In March 2000, the European Council in Lisbon set out a ten-year strategy to make the EU the world's most dynamic and competitive economy. The core elements of the Lisbon Strategy were the  creation of a stronger economy that can drive job creation alongside social and environmental policies, ensuring that sustainable development and social inclusion are achieved with economic growth. In 2005 progress against the Lisbon goals was reviewed by the European Council of ministers.

The 2005 Spring Summit of the European Council of Ministers considered the mid-term review of the Lisbon Strategy and the report produced by the high-level group chaired by Wim Kok (the Dutch ex-Prime Minister). The summit reaffirmed the importance of the Lisbon goals: see, for example the Council (Education, Youth and Culture) (2005) 'Lisbon Council conclusions on Education and Training in the framework of the Mid-Term Review of the Lisbon Strategy' and the Kok report 'Facing the Challenge: the Lisbon strategy for growth and emploment' that was published in November 2004 and analysed progress towards achieving the objectives of the Lisbon Strategy. The report analysed the strengths and weaknesses of the EU economy, as well as the potential for the EU to become the world’s most competitive economy by the year 2010. The key recommendations for change put forward by the Kok report are divided into five policy areas: (a) the knowledge society, (b) the internal market, (c) the business climate, (d) the labour market, and (e) environmental sustainability.

The core of the Lisbon Strategy is the  creation of a stronger economy that can drive job creation alongside social and environmental policies that can ensure sustainable development and social inclusion are achieved with economic growth. The Kok Report concludes that delivery of the strategy in the last 5 years has been disappointing; it finds that the agenda has been overloaded, coordination has been poor and there have been conflicting priorities. The report is critical of EU Member States for a lack of determined political action in implementing the Lisbon agenda’s economic reform programme.

The key message from the Kok Report is that while all three pillars of the Lisbon strategy – economic, social and environmental – remain valid, the priority is for Europe to boost its economic growth rate and increase employment. Europe faces two enormous challenges – increasing global competition and a rapidly ageing population. In the face of these challenges, if Europe is to safeguard and strengthen its distinctive economic and social model, it must adapt and reform.

The Kok Report sets out a series of recommendations to help achieve the Lisbon goals in five broad priority areas:

• The Knowledge society: R&D spending is too low in the EU. Tax incentives for enterprises that invest in research should be encouraged; public-private partnerships should be facilitated and encouraged as a means of boosting investment.
• The Internal Market: Member States should implement EU legislation in a timely fashion.
• Creating the right climate for entrepreneurs: a balance must be found between regulation and competition.
• Building a flexible labour market for stronger social cohesion: Member States should develop a comprehensive 'active ageing' strategy by 2006. An active ageing strategy requires a radical policy and culture shift away from early retirement towards three key lines for action: providing the right legal and financial incentives for workers to work longer and for employers to hire and keep older workers; increasing participation in life-long learning for all ages, and improving working conditions and quality in work.
• Working towards an environmentally sustainable future: Eco-innovations should be developed and promoted.

Finally, the report sets out proposals for better communication of progress with the strategy, using benchmarks and league tables designed to name and shame the non-performing member states.

A review of how the UK is faring in this context was commissioned by DfES from the Work Foundation in December 2004 and the report 'Where are the gaps? An Analysis of UK Skills and Education Strategy in the light of the Kok Group and European Commission Midterm Review of the Lisbon goals' by Will Hutton and The Work Foundation was published in March 2005. The report looked at four key areas:

• where the UK is doing well
• where the UK is falling behind
• where there are significant differences between Member States and
• what can be learned from other Member States.

The Executive Summary emphasised how:

'1.....central to this effort will be the development of a UK version of what the Kok Group and Midterm Review describe as a comprehensive lifelong learning strategy. This is an essential building block in the delivery of a higher quality labour market with highly trained and educated citizens more capable of not only realising their potential, but creating and enjoying the fruits of a knowledge economy.

2. Comprehensive lifelong learning is understood as the provision of an interconnected, universal system of education and training that permits high-quality learning from the early years to retirement. It allows learners to earn recognised and clearly understood qualifications, and to build on them over their lives with credits earned in formal and informal learning settings that will promote their employability, help realise their personal potential and make them better citizens. In creating such architecture, Britain suffers from a legacy of low levels of basic skills for many workers, moderate educational achievement, and an incoherent and insufficiently valued skills training and skills development system. Perversely, over the same period it has sustained a high proportion of Europe’s top universities.

3. However, recently there is good evidence that the UK is moving innovatively within its own cultural and institutional context to remedy these deficiencies while capitalising on its strengths. Significant progress has been made in creating an emerging comprehensive lifelong learning system, which we believe is likely to be continued. Potentially, the so-called 'human capital gap' that has plagued Britain for more than 50 years can now be closed.

4. The evidence suggests that skill levels are rising. Nevertheless, while the quality of labour entering the labour market has improved, much remains to be done for those already at work.....

