Unemployment figures to the end of December 2010 show that almost one million 16- to 24-year-olds are out of work and that youth unemployment has reached 20.5 per cent, with many of these constituting graduates that have not managed to find a job since leaving university.

Since February 2010, the graduate internship programme has supported paid internships in small businesses for 8,500 graduates. However, this scheme will be scrapped in March 2011.

In a new paper the FSB details how, through investment to extend the scheme, at least 5,000 new internship placements can be made at a cost to government of £8 million, instantly reducing benefit payments by at least £1.5 million.

FSB national chairman John Walker says, ‘The UK’s young people are the future of the economy, yet we are seeing youth unemployment approaching one million. It is time that the government invested into this vital sector so that we don’t see a generation of youngsters consigned to the dole queue.’