How we can get Britain's wasted talent working

Business leaders warn coalition of 'lost generation' – and offer their prescriptions to tackle the crisis

Britain's top businessmen today warn that a generation of youngsters will be lost to unemployment without urgent action to help them into work, training or education.

They call on the Government to launch a major drive to improve the prospects of school leavers – including recognition of poor reading and writing skills – and demand tax breaks for companies who take on young people who risk languishing on the dole.

Sir Stuart Rose, former chairman and chief executive of Marks & Spencer, told The Independent on Sunday that there is a "long-term cost for society, which business needs to do more to solve" while the Dragon's Den star James Caan said firms should be offered tax holidays to employ youngsters.

The plea comes ahead of a major Downing Street summit tomorrow, at which David Cameron will press the bosses of the country's biggest retailers, manufacturers and IT companies, including Marks & Spencer, Sainsbury's, Nissan, Virgin and Jaguar Land Rover to help secure growth.

The number of young people not in employment, education or training – Neets – has risen dramatically in the past decade. And employment experts warn that young people always fare badly in recessions, as employers adopt a "last in, first out" approach to redundancy, and anxiety about job security creates fewer entry-level vacancies.

Analysis by the EU's Eurostat, suggests that Britain has one of the worst Neet figures in Europe at around one million; one in five 18-year-old boys and one in six girls are Neets. The study also shows that the number of Neets has risen dramatically from 12 per cent in 2003 to 17 per cent in 2008, making the UK worse than countries such as Lithuania and Slovakia and just above Italy and Spain. The South-west and the East of England have seen rises of around two-thirds in a decade.

Stephen Howard, the chief executive of the charity Business in the Community, said: "Young people hold the key to the future, but many lack aspiration, support and access to work. The consequences of this are stark, creating clear challenges for the nation's economic and social stability."

Ministers are resigned to unemployment rising this year, as cuts force tens of thousands of public sector workers out of their jobs. But the coalition has put improving training and skills at the heart of its industrial policy and has increased the budget for its apprentice programme, which it hopes will do much to help get the young into work. Over the next year, the budget will rise to over £1.4bn, which will provide funding to train more than 300,000 apprentices – up from 200,000 a few years ago.

Both Vince Cable, the Business Secretary, and David Willetts, the universities minister, say they are making training a priority, acknowledging that the UK is losing its competitive edge. They are also anxious about the social cost of having so many jobless.

However, concern has been expressed about the axing of Labour's £1bn Future Jobs Fund (FJF) scheme, which funded temporary jobs, mainly for 18- to 24-year-olds who had been out of work for over six months.

The IoS has learned that the decision to end the scheme a year early has led to the scrapping of 25,000 places aimed at helping young people and the long-term unemployed back into work. Stephen Overell, policy director at the Work Foundation, said the cut, along with the scrapping of the Education Maintenance Allowance, which could be claimed by 16- to 18-year-olds who stay in education, will exacerbate Britain's historical problem of high youth unemployment. "The FJF offered some kind of guarantee of jobs and training, which is quite powerful," he said. "What the coalition has decided to target in early cuts is alarming because they affect this group of young people, which is probably a mistake. What happens to young people not in the labour market tends to scar them later in life."

The Department for Work and Pensions argues that the FJF was "expensive" and increasing the apprenticeships scheme is "a much better way of getting young people into sustainable employment". However, officials admit that half the people finishing an FJF job did not return to benefits.

Sir Stuart Rose

Former chairman and chief executive of Marks & Spencer and departing chairman of Business in Community

"It is tragic that we have so many young people without work or in training: there is a long-term cost for society, which business needs to do more solve.

"Business should engage more with schools and colleges to help young people with work placements and internships; every business should pledge to take on a few young people every year to help them experience the workplace and see for themselves the jobs available.

"Just look at M&S; we have more than 50 different apprentice and training schemes, ranging from food technologists to truck drivers, which youngsters need to know more about."

"Schools should also look more carefully to see whether they are providing the basic reading and writing and numeracy skills necessary for the 21st century.

"Business in the Community helped provide up to 300,000 placements for the young with companies and plans to help even more this year."

