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UK Politics

Branson's blueprint to revive British economy

Virgin boss urges action to get young people into work and create growth

Sir Richard Branson is to warn George Osborne that he will create a "lost generation" of young people who will never know work unless he takes radical steps in next week's Autumn Statement to kick-start the economy.

The Virgin tycoon, who writes overleaf, is calling for a three-point blueprint for growth to create more jobs – particularly for the young – and fund new businesses. His wish list includes making it easier for companies to employ workers on a part-time and flexible basis, cutting the time spent at university in half and the creation of a new government body to underwrite micro-finance for people who want to start their own businesses, modelled on the Student Loan Company.

The businessman, whose Virgin Money bought the taxpayer-owned Northern Rock for £1bn last week, will set out his blueprint in a letter this week to Mr Osborne, before the Autumn Statement on 29 November.

The Chancellor is under pressure to come up with radical ideas for stimulating growth when he addresses the Commons. In a parallel move, Nick Clegg, the Deputy Prime Minister, has told Mr Osborne he must use any additional funding in the growth review to tackle youth unemployment after the tally rose above one million last week. Aides say the issue has become "toxic" for the coalition.

A wide-ranging panel of economic experts today sets out suggestions for a much-needed "Plan B" for growth, amid criticism the Chancellor is refusing to acknowledge that Britain's precarious economic position is not solely due to the eurozone crisis.

Talking exclusively to The Independent on Sunday, Sir Richard said: "We've got to stop this high youth unemployment – there's a great danger of creating a lost generation who've never known work. If you want to take people off the dole then we must make it cheaper for companies to be more flexible. The Government should help companies by offsetting some of these costs. It could transfer money spent on welfare benefits to help companies employ more people."

Unemployment now tops 2.6 million and, according to last week's figures, more than one million young people – aged 16 to 24 – are out of work while the number of long-term unemployed is also rising. But Sir Richard said: "If the Government were clever, there would be no need for anyone ever to be out of work on a voluntary basis. It needs to get the nuts and bolts right and move quickly; everyone needs a purpose to life."

His own research, he says, shows that at least 20 per cent of the working population would like to work part-time, or be more flexible, but are often not given the option because of the cost to the employer and worries over productivity. "It might be that people want to have Fridays free, whatever. Offering staff flexible options is expensive because of National Insurance, the time invested in training and other investments."

University degree courses should be sliced in half to 18 months because, for most students, there is too much time wasted, he claims. "Most students are twiddling their thumbs. Many only get one lecture a week. This is nonsense, particularly with tuition fees so high."

Sir Richard, who left school at 16 to start his first business, added: "I've already told David Cameron that he should look at this."

Third, the Virgin boss said it's crucial to find ways to allow people – especially the young – access to small amounts of money so they can start their own businesses.

The IoS understands that the Deputy Prime Minister has pinpointed unemployed 18- and 19-year-olds as those most in need of help. "If you leave school and go straight on to the scrapheap, your entire work life is affected," a senior Lib Dem source said. "You end up going into lower-paid jobs later in life. So we want to come up with a package for them."

Mr Osborne will prioritise more than 40 major infrastructure projects, including the roll-out of high-speed broadband, the electrification of the Great Western railway line and traffic-blighted sections of the M25. Other ideas include extending the National Insurance holiday for new firms that take on staff from the first year of trading to three years, as well as credit easing to increase the flow of loans to small businesses.

A ComRes poll for The IoS today shows that public confidence in the economy has plummeted: only 23 per cent expect the economy to start showing signs of improvement soon, compared with 67 per cent in June 2009.

In a speech to the Confederation of British Industry tomorrow, David Cameron will unveil plans to open up £50bn of government business to some of the smallest companies in the country.

Cabinet Office minister Francis Maude said yesterday that billions of pounds of government tenders will be accessible online and pledged that departments will be ordered to speed up their dealings with business.