September 10, 2009 3:09 PM

The VAT cut should be scrapped immediately to pay for measures to prevent young people being condemned to long-term unemployment, Liberal Democrat leader Nick Clegg said today.

During a visit to Newcastle he launched new proposals to tackle the youth unemployment "crisis" - saying today's youngsters were at risk of being the "jobless generation" of the future.

Mr Clegg said the Government's "pointless" VAT cut - from 17.5% to 15% until the end of the year - could pay for an internship scheme for up to 800,000 young people.

Those aged 16-24 would be able to work for up to three months with any employer at no cost to that company, he said.

Each intern would be paid a training allowance of GBP55 per week, with employers required to give help with CV writing.

The Lib Dems also called for the temporary funding of 10,000 more university places and 50,000 more college-based foundation degree places.

And there should be a guarantee of work, education or training for those who have been unemployed for three months, rather than the current 10 months.

Mr Clegg said: "This recession is at risk of leaving the most poisonous legacy of all: a jobless generation.

"Parents used to worry about whether their children could get on to the housing ladder, now the concern has spread to whether they can even get a job.

"The Government's shamefully inadequate response allows young people to fester on benefits for almost a year before offering real help, while the Tories are typically silent on what they would do."

He added: "We must provide a lifeboat to this lost generation. Funding extra university and college places, introducing a paid internship scheme and creating more apprenticeships would be vital support for young people as they enter the workforce this autumn.

"Rather than allowing someone to sit at home on benefits, young people could gain invaluable experience and skills in an actual workplace.

"For the cost of just two days of the pointless VAT cut, a paid internship scheme could provide hope to hundreds of thousands of young people."

Mr Clegg was visiting Newcastle to meet apprentices learning welding and metalworking skills, before talking to jobseekers and recruiting firms at a jobs fair in the city.