5. The three policy innovations of establishing Sector Skills Councils (SSCs)and Employer Training Pilots to enlist employer buy-in; the proposed reforms to 14–19 education and training provision in the recent White Paper; and the work underway by the Qualifications and Curriculum Authority (QCA) to establish a credit-based system for adult learning could offer the UK the framework for lifelong learning that it currently lacks. But much more needs to be done.

6. One drawback facing all EU states is the lack of understanding by government, employers and individuals alike about the paybacks from education and training....

7. The government must give a clear signal that its current commitments to institute credit-based learning for adults will be integrated with similar commitments for 14–19 years olds into a simple, well-understood system of comprehensive lifelong learning.....

8. There must be parity of esteem between the academic routes and the vocational routes....

9. In this respect, the proposals for vocational training in the White Paper on 14–19 education are important. The 14 proposed learning lines, the involvement of employers and HE in ensuring their usefulness, the requirement that they meet generic functional requirements, notably literacy and numeracy, and the potential to combine academic and vocational qualifications, will greatly improve the quality, reputation, coherence and focus of vocational training. Importantly, the work is yet to begin; only four diplomas will be ready by 2008.

10. It is a much more fine judgement than many critics recognise whether the government could have integrated the vocational and academic routes as mapped by the Tomlinson Report at this moment, when the gap in standards and perception of value between the two are so great. A further test of the government’s resolve will arrive in the 2008 review when the opportunity to bring the two systems more closely together, or go further as Tomlinson proposed, will re-present itself: the development of the learning lines will be a reality rather than an intention, which will start to improve both the perception and reality of vocational education so that the gulf will be less wide. Parity of esteem between vocational and academic education must remain the ultimate goal – the core of a system of comprehensive lifelong learning – for which a common diploma framework represents the best avenue.

11. With this in mind, the government should refer to GCSEs and A Levels askey building blocks of the new system rather than as cornerstones, as it did in the recent White Paper....

12. These risks (of presenting the vocational route as the route for those who do not achieve on the academic route) can be mitigated to the extent that employers engage early in establishing the vocational diploma route as a credible alternative to the academic route, to the degree that the Higher Education establishment select those taking a diploma as readily as those taking A Levels, and if the rhetoric around GCSEs and A Levels changes....

13. The proposed new General GCSE diploma is also welcome. It strengthens the core areas of Mathematics and English so that employers will have greater confidence in young recruits’ numeracy and literacy, as well as bringing still better alignment with European conceptions of what ‘Upper Secondary’ achievement should include....

14. ....the success of the government’s reforms need to be judged against two criteria: the eventual capacity to create a genuine system of parity of esteem between academic and vocational routes ensuring a system of comprehensive lifelong learning for all; and the capacity to ensure the ongoing support of academically excellent institutions.

15. The role of Sector Skills Councils (SSCs) as the main institution for employer engagement is also critical....

16. Alongside the entitlement approach introduced in the skills strategy as away of raising minimum skills levels and engaging individuals, there is a case for reviving Individual Learning Accounts (ILAs) in the future in a more carefully managed form, with a particular focus on training to Level 3 and above....

17. The Further Education (FE) sector is a crucial part of the necessary mobilisation of training. The system is poorly co-ordinated, under-resourced, under-valued and offers a multiplicity of diplomas of varying quality whose overall coherence and usefulness for both learner and employer is often difficult to assess. The proposed 14–19 learning lines will bring a welcome new focus to the diploma structure, and the Foster Review is to make recommendations on how the FE system can be better structured and governed....

18. Success in building a knowledge-based economy requires a flourishing university sector. Universities are key drivers of innovation, both in terms of producing graduates and researchers and as centres of research excellence....

19. The Lambert Report and the Science and Innovation Investment Framework for 2004 give the UK an excellent road map to ensure that the university and business sectors are both exploiting potential links....

20. Knowledge cities or so-called ‘ideopolises’ are key drivers of the knowledge economy and were identified by the Kok Group as an important focus for future policy. There needs to be still closer co-operation and collaboration between the key policy elements that together contribute to successful ideopolises (airports, universities, business linkages, finance, telecoms, ICT, transport, creative arts policy and architecture) and various arms of government (ranging from Regional Development Agencies to central government) in order to achieve real momentum in the development of such cities.

21. The UK now has the emergent institutional infrastructures to move from alow-skills/low-tech equilibrium to a high-skills/high-tech economy. Given the rapidity and strength of the competitive challenges globalisation is bringing, the case for this is unanswerable. However, much political and institutional will is required to ensure that the UK along with the rest of the European Union becomes a dynamic knowledge economy in the future. The re-focused Lisbon Strategy offers a useful way to achieve these goals. The UK, which initiated Lisbon both in its own interests and those of the EU, should take the lead.' (pp 4 - 8).