Grammar schools are the only way, if you don't have schools who test their pupils on entry, you'll have einsteins in the local state school held back and bored out of their skulls. I think all private schools should be turned into grammar schools as well though.
The main advantage of grammar schools (from what I've heard) is that they try to encourage and stretch the talented people to get more out of them.
Most comps just try and drag up the bottom line. (Certainly the one I went to tried to do this, there was so much focus on GCSE students at the c/d boundary it was unreal).
I think what we do need is a two tier education system. The government should stop wasting resources funneling everyone through GCSE's when it's clear they don't help a significant number of people. How many people really care from day to day about the liberal welfare reforms, Iambic pentameters, or the solution to a quadratic? At the age of 14, I would like to see a larger split into academic and vocational educational routes.
Outlaw private schools, more taxes on the highest income earners and grades across the board will increase.
Not sure whether grammar schools are the right idea, but I think more emphasis needs to be put on pupils in state schools, pushing them to do the right levels (for them) and the grades that the pupils attain.