A radical rethink of higher education is needed because graduates are leaving university with the wrong skills to get work, former trade minister Lord Digby Jones said today.

The ex-director general of the CBI warned universities should take some of their focus away from degrees because students were not picking up the right skills to make it in the workplace.

Undergraduate applications to start university this September are up almost 12 per cent on last year, despite there being an average of 70 graduates applying for each graduate level job.

Birmingham-born Lord Jones, who received an honorary degree at Wolverhampton University for his services to business in 2006, said: “What the world of work needs out of universities has changed.

“A lot of them should look again and say ‘could I link in earlier with people, could I link in with schools better, could I get local businesses in better, and then can I produce something where someone is better skilled to face the challenges of today which might not necessarily end with the word degree’.”

Statistically, graduates have better job prospects than non-graduates, and also go on to earn more.

But Carl Gilleard, from the Association of Graduate Recruiters, said that degrees were sometimes seen by students as the only option.

“For some people going to university is probably the wrong way to start their working life,”he said.

However, university lecturers said it would be a mistake to discourage young people from taking a degree.

Sally Hunt, the general secretary of the University and College Union, said the UK is competing with other major economies where the number of young people with degrees is rising.

“What we should be doing is protecting what is one of the crown jewels of our country,” she said.

By Victoria Nash