Reverse VAT cut now, says Clegg

Mr Clegg said the UK risked creating a "jobless generation"

The temporary VAT cut should be ended immediately to pay for up to 800,000 young people to do work internships, Lib Dem leader Nick Clegg has said.

The government has reduced the VAT rate from 17.5% to 15% until the end of the year as part of its "fiscal stimulus".

But Mr Clegg argued the money would be better used providing three-month internships for those aged 16 to 24 who are not in work, education or training.

The Lib Dems also want a temporary increase in university places.

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

Job search help

In a speech in Newcastle, Mr Clegg called the VAT cut "pointless" and demanded the creation of an internship scheme, with those taking part earning £55 a week rather than claiming job seekers' allowance.

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

The people who deserve least to be punished because of the problems of this recession are the young Nick Clegg, Lib Dems

Mr Clegg added: "This recession is at risk of leaving the most poisonous legacy of all: a jobless generation.

"Parents used to worry about whether their children could get on to the housing ladder. Now the concern has spread to whether they can even get a job.

"The government's shamefully inadequate response allows young people to fester on benefits for almost a year before offering real help, while the Tories are typically silent on what they would do."

In an interview with the BBC's Chris Brierley, he said youth unemployment should be the government's "top priority".

He added: "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 put on a course towards long-term unemployment.

"This recession is, in my view, creating the real risk of a jobless generation and that's an absolute tragedy, because the people who deserve least to be punished because of the problems of this recession are the young."

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

The Liberal Democrats' policy paper - A Lifeboat For The Lost Generation - also calls for a temporary increase of 10,000 university and college places.

The party says there should be a guarantee of work, education or training to those who have been out of work for three months, rather than the current 10 months.

Official figures released last month showed that the number of young people in England not in employment or training had risen to 935,000.