The Deputy Prime Minister has unveiled  a new scheme to try and tackle the “ticking time bomb” of 16 and 17 year-olds who are not in education, employment or training (NEET).

Nick Clegg announced a £126 million allocation on Tuesday to help more than 55,000 teenagers with no GCSES at grade A* to C.

The new scheme is part of the youth contract announced last November and will use a ‘black-box’ payment-by-results scheme for businesses and charities.

Mr Clegg, speaking at the Groundwork Hub in south east London, said: “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.

“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.”

The announcement follows record levels of youth unemployment, now at 1.04 million, as well as a significant rise in the number of people not in employment, education or training (NEET), released by the Department for Education (DfE) last week.

Graham Hoyle, chief executive of the Association of Employment and Learning Providers (AELP), said: “This is what AELP has been pressing for over many months since it became apparent that youth unemployment was on the increase.

“We are pleased that the DfE has listened to our calls that their NEET programmes should offer training providers maximum flexibility in offering personalised solutions to individuals to overcome the barriers that prevent them from securing a job or further learning.

“For too long, government funded schemes for 16 to 18 year-olds have been too tightly linked to securing a qualification, when first landing a job as a result of a scheme might be a better outcome for the individual.”

The new scheme, which will offer firms a maximum of £2,200 for helping a young person back into education, employment or training, has been designed to try and support teenagers who are at the greatest risk of long-term disengagement.

Businesses and charities will receive an initial payment for taking on a young person, followed by payments based on a successful outcome of re-engagement and sustained re-engagement of at least five months.

A document detailing the contract information for the scheme, written by the Young People’s Learning Agency (YPLA), DfE and Department for Work and Pensions (DWP,) shows that an initial payment will will only be made once a young person has “an effective and clear action plan” for re-engagement.

The initial payment will be no more than 20 per cent of the ‘unit cost’ for any young person starting the programme before September 2013, reducing to 10 per cent for any learner accepted thereafter.

A re-engagement payment, made up of no more than than 30 per cent of the ‘unit cost’, will be issued for positive outcomes including full-time education or training, participation in an apprenticeship or a job with accredited training, or attending  part-time education with re-engagement provision  for at least three months.

Payments for sustained outcomes, which start at 50 per cent of the ‘unit cost’ but rise to 60 per cent after Septermber 2013, will be given out once a young person has completed at least five months of their chosen education or training.

The document suggests the support could  be personal, one to one help and advice, specialist support to keep young people safe and well, or free from drugs or alcohol.

Neil Carberry, director for employment and skills policy at CBI, said:  “This announcement is a step forward, but we remain concerned that this programme does not go far enough.

“We still need to see urgent action in schools to minimise the risk of young people becoming NEETs in the first place, through better careers and study advice and improved business-school links.

“It is right that private and third-sector providers are tasked with delivering this initiative on a payment-by-results basis, but they will need to work closely with local authorities, schools and other public agencies to make sure the scheme delivers.”

The document says organisations will need to set out a detailed pricing model over the lifetime of the contract once they are invited to submit a bid at the invitation to tender (ITT) stage.

The deadline for submitting the pre-qualification questionnaire (PQQ) is March 5.

The ITT document will then be sent to shortlisted organisations by March 20, with full tender submissions to the YPLA closing on May 02.

The document states each bid will need to demonstrate the organisation’s ability to deliver on the programme, as well as a detailed track record of relevant successful experience.

Children and Young People’s Minister Tim Loughton said: “Providers know how best to support young people back into education training and employment.

“We are looking forward to receiving some innovative ideas that really work from experienced organisations in all sectors.”

Contract amounts in each region will be proportionate to the amount of NEETs calculated to be in each area during 2010.

The government has emphasised that successful organisations will also need to sign a declaration confirming they will not apply for funds through the programme if they are receiving a similar type of provision elsewhere.

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  1. Even in the current frenzied climate around A Certain Supplier, i assume we’ll see the usual (private sector) suspects hoover up this money, because you need to be pretty huge to take the risk of only getting £220 a punter with what will need to be a pretty hefty upfront investment.
    The problem I have with payment systems that are this extremely back-weighted is the providers are *bound* to go for the “low-hanging fruit”. We need a pot of money that says “just go and spend it, we know big successes are going to be incredibly hard, so just get out there and do what you can” and give it directly to properly small community orgs so “management fees” aren’t being creamed off by large private companies as is alleged to be happening with The Work Programme.

  2. My understanding is that firms can get a maximum of £2,200, not £220, for every young person? Or are you referring to the initial payment of only 10 per cent after September 2013?

  3. I can’t agree with Steve Hewitt that his approach would be a good one. Payment-by-results may drive a certain amount of prioritisation in terms of supporting those closest to outcomes into outcomes initially, but it also drives supporting a number of the harder-to-help group if profit is to be made (if the contract is so set out, as it is in the WP and as it would appear to be in this youth contract). His recipe is to give a large amount of money to small organisations to deliver whatever they want – I would argue that this would certainly lead to greater inefficiency and less value-for-money for the taxpayer. Indeed, why shouldn’t the government adopt a similar ‘give them lots of money for no incentive’ approach to the larger providers? Because it wouldn’t work because they would have no incentive to succeed. The same applies to smaller providers.

    Incidentally, I do not share the scepticism towards management fees, because contract management does actually cost a great deal of money. If my organisation is anything to go by, subcontracting is actually a great deal less profitable than direct delivery. We do it in part because the specialism that subs provide can improve our service, and in part because we have to subcontract if we want to win any business. We certainly do not do so in order to rip off other organisations or ‘top-slice’.