AN American-style graduation certificate and a youth discount card are to be offered to young people as incentives to stay in education and training.

The Government wants to bring back what Tessa Blackstone, the further and higher education minister, described as “the lost generation” - about 161,000 people without education, training or jobs.

Speaking after the release of recommendations from the Downing Street Social Exclusion Unit, she said: “It is a tragedy that one in 10 of our young people, aged 16-18, are not in education, or training or work... they are on the fast track to social exclusion.”

She said society would lose out as a result. The young people were more likely to be caught up in crime, and they would probably rely on benefits for a long time.

Prime Minister Tony Blair said: “This is a government for the many, not the few.” The best defence against social exclusion was having a job, and the best chance of having a job was to be well-educated.

Under the new plans everyone will aim to have a graduation certificate by the age of 19. Lady Blackstone said this would be an aspirational goal, to motivate young people. There would be three pathways to graduation: general education, based on full-time study in school or college; high-quality vocational education, in college or the workplace; or employment with the right to time off for study.

At present the Government has set targets for 85 per cent of young people to reach level 2 (five GCSEs at grade C or above, or the vocational equivalent), by 2002. Lady Blackstone called it a “demanding and tough target”. Nevertheless, she said, “we will be looking at raising it so we can get all youngsters reaching this target. But we have to do this in sensible steps. At the moment we have a very big leap to get to 85 per cent.

“The graduation certificate (and we may change the name) is something that will motivate young people, it is visible and attractive. Young people will not see it as just a piece of paper. It will be something they will want to get.”

Schools and colleges will keep a register of all their pupils and students to allow personal advisers to follow up their progress, giving advice on education and training.

There will also be a Youth Card, giving discounts on travel, cinemas and sports functions. It will all be linked to incentives for young people to stay on at school, college, in training or work.

The Qualifications and Curriculum Authority has been asked to examine options on introducing the graduation scheme.

Nine per cent of 16 to 18-year- olds are not in learning or work * No education, training or employment at age 16-18 is a majorpredictor of unemployment at age 21 * Young people of African-Caribbean, Pakistani and Bangladeshi origin experience longer periods than their white peers out of learning and work * Seventy-five per cent of males aged 16-17 charged with a criminal offence are in no formal full-time work or education * For women, non-participation at 16-18 is a powerful independent predictor of teenage parenthood * Non-participants are substantially more likely to be smokers * Nearly three-quarters of non-participants aged 16-18 have used drugs, compared with just under half in education or work.