BUSINESSES must let education bosses know what they are looking for in employees if the skills gap holding back the North-East economy is to be closed, a Government expert has said.

Hugh Tollyfield, deputy director of higher education employer engagement at the Department for Education and Skills, said the Government had worked hard to create a demand-led skills strategy and it was now up to bosses to make the most of the opportunity.

He warned that businesses must be prepared to put their hands in their pockets and share the cost of training.

Speaking ahead of the North East Chamber of Commerce's Future of Skills seminar, at Durham County Cricket Club, in Chester-le-Street, Mr Tollyfield said: "The message for business is that we are creating a demand-led system, so start demanding.

"Many businesses, no matter what their size, do care about skills and do invest in training.

"The problem is that if we want to win the battle for competitiveness and productivity that we are talking about, there has to be more investment and it has to be smarter."

Professor Tony Cockerill, Camelot Professor of Applied Economics at Durham University Business School, told more than 80 businesses attending the seminar that there was a major mountain to climb, because the North-East lay at the bottom of the UK regional rankings on skill levels. He said that was having a serious effect on productivity. He warned slower growth meant the gap between the North-East and other regions was growing.

Tom Crompton, executive director of Learning and Skills Council County Durham, said: "We are on the periphery of an island which itself is on the periphery of Europe. We are up against it."

However, he said £320.5m was being invested in improving higher education in the North-East and there was a growing willingness among employers to take part in key training programmes.