The work and pensions select committee says there is a danger that the govenrment will miss its target of getting 160,000 young people into work by subsidising their wages, while the number of people in the Neet category, young people who're not in education, employment or training, is more than a million.
Mark Hoban, work and pensions minister, described the youth contract scheme as "bold, imaginative and ambitious".
He told the Today programme that work experience, which is part of the youth contract, is a "powerful tool in helping young people into employment".
"It's a big challenge but we've got to get this right," he said.
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