Cash will be targeted at deprived areas and new training standards will be set to give youth workers a more central role in education and training.Both the local education authorities and voluntary organisations will be given new powers and money to reach young people currently excluded from education and training.

Target groups will include teenage mothers, young people caring for sick and elderly relatives, those working in the black economy and school and college drop-outs. A package of reforms being considered by ministers include new childcare arrangements and co-operative working arrangements by all agencies.

Mr Mudie will resist pressure from the youth services for legislation to back the new powers. “They say they want statutory powers; I say we cannot wait for that.” Instead, tough targets will be set for LEAs on spending, standards and recruitment of young people.

The proposal for funded targets rather than legislation was welcomed by Graham Lane, education chair of the Local Government Association.

“The way forward is through the funding mechanism. Efforts to bring in statutory changes would delay us for 18 months,” he said.

The youth service has suffered for decades as the wording of the 1944 Education Act which underpins the service requires LEAs to prove only that there is “adequacy” of provision. An audit of the service commissioned by the National Youth Agency showed spending per teenager varies among councils by as much as Pounds 274 a year.

Reforms being considered would give the youth service responsibility for 13 to 19-year-olds, though there are plans to extend this to pre-teens. Originally the service was responsible for young adults up to age 25. But Mr Mudie is looking at parallel reforms to the careers service which would create a new structure of support and guidance services for all young people and adults.

“We want a fundamental reshaping of the careers service. It would run alongside the youth service and overlap with it. There will be pressure from here (the Department for Education and Employment) to make sure that the careers companies refocus their efforts more sharply on the target groups. ”

Many careers service contracts are up for renewal with the DFEE within two years; the department also sets annual targets which may be used to apply pressure for reforms.

A consultation paper on careers will follow that on the youth service by the new year. Mr Mudie made it clear that he would like root and branch reforms. “The challenge is with the careers service. We spend more than Pounds 200m on it and I am tempted to think that if I had a clean sheet of paper, I could use it to meet my objectives in a very different way.”

Reforms being considered by the DFEE include the development of new-style brokering services, already created in some areas through training and enterprise councils, where the careers officer acts as an intermediary to negotiate work and training packages with colleges and employers on behalf of young adults.

Ministerial interview, page 31