NICK CLEGG will today unveil a £1bn jobs fund to counter growing criticism that soaring youth unemployment is creating a “lost generation”.

The Deputy Prime Minister will promise what he will dub a “Youth Contract”, to ensure “all jobless young people are earning or learning again, before long-term damage is done”.

The package – likely to be funded by squeezing tax credits for poorer workers – will offer:

Wage subsidies – for companies to take on 160,000 18 to 24-year-olds, receiving an incentive payment of £2,275;

Work experience – an additional 250,000 places, lasting for up to eight weeks;

Apprenticeships – an extra 20,000 incentive payments, for 16 to 24-year-olds, doubling the Government’s previous commitment;

A £50m programme to help the 25,000 “most disengaged 16 and 17-year-olds” – getting them back to school or college, onto an apprenticeship or into a job with training.

Speaking in Leeds, Mr Clegg will stress the wage subsidies will cover half the cost of the national minimum wage for youths, lasting for six months. It will be available to young people who “need the most help after three months” and to all young people who have been on jobseeker’s allowance after nine months.

Mr Clegg will say: “Youth unemployment is an economic waste and a slow-burn social disaster.

“If people are out of work when they are young, they bear the scars for decades. If they have a false start, they might not ever fully catch up.

“We will not allow the children brought up in the boom to bear the brunt of the bust.”