Brown's bad deal: £3.8bn jobs drive for the young is failing, says OECD

It found that job prospects for 16- to 24-year-olds had fallen and increasing numbers were out of work.

The figures are another dent in Mr Brown's record at the Treasury, where the New Deal was one of his flagship initiatives. 

Stalled: Gordon Brown's New Deal jobs scheme for young people is struggling in a climate of rising unemployment

The report from the highly-influential Organisation for Economic Cooperation and Development found that the scheme had cost £3.86billion since its launch by Mr Brown in 1997.

It said early success in driving down unemployment among the 16 to 24 age group had gone into reverse.

The report - Jobs for Youth: United Kingdom - pointed out that youth unemployment in other OECD member countries was falling. Yet in Britain the rate hit 14.4 per cent last year compared with 11 per cent in 2002.

At the same time, the total employment rate for the age group has dropped from 60.9 per cent in 2002 to 55.9 per cent last year.

The report concludes: 'While the main activation programme for young people in the United Kingdom - the New Deal for Young People - has helped many youths return to work, sustainable employment outcomes have proved difficult to achieve and there are signs that the programme is no longer as effective as in the early days.

'In 2007, one in five young people who found work through the programme held a job lasting less than 13 weeks. As a result, the most difficult clients alternate short employment spells with benefit dependency.'

The report singles out how unskilled teenagers find it more difficult than their counterparts in the EU to find work.

It says those with qualifications do better than elsewhere, but unskilled 16- to 24-year-olds contribute to employment rates below the OECD average.

The report found that a low-skilled youth in the UK was five times more likely to be unemployed than a skilled youth, the second worst rate in the OECD.

Fewer than half of school leavers who obtained A-levels, five good GCSEs or an equivalent vocational qualification found themselves in work a year after starting their job search.

The OECD urged the Government to take vigorous action to help young people find work or stay in education or training. It called for the fine-tuning of Government plans to introduce new employment schemes and extend the school-leaving age in England.

Academic and vocational qualifications should be simplified and apprenticeships improved, with more involvement from trade unions, the report said.

Gender segregation in apprenticeships should be tackled and more youngsters from ethnic minorities offered places, the OECD added.

The New Deal for Young People has received the lion's share of the cash handed out under a wider scheme also targeted at pensioners and lone parents.

Reducing youth unemployment was one of the five pledges Labour campaigned on in 1997.

Chris Grayling, Tory work and pensions spokesman, said: 'This report highlights the failure of Labour's welfare policies which have let down a generation of young people.

'Young people need early intervention, high-quality support and long-term employment, as Conservatives set out in their plans for welfare reform last January. Gordon Brown's New Deal is simply not up to the job.'

A Government spokesman said: 'The picture for young people in employment, training and education in this country is improving but more needs to be done.

'We welcome the fact that the OECD recognises much of the gains made, including the considerable improvements in youth employment.'