Figures published yesterday showed the government had made 4,690 payments of £2,275 to employers under the wage incentive element of the Youth Contract since it was set up in April 2012. These payments – offered as an incentive for employers to take on someone aged 18 to 24 who has been out of work for six months – are usually made only when a young person has been in a job for at least six months.
Lottie Dexter of youth employment charity the Million Jobs Campaign, said the figures showed the policy was not working and called for a new approach to youth employment.
She added: “We urge the government to redouble efforts on successful reforms to education and enterprise, and abandon this sinking ship, wage subsidy scheme.
“They must look at new policies that end national insurance contributions for young people and tax cuts that encourage skills and training.”
Liam Preston, policy and parliamentary officer for YMCA England, said: “The figures are disappointing and staggeringly low compared to their intended success rate.
"The Youth Contract was held up as the flagship programme to end the youth unemployment crisis and this announcement would suggest that wage subsidies do not go far enough in ensuring those who are long term unemployed are able to get back into work quickly.”
The wage incentive element of the Youth Contract was allocated enough funding to help 160,000 young unemployed people find work over three years.
The Department for Work and Pensions said the scheme "has encouraged UK businesses to offer over 21,000 jobs to young people at risk of long-term unemployment", while youth unemployment has fallen by 59,000 over the past year.
However, the low take-up means the fall in youth unemployment cannot be attributed to the wage subsidy.
The government said it was “constantly reviewing” the scheme, and that ministers will shortly announce how any money that businesses decide not to claim in wage incentives is to be reinvested in other programmes to help young people into work.
Minister for employment Mark Hoban said: “Although take up of the incentive got off to a slow start, it is now on a clear upwards trajectory – and of those employers who have already made use of the scheme, 86 per cent said they would be likely to take someone else who is eligible for the scheme on in the future.”
But shadow work and pensions secretary Liam Byrne said the scheme had “utterly failed” and the “welfare revolution we were promised has fallen apart”.
Labour has published a report from its youth jobs taskforce that found not a single employer out of 200 surveyed by the Recruitment and Employment Confederation had used the Youth Contract because it was deemed "too complex and ineffective".
The report, also criticises the lack of links between schools and small businesses, and warned that careers services are becoming "extinct" for young people.