The Government’s New Deal will need to accommodate employers’ and charities’ concerns that a growing proportion of the target group are ‘unemployable and unteachable’. Education and Employment Secretary David Blunkett has pledged to help “our most disadvantaged young people” in the so-called New Deal.

He unveiled details this week of the four options to put 250,000 long-term young unemployed back into work, a place on an environmental task group or voluntary work - all with high-grade training - or back into full-time education.

But many charities and big businesses fear at least 60,000 young people will slip through the net because of a lack of cash to prepare them to take up options. Their fears were heightened by Government confirmation in this week’s detailed plans that draconian measures - including fines and cuts to welfare benefits - will be used to persuade those reluctant to accept an “option”.

Mr Blunkett has made some concessions to the charities. More costly schemes, separate from the mainstream four options, will be available for agencies which work with down-and-out young people. He singled out the “foyers” - local rehabilitation centres which combine housing with pointers towards education and training - as the type of group he would welcome bids from.

But no cash figure has been put on the separate contracts, which will be determined locally. Money has, however, been earmarked for other parts of the New Deal, including a scheme to help at least 20,000 young unemployed people start their own businesses, Charities seeking involvement are still sceptical. While they are pleased the foyers have been given due praise, they are concerned that Mr Blunkett’s plan will not reach the hard core of “unteachable and unemployable” 18 to 24-year-olds.

Big employers, including Jaguar, Kwik-Fit and Powergen remain to be convinced that the cash will be there for the basic rehabilitation and training this group needs even to take part in a New Deal option or join a company.

When it came to the new scheme to train young business people, Mr Blunkett was precise about the cash and support that would be offered. Young entrepreneurs whose business plans are accepted will be given training in book-keeping, marketing and other related activities. Armed with loans, wages worth at least their welfare benefits, a start-up grant of up to Pounds 400 and a contract with specialist providers such as the Prince’s Trust, they will swell the ranks of Britain’s aspiring Bransons and Conrans. “We want to remove the barriers that have prevented the jobless from becoming job creators,” he insisted.

The benefit to employers who take on a young unemployed person was also spelled out in detail: between Pounds 40 and Pounds 60 a week depending on the length of the working week, including college day release or training.

Employers will be told not to lay off more expensive staff to create vacancies. A confidential hotline will be available for employees to report abuse of the scheme.

The first stage for all options is the Gateway which lasts up to four months. The priority will to be find a suitable job with help from counsellors, mentors and job-skill training. Special support will be available for those with exceptional difficulties (homelessness, drug dependency or debt). Plans have also been drawn up to help people with disabilities and to counter discrimination against ethnic minorities.

But the big charities working with the most destitute, whom they believe need extra help to get past the Gateway, have been asking tough questions about funding. They include Drive for Youth, headed by newscaster Martyn Lewis, and Fairbridge, which won a Pounds 1 million National Lottery grant last week.

Major employers have told Mr Blunkett that they cannot take the poorest achievers without preparatory training. Evidence from the United States and Australia shows that if the bottom 25 per cent lacks this extra support, the entire New Deal will collapse.

Andree Koval, director of development at DFY, said: “It costs Pounds 3, 000 to put a young person through our 17-week course and this more than prepares them for the Government’s New Deal. Without it they have no hope of any of the four options.

“All will benefit from Welfare to Work if they are first removed from this spiral of debt, unemployment, homelessness and, sometimes, crime.” (See case studies, below.) “We can get two-thirds of the cash from grant-raising trusts and industry if the other Pounds 1,000 comes from the Government. ” Seven of the biggest charities, backed by Jaguar and other industry giants, have formed an alliance to press Mr Blunkett for a better deal. The number of long-term unemployed 18 to 24-year-olds has fallen to 178,000 and this, they argue, should have released cash for those in greatest need.