Following the announcement from Arts Council England that sales of literary fiction are plummeting, it is suggested that arts subsidies be deployed to help writers survive. I have another idea. They should write better books.

I barely read literary fiction any more. When I do it is almost always American writers: Michael Chabon, Jonathan Franzen, Anne Tyler, Donna Tartt. Not only are the aforementioned brilliant writers, they are accomplished storytellers. But here, the form of storytelling and literary novel writing has become largely divorced.

Francis Spufford’s Golden Hill is a magnificent recent exception, and there are of course others. But on the whole, my impression of literary fiction, from Eimear McBride’s much-praised A Girl Is a Half-Formed Thing – the last literary novel I read – to the elegant tedium of (insert any number of literary writers here), is that it has lost the plot. Literally.

McBride is a superb writer. But it is fascinating how she reaches out for story and then, just after halfway through, she simply doesn’t know what to do with her driving narrative voice. Perhaps it’s because she wants to subvert story form. Or she may simply not know or care about it.

This would not be uncommon. Worrying about plot and story has long been unfashionable on the literary scene. Style and voice are what gathers plaudits. Martin Amis wrote: “If the prose isn’t there, then you’re reduced to what are merely secondary interests, like story [and] plot.” Edna O’Brien suggested plot was for “silly boys”, which might explain why men in particular are reluctant to buy literary novels.

It might also explain why, when I went to teach postgraduate students at the University of East Anglia – the foremost writing course in the country – about the fundamentals of plot, I was astonished to discover that these superbly talented young writers knew nothing whatsoever about it after years of studying the form.

This has long been the brahmin stance that distinguishes “literature” from mere novels. It consigns storytellers such as Austen, Dickens, Golding and Orwell to mediocrity or redundancy. Literary novelists have been in thrall to modernism since Joyce and Woolf, and latterly postmodernism (a more potentially entertaining template, certainly in the hands of writers such as David Mitchell and Magnus Mills).

But you can be a great writer and a great storyteller as well. Nowadays, long-form television has taken the place of most novels. What distinguishes great TV such as Breaking Bad, The Deuce, Six Feet Under, The Sopranos and many more is the power of the narrative drive. With the great fields of time and scope now opening up on TV, these series have become the new novels. If novelists want to compete they have to up their game.

I have been teaching a course at Guardian Masterclasses with John Yorke, author of a seminal text on story, Into the Woods. We called the classes What Novelists Can Learn From Screenwriters, since it seeks to unpack for novelists the psychological and mythic patterns underlying plot. It is complex – plot is one of the most mysterious and tricky of all literary techniques, which is why so many writers, I suspect, avoid it. But it is essential for any writer who wants anyone to actually read their books, rather than just be admired by a tiny coterie.

The objection is that craft hinders creativity. Jonathan Coe sums up this point of view: “I have an instinctive horror of all systems which try to reduce writing to a series of rules to do with three-act structures and narrative arcs. It’s a sure recipe for formulaic writing.” With respect to Coe – a wonderful writer – I think he’s wrong. I stand with Delacroix: “You have to learn your craft. It won’t stop you being a genius.” The trouble is, novelists have chosen to forget that there is a craft to it.

Screenwriters have three main tools in their box: story, story and story. They know it inside out, because when you have to spend thousands of pounds for each frame to be made, you make damn sure you know what you’re doing. In the past, literary writers have had the luxury of ignoring this discipline. By confirming that this luxury, for most, no longer exists, the Arts Council has done us all a favour.

• Tim Lott is a journalist and author