Alistair Darling has been forced to scrap his proposals of taxing foreign profits but the problem has not gone away. The probability now is that the chancellor is so dizzy from performing U-turns he chooses to sit back and do nothing.

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Is a slow recovery better than an imminent crash? Governments are trying their best to ensure stability even if it means a long haul: business might be better off seeing the economy allowed to sink to its natural level now so that the recovery can start sooner.

The housing market offers an easy analogy of the choice. If property values are 20 per cent too high, then six years of flat prices while inflation creeps up at 3 per cent would bring values back to their equilibrium level. Alternatively, prices would be allowed to crash by 20 per cent now and then start rising again as soon as the market has bottomed. That analogy can be applied to stock markets, consumer confidence, business profits or the whole economy.

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Unemployment used to be caused by a lack of jobs. Now it is caused by a lack of skills. The jobs are there, but not for those unable to do them. The need to produce a better qualified workforce is imperative.

Government has a role – not in creating jobs, however, but in giving incentives to learn. And companies have a role, not simply providing the education that schools fail to supply but in giving workplace training that schools and colleges are unable to give.

If government is to throw money at the problem it should not now be by creating make-work schemes, but in helping employers provide that training.

Britain currently has six million unskilled workers and nine million who are highly-qualified. The review by businessman Lord Leitch for the government forecasts a rapid fall to just 500,000 skilled jobs but an increase to 14 million highly-skilled positions.

Somehow five million unskilled people have to be replaced by five million high-skilled employees – otherwise there will be five million unemployed unskilled people.

Tony Blair set a target of half the population going to university. A brave Gordon Brown would abandon that objective and concentrate on 95 per cent of the population acquiring useful skills. For half the population to have on-the-job training would be much more useful, whether they are apprentices or researchers.

That means employers becoming the new teachers. But as it is employers that will benefit from a qualified workforce, they should be eager to take on this role.

It really doesn’t matter what the exams are called so long as the certificate has value. Employers who have had to work out how GCEs compare with GCSEs or NVQs will now have diplomas to trade off against A-levels. But if the new qualification can raise educational standards and provide a measure of practical skills, it is worth the added complication.

The big problem with the existing system is that despite more students getting higher grades, employers can see that they are less well educated than previous generations. And what is taught is increasingly less relevant to the workplace.

A diploma that recognises practical skills is thus welcome. It is in the employers’ short-term interests that English, maths and IT are core components of the new curriculum, but it is in the students’ own long-term interest that they emerge with such key skills.

It may be politically expedient to postpone the review of A-levels’ future until 2013 even though the new diplomas start in 2008, but it is also sensible. Running the two exams in parallel will allow employers to compare their value.

The diplomas must not be allowed to become a second-rate qualification however, recognised by employers while universities continue to prefer A-levels. It is imperative that diplomas are not simply handed out to those unable or unwilling to sit A-levels but that they set a standard at least equal the existing exams.