Youth contract: What are the lessons of the past?

Youth unemployment hit 1.02 million in the three months to September

Work experience and training for more than 400,000 young people, at a cost of £1bn. Sounds familiar? Well, it is.

That was the description of the Youth Training Scheme (YTS) launched back in 1983. That £1bn was, of course, in 1983 prices.

Spool forward to 2011, and the coalition government is launching a new scheme with some similarities. Its £1bn will clearly not go as far as the YTS money nearly 20 years ago.

The principle of paying an employer a "wage subsidy" is another common theme, so too the number of places available.

Gordon Brown's new deal employment option also involved subsidies for employers.

A "six-month offer" subsidy introduced in 2009 gave all unemployed people out of work for more than six months, including youth jobless, the option of taking a £1,000 voucher to offer any employer who would take them on. It was phased out a year later.

So how successful were these previous schemes? The Centre for Economic and Social Inclusion argues that "subsidies have tended to have very low take-up".

It also points to research suggesting the subsidies may have been too low to influence employer behaviour. But the Centre says evidence from the United States reveals success in transitional job schemes for those furthest from the labour market.

Private sector support

Labour has accused ministers of a U-turn for scrapping the previous government's future jobs fund and then introducing its own youth jobs initiative.

Whitehall sources point out that the future jobs fund placed people in the public sector or community organisations and that they did not always learn marketable skills.

By contrast, the youth contract is aimed at private sector opportunities. The aim is to match people up with employers who might go on to offer them real jobs.

The drawback is that it depends on the willingness of private sector companies to step forward. At a time of economic uncertainty, that may not be as straightforward as ministers hope.

There is nothing new about placing unemployed young people in positions subsidised by the government.

What is hard to prove is to what extent employers would have taken those trainees on anyway, without financial assistance from Whitehall.