial markets was to increase the discount factor on future profits and reduce future profit projections, and hence stock market valuations fell markedly, as can be seen from charts 1 and 2. This fall has been largely reversed since the attack, but markets have in general continued their decline from their peaks a year or so ago. Falls have been particularly precipitate since July 2001, with the German and French stock market indices falling by 20 per cent over the last three months, whilst the Canadian markets have fallen even more. Stock market falls of the scale we have seen since July are almost bound to impact on the level of economic activity in the major economies. They are likely to reduce the rate of growth of the world economy over the medium term as well as change the structure of saving and investment.

The past decade has seen fundamental policy initiatives at a national level intended to improve vocational skills and to raise school-leaving standards — particularly in mathematics. These initiatives centred on:

1. (i) the formation of a National Council for Vocational Qualifications with the object of re-designing, and imposing fundamentally greater coherence into, our previous ‘jungle’ of vocational qualifications, thereby raising their level of recognition both by employers and by potential trainees, and consequently encouraging a greater volume and higher levels of training to accredited standards of qualification;

2. (ii) the specification of a National Curriculum for schools, stipulating the main subjects to be taught, the standards which teachers need to aim for in respect of the majority of each age-group, and associated nationwide attainment-tests to be taken by all pupils at several stages in their schooling. A detailed teaching scheme, the National Numeracy Strategy, was laid down nationally for teaching primary-school mathematics (based on the Improving Primary Mathematics scheme developed in Barking and Dagenham together with NIESR using a Continental model) together with a similarly detailed scheme for teaching basic literacy.

Government has promised that Britain will build a vocational route based on apprenticeship to match that found in the rest of Europe. However, judged on the first five years of Modern Apprenticeship, every important aspect of apprenticeship in Britain will need to be strengthened and improved if the government's aspirations are to be realised.

Most vocational qualifications have been gazumped by general educational qualifications that have higher selection value, and their relative esteem is self-perpetuating. The use value of vocational qualifications depends on (1) the appropriateness of, and interconnection between, their work-related and work-based components, and (2) further work-based learning after qualification to ensure that the acquired knowledge and skills can be used in the particular circumstances and conditions of the current workplace. The NVQ experience has confirmed that detailed national specifications cannot match the diversity of workplace learning needs, so a more flexible approach is needed. Qualification policy should be based on evidence of fitness for purpose, rather than political troubleshooting or wishful thinking; and backed by a programme of incisive research.

British apprenticeship, now dependent on the Modern Apprenticeship programme, is compared in this paper to both German apprenticeship and its national predecessor, Youth Training. Modern Apprenticeship shares many of the attributes of Youth Training, and shows some improvement in terms of skills produced. However, British apprenticeship performs poorly, in terms of rates of qualification and completion, as well as in breadth and depth of training, relative to its German counterpart, despite the provision by Modern Apprenticeship of substantial government financial support. The fact that MA resembles YT more than German apprenticeship reflects continuing institutional differences between the two countries, notably the limitations of the training quasi-market in which both YT and MA have operated. The prospects for MA to flourish, let alone perform the educational role that the government envisages for it, are bleak in the absence of institutional development along different lines.