James Caan

Dragon's Den investor and recruitment chief

"If every small to medium-sized company in Britain – there are 4.6 million – took on one unemployed person we could solve the unemployment problem overnight.

"The Government should provide business with either National Insurance holidays or tax breaks to take on these youngsters.

"We should also be making sure that the skills being taught in our schools are relevant to today's growing industries, such as green technologies, solar energy.

"We need to make sure that our youngsters are getting a good grounding in the basic sciences as we will need more scientists, technologists and engineers over the next few decades."

Gay Huey Evans

Former Barclays banker and non-executive director of the London Stock Exchange

"The Government is doing a lot to tackle the numbers of unemployed young – both non-graduates and graduates – with its training policies but, together with private business, it needs to do much more for the long-term health of the country. We should be encouraging businesses to take on more of the young and look at ways to do this – whether it is through tax breaks or other schemes. There should also be more and better careers advice in schools."

Jeremy Helsby

Chief exective, Savills Plc

"The recent economic climate has made it tougher than ever for the young in the job market. For graduates in the property sector there have been positive stories, with most companies continuing to recruit and offer work placements, although on a reduced scale. I would urge graduates to keep trying.

"Work experience is key as well as constant communication with firms to demonstrate commitment and determination. For those young people who do not have a degree but are committed to working in the industry, there are alternatives to university which may take longer but will give access into a professional career.

"The Royal Institution of Chartered Surveyors, for example, offers Assocrics, which is a stepping stone for unqualified people working in surveying to build experience over a period of three to five years, then giving access to higher education and a full qualification."

Lucy Neville-Rolfe

Executive director of corporate and legal affairs at Tesco

"The solution is to get the economy growing strongly and to get education right. It's only through having a growing economy that you can get unemployment down: then there is a framework to help people into work. Employers want to get young people working for us because they're long-term workers, but they need basic skills – not just reading and writing, but also in talking to people and working in a team. Education needs to work with employers to make sure they're getting the right skills. For example, if someone interviews well, that will make a big difference to their employability."

Carol Leonard

One of the UK's boardroom headhunters and partner of the Inzito Partnership

"If we can't improve teaching in an economic downturn, then we will never be able to. Schools should be employing the best – and retaining them. Most schools offer disgraceful careers advice. We should be explaining to our teenagers how the real world works – how to become apprentices or find other further education courses which will lead them to become plumbers, architects, scientists – proper jobs, particularly for the working classes who need the exposure to what is available. The Government, together with business, should be coming up with more innovative schemes."

Sir John Rose

Chief executive, Rolls-Royce

"We need to do better in providing young people with the skills employers require. Apprenticeships are a proven way of meeting this need. The development of University Technical Colleges is a step in the right direction. An academic system that supports the practically intelligent is crucial to ensure we provide the widest possible opportunity for people.

"Rolls-Royce has one of the biggest apprenticeship schemes in the country with 650 apprentices training with us. About half of them go on to take higher-level qualifications and 15 per cent go on to study for degrees. Around 30 per cent of its UK senior managers began their careers as apprentices."

Liz field

Chief executive, Financial Services Skills Council

"Government needs to empower education and training providers to create skills programmes which align more closely with the needs of business. Vocation-based training, such as higher-level apprenticeships, can raise the prospects of young people considerably, and ultimately help the UK back on the road to recovery.

"Business needs to communicate its requirements more clearly than it has done for policy makers and the education sector to meet its needs more fully."

View from the Dole queue

Kelly Walsh, 20

"My last job was working in a pet shop in Hastings, and I really enjoyed it. I moved to London last year but I'm still unemployed. I need qualifications to get a job, so I want to go to college when my baby is a bit older. Along with benefits I receive, my two children are supported by my husband, who works as a digger."

Karen Chapman, 27

"I can't even remember the last time I had a job interview. I've sent applications to places like Argos, McDonald's and Asda but I haven't heard anything from them. It's really hard living with the amount of dole you get and I miss working with people. It's very isolating knowing all my friends have jobs while I'm unemployed."

Lee Costello, 19

"I left school at 15, and my last paid job was when I was 16. Since then I've been trying to get a job, but Jobcentre hasn't helped. They tell you to check their database for vacancies but every position needs qualifications. I don't mind taking the rubbish jobs but even for them you need qualifications."