Businesses have increased the amount of money they spend on training by 16% since 2005, according to the Learning and Skills Council's National Employer Skills Survey.

In one of the most extensive pieces of research of its kind, the survey - which featured responses from 79,000 employers - revealed that companies spent £38.6bn on training in 2007; an increase of £3.5bn in real terms once inflation has been taken into account.

The average money spent per employee on training increased by 11%, from £1,550 in 2005 to £1,750 in 2007.

The number of vacancies that can't be filled due to a skills shortage has fallen, meanwhile, from 25% in 2005 to 21% in 2007. This now affects 5% of employers.

"The need to improve the nation's skills is a key priority for the government as we face increasing competition from across the globe," said John Denham, Secretary of State for Innovation, Universities and Skills.

"It is vital for everyone - businesses, employees and government - to work together to ensure we have the skills we need to succeed.

"It is very encouraging to see that 77,000 more companies trained their staff last year and I urge all businesses, regardless of size or sector, to follow their lead and invest in training."

"These findings are extremely encouraging," added Chris Banks, chairman of the Learning and Skills Council. "Never before have so many employers invested so much in staff training their workforce.

"Employers are clearly seeing that training is helping to shape the future of their businesses and is the solution to their skills needs. The challenge now is to encourage more employers to invest in their staff in this way, so that we can close the skills gap further."

The LSC also reported a rise in take-up for its Train to Gain service, which aims to give employers access to the right type of training for their business.