Proposals to pay firms £1,000 to businesses hiring long-term unemployed young people or a new apprentice are being backed by local business leaders.

The new West & North Yorkshire Chamber of Commerce – created through a recent merger of chambers in Bradford, Leeds and York – has backed a national call for next week’s Budget to focus on youth employment as a key issue.

The British Chambers of Commerce is urging Chancellor of the Exchequer George Osborne to answer the criticisms of employers about the lack of work-readiness of young people. In its Budget submission to the Treasury, BCC has highlighted that young people are almost three times as likely to be unemployed as the rest of the population, causing problems in the labour market.

It has warned that if economic recovery is to continue, steps are needed now to avoid a ‘lost generation’.

BCC has called on Mr Osborne for measures to introduce a £100 million Future Workforce Grant scheme – providing £1,000 grants to businesses hiring long-term unemployed young people or a new apprentice to help bridge the gap before under-21s national insurance exemptions in 2015.

BCC has also called for a two-year extension to the Apprenticeships Grant for Employers scheme to help create 80,000 additional apprenticeships; and increasing tax relief from 30 per cent to 50 per cent for investors in businesses run by under-24s to help more young people set up.

The body said it would put forward more economic reforms and incentives for growth in the autumn, as the political parties gear up for next year’s General Election.

The new ‘super chamber’ is backing the focus on youth employment, training and enterprise in the Budget.

Paul Mackie, Bradford Chamber president, said: “In this Budget, the Chancellor can help businesses train young people and ensure the nation has a properly skilled workforce for the future. Measures that would encourage more investment in businesses run by young people, such as extending income tax relief, would also help.”

Leeds president Nigel Foster said: “If our region is to compete with the South and elsewhere, we need appropriately qualified young people coming forward for the new posts being created. The transition from education to employment needs to be made as easy as possible.”