Clegg: Spend VAT rise on helping young jobless find work

VAT should be immediately increased to fund a new scheme to help Britain's growing army of young unemployed, Liberal Democrat leader Nick Clegg urged today.

The tax was cut from 17.5 per cent to 15 per cent by Alistair Darling in the Government's "fiscal stimulus".

It is due to go up again at the end of the year, but Mr Clegg said the money would be better used now to pay for up to 800,000 young people to do work internships.

He said in a Newcastle speech launching his party's policy paper, A Lifeboat For The Lost Generation, that he wanted three-month placements for those aged 16 to 24 who are not in work, education or training, and a temporary increase in university places.

Mr Clegg said those on an internship scheme should earn £55 a week rather than claiming jobseekers' allowance.

Employers should also be obliged to help participants search for a permanent job.

There are thought to be almost one million people young people in England without jobs or training.

Mr Clegg told the BBC youth unemployment should be the Government's "top priority".

"We're proposing to give young people the hope that they can stay active, stay in study, stay in work, stay in training, rather than find themselves on a course towards long-term unemployment.

"This recession is creating the real risk of a jobless generation. The people who deserve least to be punished are the young."

Mr Clegg said the whole cost of the scheme would be the same as "just two days" of the VAT cut.