In a document published today, Reforming Skills Funding - Delivering Productive Results, the business group sets out how the Government could do more with limited public funds and get a better result.
The CBI proposals include cutting back on 'nice to have' but non-essential training courses. It also calls for the redirection of some funds away from basic skills training, where the Government has already exceeded its 2010 target, towards higher-level skills to tackle skills shortages in areas as such as science, technology, and engineering.
Susan Anderson, CBI director of Education and Skills policy, said: "The Government must put the £4 billion of public money it spends on adult skills to more effective use, especially when there is pressure on the public finances and on business competitiveness.
"Raising workforce skills relies on a partnership between the Government, employers and employees. But firms need a much simpler, more flexible system of public funding to help develop higher-level skills. The challenge is to make businesses in Britain more competitive, and to give individuals the productive skills required to sustain employment."
The CBI believes the majority of the Government's adult skills funding should continue to go on helping individuals to improve basic skills like reading, writing and doing simple maths, and supporting employers' efforts to compensate for shortcomings in the education system. However, it says public funding for basic level skills can now be re-directed to programmes with greater economic returns. For example, through the Train to Gain and Skills for Life programmes, the Government has already met and exceeded its 2010 target for 2.25 million adults to achieve a qualification in basic literacy or numeracy.
The business group points out that employers are increasingly looking for staff with intermediate or higher-level skills - by 2020 it is estimated two thirds of jobs will be at these levels. It is therefore calling for greater support for apprenticeships - for school leavers and adults - to give employees the technical and work-focused skills that business needs.
Priority should also be given to investing in the STEM (science, technology, engineering and maths) skills required to boost growth in areas such as low carbon technology, which are vital for our business and industrial future.