A loophole in the government’s Youth Contract means that tens of thousands of disadvantaged young people are being excluded from the scheme, claims the charity Barnado’s.

The £1 billion Youth Contract was introduced by deputy prime minister Nick Clegg earlier this year and aims to increase the workplace inclusion of Neets – young people who are not in education, employment or training – by offering them work experience, internships or apprentice vacancies with employers.

However, the scheme includes a clause that prevents any school leavers who have one GCSE or more from taking part.

According to Barnado’s – one of the subcontractors being paid to deliver the Youth Contract in the West Midlands, North West and Yorkshire – those with just one or two GSCEs are equally as likely to be excluded from the workplace as those with no qualifications.

Speaking to the Daily Telegraph, Janet Grauberg, Barnardo’s UK director of strategy, said: “Youngsters with just one or two GCSEs are also at risk of becoming Neet and are being penalised for their achievements if they are not able to access further training.

“The government must act now to give the most disadvantaged young people the chance to achieve their potential.”

It follows comments made earlier this year by the City & Guilds exam board, which claimed the Youth Contract is at risk of failing to assist a large number of young people because of the complexity of the scheme and the high number of agencies involved in implementing it.

“It would be preferable for the Youth Contract to run though a single agency or department in order to minimise both bureaucracy and inefficiencies,” written evidence submitted by City & Guilds to the work and pensions select committee said.

“We appreciate that this may not be a simple matter to organise but feel that otherwise there is a serious danger of many young people ‘falling though the cracks’ and becoming further disengaged.”