Ideally, the job of education should not be to produce work-ready drones, but responsible citizens. Thus a knowledge of history, culture, politics and ideological systems is important.
The current system in the UK is failing because exams, instead of being a method of assessing progress, have become an end in themselves, a (false) measure of a schools' quality. A high pass-rate makes a school popular and more pupils means more funding.
Testing, properly used, allows teachers to measure childrens' progress against average targets across all subjects. This will enable them to find those who are struggling, and to find the differing strengths and weaknesses of individuals.
A house system, with teachers giving points to pupils for good work or good conduct, or simply for being kind, encourages both competition and co-operation. Especially when the rewards are tangible. In my junior school, classes who accumulated between them more than a set number of points -regardless of House - were rewarded with extra playtime. In my senior school, the House system was moribund, only revived for Sports Day.
In the end, it's neessary to remember that children are people, and that schools are there to produce young adults ready to take their place in society. That means a lot more than a handful of certificates obtained by two years of 'teaching to the test'.