The Government has accepted the Wolf Review of Vocational Education and announced plans to ensure that more young people leave school or college with a good grasp of English and maths.

The move will address concerns that standards of literacy and numeracy among young people are not good enough.

This year's annual skills survey from the CBI found that more than two-fifths of firms are not satisfied with the basic literacy of school and college leavers. More than a third are unhappy with levels of numeracy. In 2010 only 55% of young people managed a C or better in GCSE English and maths.

This recommendation was among those proposed by Alison Wolf when she published her review of vocational education in March.

Education secretary Michael Gove (pictured) accepted all her recommendations as the Government published its response to the review. Wolf has agreed to take a formal role within the Government to help implement them.

In her report Wolf proposed a package of radical reforms designed to overhaul the current flawed system. She said thousands of 14 to 16-year-olds are on vocational courses that the league table system encourages but which do not help children progress.

More than 300,000 16 to 19-year-olds are on courses that do not lead to higher education or good jobs. The report also found high-quality apprenticeships are rare and an increasing proportion are not offered to those aged 16 to 18. The funding system should be revamped because it offers perverse incentives that work against young people's best interests, it said.

Gove said today that the Government will:

• Ensure all young people study maths and English to age 18 until they get a good qualification in those subjects. Ideally this will be a C or better at GCSE but high-quality alternatives will be identified following a consultation this summer
• Reform league tables and funding rules to remove the perverse incentives that have devalued vocational education. This will mean more young people take the high-quality qualifications that lead to university and good jobs
• Consult with employers, schools, colleges, universities and Ofqual this summer to define the criteria that the best vocational qualifications must meet
• Introduce a new measure to assess the performance of both higher- and lower-attaining pupils. This will ensure schools and colleges do not focus only on students on the C/D grade borderline
• Consider paying businesses that take young people onto high-quality apprenticeships. Apprenticeships will also be simplified and made easier to offer
• Support 14- to 16-year-olds enrolling in colleges so they can benefit from the excellent vocational training available there
• Offer training to maths teachers so they continue improving and learning once qualified. This will be in place by the autumn.

When Wolf published her review, the Government immediately accepted four recommendations:

• to allow qualified further education lecturers to teach in school classrooms on the same basis as qualified school teachers. This requires a change in the law
• to clarify the rules on allowing industry professionals to teach in schools. This will be ready for the coming academic year
• to allow any vocational qualification offered by a regulated awarding body to be taken by 14- to 19-year-olds
• to allow established high-quality vocational qualifications that have not been accredited to be offered in schools and colleges in September 2011.

Gove said: "The weaknesses in our current system were laid bare by Professor Wolf's incisive and far-reaching review. The changes we will implement as a result of her report will take time but will transform the lives of young people. I am pleased Professor Wolf has agreed to work with us to implement them.

"For too long the vocational education system has been devalued by attempts to pretend that all qualifications are intrinsically the same. Young people have taken courses that have led nowhere.

"Good qualifications in English and maths are what employers demand before all others. Young people must be able to demonstrate their understanding of these subjects.

"We will reform league tables, the funding system and regulation so children are given honest information and take the right courses. We will make sure that employers are more involved in the system. We will encourage them to offer more high-quality apprenticeships.

"Our reforms will ensure that vocational education is again given the high status it deserves."

Wolf added: "For 20 years we have toyed around with vocational education but succeeded only in creating a bureaucratic and expensive system that limits the life chances of too many young people.

"There are many excellent vocational qualifications, teachers and institutions - they are the examples that should be the norm. They prove that vocational education is a great choice for many young people.

"I am delighted the Government has agreed to implement the changes I have proposed. They must be made if vocational education is to be a great choice for all young people, as it is in so many other countries, and I look forward to working with the Government in taking them forward.

Skills minister John Hayes said: "Vocational education matters because it enriches lives, inspires ambition and builds economic prosperity. But, as Alison Wolf has detailed, many qualifications offered to young people fail to provide progression to higher learning or employment.

"Today we have outlined how we will take forward key recommendations in her report; spreading opportunity by encouraging and supporting all that is excellent in vocational education, including apprenticeships, helping us produce a new generation of craftsmen and women capable of building Britain's future."