IN BRITAIN today, there are 150,000 young people aged between 16 and 18 outside formal education, training and work - many without homes.

And every year the challenge intensifies: more than 12,000 children are excluded from school; 6,000 young people leave care with nowhere to stay; and family break-up pushes more young people on to the streets. This leads not only to deprivation, isolation and misery but to wasted potential.

I want to see a new Britain, educated and at work and not on welfare. Our challenge is to enable young men and women to bridge the gap between what they are and what they have it in themselves to become, to allow them to realise their potential and ambition.

We must deal not only with the consequences of poverty but its causes, too. In the past two years, we have been putting in place the building blocks that can create a new future for Britain where everyone can use their talents, maximise their potential and meet the key challenges of the modern economy.

That is why over the next three years the Government will be investing an additional pound;19 billion in education. We want every school-leaver to be able to continue their education.

We are also expanding the number of students in higher education and creating a university for industry for everyone who wants a second chance in education. These will be backed by individual learning accounts.

But if we are to have recurrent and permanent education, we must make opportunity real for everyone after the age of 16 and, crucially, tackle the problem of the “16-plus”: the large numbers lost from education and training who now find themselves without jobs.

It is a scandal to think that there are 150,000 young people between 16 and 18 who are neither in work nor in any form of education - no jobs, no skills and, in many cases, no home and no hope. And every year more young people without skills and jobs join the queue of young people in difficulty.

What will distinguish them by the age of 18 is that they will be unemployed and what they will face in their 20s - unless we act - will be prolonged unemployment. Since 1845, there have been two routes to opportunity and income for young people. One was to leave school at the earliest opportunity, get a manual job in manufacturing and, through that, earn a decent wage. The other was to stay at school, get qualifications, find a professional occupation and, through that, earn a living.

Now, as manufacturing employment and the value placed on brawn rather than brains contracts, the first route is closing up as a means to prosperity and, in the 1990s, the link between education, employment and earnings is tightening as never before.

While the Welfare to Work programme helps young people after 18 to find jobs and skills for work, at 16 the challenge is different. Too many young people leave school early without qualifications never to reappear in education to obtain the skills they need. So we have to persuade young people to stay on at school or at college. In particular, we want more teenagers from lower-income families staying on at school and going to college and university.

That is why we are using resources, through the new educational maintenance allowances, to break the cycle which leaves children from poorer families without the qualifications they need. The allowances will run, from September, in 12 pilot areas around the country - areas where more young people leave school early than the national average. We will pay up to pound;40 a week for young people in families where household income is below pound;13,000 a year. But with this help come responsibilities - young people will have to sign a “learning agreement” with the school and college and stick to it.

These allowances offer a real chance to make a difference to the lives of many young people. I want to see a partnership approach in the delivery of these allowances, with government, education authorities, schools and colleges working together. The new Britain I want to see is one where it is not your background that matters, or the school you attended but the aspirations and ambitions you have - a Britain where opportunity is available to everyone and where everyone has a contribution to make.

Analysis, 27