Margareta Pagano: Raise the school age to six to boost British literacy

After 11 years in compulsory, and free, education just over a half of all teenagers taking GCSEs achieve less than Grade C in English and maths, while a growing number of youngsters are leaving school semi-illiterate.

This is not only a national disgrace but a disaster of catastrophic proportions, since educating our young to the highest levels of literacy is the most powerful force to improve the social and economic future of the UK. Since 93 per cent of our population is educated in the state sector, it should also be considered a national emergency.

That's why business leaders such as Sir Terry Leahy, boss of Tesco, and Sir Michael Rake, head of BT, were right to whip up the educational debate last week when they criticised the literacy levels of the young men and women they employ. It's rare that business leaders wade into such political waters, and it's even rarer that they get the subject right. Hopefully, they have made enough noise to get the politicians worried. But don't hold your breath. As Lord Jones, the ex-CBI president, says, CBI members have been lobbying government for years about low levels of literacy lowering our ability to compete in a globalised world, where "China wants our lunch and India wants our dinner".

So what's to be done? We know the British are good at education – we have some of the best schools in the world. Just look at our private schools – their pupils are four times more likely to get three straight As at A level. Nearly 12,000 private-school pupils achieved a hat-trick of As, compared with 10,090 across all our comprehensives, in the summer. Many top comprehensives, and former grammar schools, have similarly excellent grades, but they are in a minority. More worryingly, the gap is widening.

I don't believe for a moment that the failure of our schools is to do with money – most Continental countries have 30 to a class. Instead, it's all to do with fostering a culture of, and love for, learning, not just in our schools but in homes and local communities. This is what has been lost as governments exhaust teachers and pupils with tests upon tests, set political agendas with vacuous lifestyle classes, and fiddle with the curriculum to such an extent that many teenagers are allowed to drop subjects such as geography and languages at the age of 13.

But – and witness the current controversy on this – by far the greatest handicap we impose on our children is forcing them to start formal learning at four. Many get frustrated or put off school because they are just not ready. If we want to lift our game, we should follow the suggestions in the Cambridge Primary Review last week which argues for a lifting of the school age to six years old to improve literacy. It is no accident that children in the countries with the world's highest literacy levels – Norway, Finland, Hungary and Sweden – don't start school until they are six, if not seven.

Not only do they catch up within a year, but they then outperform us. Professor Robin Alexander, the report's author, drops even more dynamite with his claim that it is children from poor backgrounds who are held back most by our teaching methods. Messrs Leahy, Rake, and Jones should get together with the professor to make sure education stays burning right at the top of the agenda.

Flaky figures Martha's bitten off more than she can chew

Martha Lane Fox is such a class act. Everything she has done has been with quiet aplomb which, considering her youth and celebrity, is rather impressive. But I found it hard to believe some of the extraordinary numbers she published last week. As the Government's Digital Inclusion Champion, she has been researching the impact on people of not being online. Households, she said, can save £560 a year by paying bills on line. The 1.8 million children in families which are not internet savvy will lose £10.8bn from reduced lifetime earnings. And an unemployed person going online could increase their worth by £12,000. Really? Not only are the numbers too precise, I wonder where we are supposed to go with them. I do hope Lane Fox hasn't taken on a job too far.

Don't panic about hedge-fund reform, just make sure they get it right

Listen to the noise whizzing around the City right now, and you'd think the EU's draft directive on hedge funds and private equity firms is like a Blitz that's about to wipe London off the map. Each day there's a new survey warning that billions will be lost to the City if the directive goes through, while yet another report last week, from Boris Johnson, London's Mayor, says it will knock the city off the financial stage.

As ever, the truth is more subtle. The draft directive will have a financial impact on hedge funds because it requires tighter regulation and more transparency, but it will do so for firms across Europe. Of course, it will have a bigger impact on London because 80 per cent of the business is based here. While the directive does go over the top in some respects, it is only asking the hedge funds to comply with capital adequacy rules already operating for banks and, as many of them operate as banks, this should be supported.

Vince Cable, the Lib Dem's shadow Chancellor, put it well at a private conference last week by warning that the UK should be careful not to try to compete as an "on-shore tax haven" and that begging firms that threaten to jump ship is "irrational" since there is still a long way to go in getting the regulations changed.

It's interesting to know where Cable stands because the job of arguing the British case at the EU falls to a Liberal, the MEP Sharon Bowles. She chairs the committee – which includes other British MEPs – that will negotiate amendments to take out the more protectionist elements of the directive. If we want to ensure the draft directive is changed to protect our interests, which we should, then Johnson and Co should blew their hot air across the Channel to help Bowles build her case. Ironically, we are on the same side as the French – they don't want to loose their financial centre either.