The national council in charge of youth training for more than 277,000 unemployed teenagers said last night that it had "serious concerns" that swingeing cuts were to be announced in next week's Budget.
Gillian Shepherd, Secretary of State for Education and Employment, is under immense pressure to produce more resources for schools following criticisms of poor test results, growing class numbers and lack of discipline in schools such as The Ridings, near Halifax.
By switching money within the budget of Mrs Shephard's department, the Government can avoid inter-departmental quarrels and thus make the cuts less conspicuous.
Chris Humphreys, chief executive of the national council which oversees the 81 Training and Enterprise Councils in England and Wales, said those in charge of youth training were extremely worried.
"There are very strong concerns that the schools system in England is not attracting the resources it needs and that young people in training are the ones who will be made to pay," he said.
John Howell, chief executive of the south London TEC (Solotec) and the former managing director of Singer, said the cuts would alarm the private sector, where the TECs enjoy the support of organisations such as ICI, British Steel and Woolwich Building Society.
"My understanding is that there are going to be cuts and they are going to be sizeable," he said. "What we are talking about here is the destruction of the work-based route back into employment - the route of training alongside employers. We have moved away from the old days of the YOP scheme which involved community work and we are giving people work-based qualifications relevant to the world of work."
Mr Howell said that 1,200 of the 6,000 trainees at Solotec could be lost.
There are fears that up to 27 per cent of the pounds 180m youth training budget, which gives 50,000 training places, could be at risk.
The places under threat are those described as "non-guaranteed", which are for trainees over 18. Unemployed 16- and 17-year-olds who are not in education are guaranteed a TEC place.
Representatives of the TECs have been in lengthy talks with Mrs Shephard and James Paice, the education minister, over changes in the way the department's budget is allocated.
There have been criticisms of TECs over their drop-out rates and low qualification achievements.
The TECs, which are jointly funded by private business, argue that they are turning the corner and that their achievements are being recognised by employers and young people alike.
The number of people enrolling for the courses has been steadily increasing since 1993-94 and the numbers achieving qualifications of NVQ level two or above has increased from 37 per cent to 82 per cent since 1991.
Godfrey Blakeley, spokesman for the TEC National Council, said: "Word has finally got around that youth training is a realistic way into a job. After five or six years of painful improvement this thing is coming good.
"It is this approach which is the reason for Germany's high level of skills in industry. Now, in typical British fashion, we are planning to diminish it just as it is bedding down."
In 1989, almost two-thirds of participants left their course early for no good reason, but the drop-out figure has been reduced to just over a third, which is similar to the rate in other education programmes for 16- 18-year-olds.
Mrs Shephard has been an enthusiastic supporter of vocational qualifications and acknowledged recently that more money would be needed if they are to be successful.The education budget is under immense strain, with pounds 700m needed to pay for the nursery voucher scheme for all four-year-olds from April. Millions more is being allocated for extra security in schools following the outcry after the death of the London headmaster Philip Lawrence.
The youth training budget for England alone now stands at pounds 669m a year.There are 600,000 under-25s without a job and unemployment for 16- 19-year-olds is 15 per cent, compared to 8 per cent for all ages.
The Department for Education and Employment would not discuss its plans in advance of the Budget.
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