Ask business people in Thames Valley to name the issues that keep them awake at night, and the odds are that they will put skills and training high up on the list.

They will talk about shortcomings in literacy and numeracy, and the need to provide 'remedial' training even at graduate level.

They may mention the widespread lack of a work ethic and add how hard it is to find people with the skills they need in science, technology, engineering and maths.

This is not a short-term problem, the result of high employment levels and a strong business cycle. The fact is that the workplace is being transformed by a combination of globalisation and new technologies.

These changes present big opportunities and huge challenges for the UK. We have powerful assets to deploy in this new environment - the output of our great universities, our flair in high value manufacturing and the creative sectors, and a good number of world-leading service companies.

But we also have major weaknesses.

In particular, the UK comes out poorly in comparison with other big developed economies on the league tables of skills - especially at the basic level. If we are going to compete in the new globalised world, we have to raise our game.

Lord Leitch recognised the scale of the challenge in the report for the Government he published last year.

He called for urgent and radical changes right across the skills spectrum. Failure to achieve these goals would condemn us to "a lingering decline in competitiveness, diminishing economic growth and a bleaker future for all."

If you wanted to be polite about the Government's response to this clarion call, you would probably describe it as 'worthy'. There's a lot to be done, the new Department for Innovation, Universities and Skills acknowledges.

But think of all the progress that's already been made since 1997, it adds.

Although the Department "endorses the direction of travel" set in the Leitch proposals, it can't quite bring itself to go along at the pace he thought was necessary.

There's very little discussion about how globalisation is totally transforming supply and demand in the labour market. There are only a few paragraphs on the skills shortage in science and engineering, and not much hard detail on plans to expand the number of apprenticeships.

There's no real sense that if we fail to raise our performance significantly, we are all up the creek.

Sandy Leitch's central recommendation was that by 2010, all funding for adult vocational skills should be driven by the demands of business and of those who are being trained, not by colleges and training providers. Nice idea, says the department, but too risky to pull off in three years. This is just a fudge.

To be fair, the government does make some good points, but they do not add up to the kind of step change that Lord Leitch argued would be necessary. And meanwhile, the rest of the world is not standing still.