The numbers of 16 to 18-year-olds "doing nothing" has remained constant since the early 1990s. In fact, numbers rose last year, although this was in part due to an increase in the group's population.
About 10 per cent of the age group - 174,000 people - are classed as disaffected, and only 15,000 of them receive any financial support.
Paul Convery, executive director of the Centre for Economic and Social Inclusion, says in the report that this group seems "almost impervious to the economic cycle or to action by the Government".
Despite reform of the careers service, a "learning gateway" and "New Start" pilots, Government policy has had little effect in reducing "the persistently high proportion of young people disengaged from learning and remaining outside the labour market".
In contrast, the New Deal had significantly reduced the numbers of 18 to 24-year-olds who are long-term unemployed. Between 19967 and 20001 the number of claimants plunged from 176,000 to 37,000.
The Department for Education and Skills estimates that the lifetime cost of a young person being outside education or employment between the ages of 16 and 18 averages pound;97,000.
In 1999 the Social Exclusion Unit concluded that the "structure of financial support for 16 to 18s needs fundamental re-appraisal". This still remains to be implemented and Mr Convery says that "only a new set of financial incentives will help the Government achieve its goal of greater participation".
He calls for a new "learning allowance", of at least pound;40 a week, to support young people who do not enter paid employment or an apprenticeship at age 16. The Connexions Service should be responsible for locating and tracking non-participants, and should run an expanded "learning gateway" able to cope with large numbers of young people.
"Reforming financial support for 16-18s", Centre for Economic and Social Inclusion. Tel: 020 7582 7221