The public purse is hit to the tune of £800 million each year by thousands of teenagers leaving school or college without passing their qualifications, according to a new analysis.
The Local Government Association (LGA) has warned that a so-called "bums on seats" approach to post-16 education, in which schools and colleges are funded according to student numbers, is failing young people.
The latest figures show 178,100 16- to 18-year-olds failed to complete post-16 qualifications they started in 2012/13, and are at risk of becoming Neet (not in education, employment or training).
Analysis for the LGA by the Centre for Economic & Social Inclusion reveals that this cost £814 million, some 12 per cent of all government spending on post-16 education and skills.
The cost of students failing to achieve AS and A-levels amounts to £316 million, along with £302 million from general FE and £196 million from apprenticeships.
The LGA said councils could do far more to support young people if further education, apprenticeships and careers advice funding and powers were devolved to local areas.
It claims this would allow councils, schools and colleges to work with local employers to make sure all young people get good careers advice and gain skills for local jobs.
The call forms part of the LGA’s proposals for the next government.
David Simmonds, chairman of the LGA’s children and young people board, said: “Councils are having success in helping young people that do drop-out back into learning but fear a failure to reform the centralised ‘bums on seats’ approach to funding further education could leave too many teenagers at risk of dropping out or without the skills needed to get a job.
“Local councils, colleges, schools and employers know how to best help their young people and should have devolved funding and powers to work together to give young people the best chance of building careers and taking jobs that exist locally.”
It follows calls from the Association of Colleges( AoC) for the creation of new careers “hubs” based in colleges, universities or even high-street shop units that could take over responsibility for delivering careers advice locally.
“The reasons why some young people don’t finish their course are complex," he added.
"Sometimes they get a job...they might also change course which the data doesn’t necessarily take account of.
"Funding for 16-18 year olds has faced significant reductions too, particularly the abolition of the Education Maintenance Allowance in 2011 which supported young people through their education. In addition there are outdated policies resulting in poor careers advice and growing transport costs."
Government 'doesn't know if Neet policies are working' – January 2015
Ofsted: Force colleges and schools to work together to tackle Neets – September 2014
Careers advice? Keep it local, experts argue – September 2014