The Neet solution: Clegg outlines plan for young people

By Oliver Hotham

Nick Clegg will today outline the government's plan to deal with the problem of "Neets" - young people not in education, employment or training.

The government plans to allocate £126 million towards a new scheme to help those most likely to fall off the radar, offering training in basic skills and interview practice.

Businesses and charities with experience in training young people will be given the chance to bid for contracts worth £2,500 for every trainee.

"Sitting at home with nothing to do when you're so young can knock the stuffing out of you for years. It is a tragedy for the young people involved - a ticking time bomb for the economy and our society as a whole," the deputy prime minister said.

"This problem isn't new, but in the current economic climate we urgently need to step up efforts to ensure some of our most troubled teenagers have the skills, confidence and opportunities to succeed.

"Many of them will have complex problems: truancy, teenage pregnancy, a lack of GCSEs and health problems. So helping them onto their feet will not be without challenges and government cannot do this alone."

The scheme will be based on 'payment-by-results' using the same system being adopted in the Ministry of Justice to rehabilitate offenders.

Minister for children and young people Tim Loughton said that the scheme's emphasis on the use of charities and business was central to its potential success and he looked forward to "innovative ideas that really work from experienced organisations in all sectors ".

There is significant evidence that unemployment at a young age severely effects earning potential late in life. Studies show that by their early 40s, an individual with frequent periods of unemployment in their youth earns 12-15% less than their peers.