Gordon Brown last night told the captains of industry that Britain had to become "the education nation", tapping all of its potential to compete in a new world order faced with the emerging economic giants of China and India.

In his final Mansion House speech as Chancellor, Mr Brown, who suggested he had already begun "my new job" as Prime Minister, placed schools at the heart of his premiership and the electoral battle ahead with David Cameron, the Conservative leader.

At the City of London Lord Mayor's Banquet, he spoke of increased investment, stronger links with business, deeper involvement by parents, better quality teaching and tougher discipline.

"The prize is enormous," declared Mr Brown. "If we can show people that by equipping themselves for the future they can be the winners not losers in globalisation, beneficiaries of this era of fast-moving change, then people will welcome open, flexible, free trade and pro-competition economies as an emancipating force.

"If we can become the education nation, great days are ahead of usWe are capable of being one of the greatest success stories in the new global economy,"

he said. However, education is devolved. The differentiation between Scotland and England has already been underlined by the new Scottish Executive.

Last week, Fiona Hyslop, Holyrood's Education Secretary, announced plans to scrap the £2000 fee paid by Scottish students after graduation and yesterday she unveiled proposals to attract 300 new teachers in primaries and nurseries to reduce class sizes.

Calling for a national debate on how Britain can become a world-beater in education, Mr Brown set out the challenge, explaining how at present the nation had five million unskilled people but by 2020 it would need only 500,000. Thus, up to five million new skilled jobs had to be created.

"Quite simply in Britain today there is too much potential untapped, too much talent wasted, too much ability unrealised. So despite all the progress we have made, there is no place in the new Britain we seek for complacency and no room for inadequate skills, low aspirations, a soft approach to discipline or for a culture of the second best."

The Chancellor flagged up a proposal for a National Council for Educational Excellence bringing together business chiefs, universities, the voluntary sector, headteachers and parents. "In future, every single secondary school and primary school should have a business partner and every secondary school should have a university or college partner."

There should also be links with arts, sports and cultural communities and "every school should work with other local schools to raise standards for all", said Mr Brown.

Backing Tony Blair's academy schools, he spoke of "employer-led skills academies to transform the quality of vocational training".

The in-coming PM also spoke of a new nationwide programme giving each pupil a personal learning coach, one-to-one tuition for those falling behind and after-school teaching.

He also said he wanted to pilot a new "learning credit" to spend on extra provision for certain pupils.

And on the touchstone electoral issue of school discipline, Mr Brown referred to more attention being given to "good behaviour" and "decent manners" and revealed how he wanted Ofsted, England's education watchdog, to consider "raising the bar on what is satisfactory and unsatisfactory behaviour".