22/02/2012 16:59 GMT | Updated 23/04/2012 06:12 BST

Youth Unemployment Needs a More Radical Response

The government has announced £126 million worth of contracts available to companies and charities to tackle the challenge of long term unemployed young people. Whilst I welcome the announcement, I must say that the jury is still out on whether this government fully understands the ramifications of long term youth unemployment.

This announcement has come nearly two years into their term in power and the fact is that youth unemployment has been a key challenge for many years. The government continues to fail to demonstrate any urgency within this area, and some would argue it's probably because they do not understand the potential political power that these young people will have during the 2015 general elections.

The new contracts are part of the larger Youth Contract that was announced in December and will see funding for up 50,000 young people across the UK. Organisations will be paid by results, which gives financial incentives to the organisations to deliver. The theory is that if the contractors do well they will get paid well, but of course the reality is not that simple. As we have seen by previous contracts of this nature, payment by results will mean that some organisations cut corners to ensure they make enough money to survive. It also means smaller organisations and charities simply will not be able to compete to win any of these contracts at all.

Ultimately, these contracts will go to very large companies that arguably have little connection with the people they are being paid to serve. At the very best; smaller charities may be able to come in as sub-contractors, but it is highly unlikely that they'll be paid anywhere near what they will need to be paid to deliver something of real value. I have personally seen this happen and I must say it is a shame to see such a thing during a time when we speak of an ideal 'Big Society' where community groups are part of any response to rebuilding their communities. It is wrong and this system needs to be made much fairer going forward.

Over a million young people are unemployed so why does Nick Clegg and co think that providing funding for 50,000 places does the trick? The £6 billion Work Programme contracts have been designed in a way that means contractors can engage with as many people as they want and will be paid based on the assumption that any costs would be much cheaper than the long term consequences of someone staying on benefits. Surely any of these youth initiatives should work on the same basis as the Work Programme. If someone can get one million young people back into work I'd say good luck to them and go for it. The contracts should have been open ended in this respect - and by the way, why is there only a focus on 16- to 17-year-olds with this most recent announcement?

I have a big problem with the lack of focus on graduate unemployment. It is simply not fair in this age of fairness to see graduates leave with spiralling dept and returning to either be unemployed or underemployed. And then of course there are race and geographic inequalities that must be considered. 50% of African Caribbean young people are unemployed in comparison to a national average of 20% and we know that some areas are unemployment hotspots across the country. This is a big deal and the new announcements should have been a lot more radical and targeted than it was.

This all sounds very negative, and the truth is that I welcome what is being done as a step in the right direction. It is a lot of money being spent by any stretch of the imagination, but I just have the feeling that more could have been done and things should have been done a lot sooner.

Many people are very perplexed as to why it has taken so long to get the ball rolling on tackling youth unemployment. I am no different, and when I see young people struggling to be given a chance in life it really hits home that we have some big challenges that are deep routed. The Youth Contract is just part of the story and I really hope that a wider review into the situation and larger policy will be created sooner rather than later. Because if anyone feels like throwing money at the situation will fix anything, they need only look at Labour's failed Future Jobs Fund!

Samuel is an award winning social entrepreneur and political commentator. He has previously been highlighted as a Future Leader by Powerful Media, and is the first ever GBA Young Star of Enterprise (CBI/ Real Business Magazine). He is the founder of youth employment social enterprise Elevation Networks