The Conservatives call them the “lost generation”, soundbite offspring of the “broken society”. Labour recognises the problem, but thinks the Conservatives exaggerate the numbers. Neets (young people not in employment, education or training) will find themselves at the centre of the political battleground today as Gordon Brown unveils his “Budget for jobs”. Politicians on both sides of the Commons agree that Something Must Be Done to help the growing number of under-25s out of school and out of work: some 857,000 of them last year.

What do you do with Carl: 21 years old, still living at home with his six younger siblings, never had a job, abusive to his mother - and angry that the housing association sees no reason to give him his own place? I met him recently in Tonbridge, Kent, his language a barrage of curses, his behaviour bordering deranged. Carl did not even sign on, a new one on me: somebody so utterly lethargic he couldn't even be bothered to claim benefits, presumably in case he was expected to do something at some point in return.

What do you do with Shane, the 14-year-old who told me that his only ambition in life was to go to jail? Or Darren, the 16-year-old who left his training course because the allowance that he expected for doing it was late coming through? He was training only for the money, not the qualification it would give him.

There is a slice of society that does not want to work. Benefits staff say that the problem is greatest among the young, who unlike older workers are unembarrassed about signing on. In the eight years to 2008, at a time of rising employment, the proportion of under-25s who were unemployed rose across both sexes and age groups, 16-18 and 19-24.

Ministers believe that only a small minority of these do not want to work. They point to evidence that relatively few claimants are “sanctioned” by having their benefits payments cut if they fail to look for work. Across the entire benefits system only 12 per cent of payments were cut over the past four years, I was told yesterday, and returning sanctions were only 1 per cent.

But the number of sanctions does not begin to represent the number of loafers. Sanctioning is viewed by benefits staff as an extreme step. If somebody is claiming jobseeker's allowance, the staff have just five minutes to check if the claimant has applied for three jobs in the past fortnight; and must rely on his or her word. Documentary proof can mean an advert circled in a newspaper. I recently watched a 19-year-old run through his applications - he said that he had sent an e-mail to one company, filled in an online application for another, and registered with Monster.co.uk. He may have been genuinely searching; it was impossible to tell. The next claimant, a 25-year-old girl, seemed more frustrated and provided more detail about what she had applied for.

One 30-year-old graduate, Paul, whom I saw at a Jobcentre, had claimed benefits for 14 months, worked for a week, claimed for 18 months, during which he clearly had not applied for work as he had not noticed any of the suitable jobs advertised in the local paper he pretended to have been scouring. He had not been sanctioned once.

The “Flexible New Deal”, due to be introduced in October, is designed to address some of these problems. After six months of unemployment, Paul's adviser would draw up a “back-to-work action plan”, drawing from “a menu of activities aimed at improving employability and job chances”. I can tell you what that will look like: Paul will be told to brush up on his personal appearance, buy an interview shirt (allowance available), visit a training centre and perhaps a few typing classes - then come back to report on progress.

After 12 months, he - and the Neets - will be passed on to private companies or voluntary groups who are paid according to their success rate in getting people into work. It's a good move, but there has been a hitch; the companies bidding for the contracts want more money for placing people as the labour market withers. It's an expensive business.

What is missing from Carl and Shane and Paul, and from the single mothers who believe they cannot possibly work while they have to pick Lauren up from school, is ambition and determination - and those are hard to subsidise. If Carl doesn't want to get a job, if Shane doesn't acquire a little aspiration, if Paul lacks determination, they won't get anywhere. Around 250,000 vacancies are notified to Jobcentre Plus each month; there is work out there if people are prepared to do anything, in caring and packing and serving in bars, and the young unemployed ought to be prepared to do anything.

Ministers will focus today not on the unwilling but on the 88 per cent of benefits claimants who they believe are willing workers. The Tories address a similar target group with their new master's degrees, and apprenticeships, and their proposal for street education youth workers. Look out, from the Government, for pledges to local authorities and businesses to subsidise heavily the creation of new posts specifically for Neets or longer-term unemployed, to the tune of far more than the £2,500 at present on offer. It could be up to half the £12,000 minimum wage salary for a full-time job; a subsidy for a job rather than a benefit, although at twice the cost to the taxpayer (and more than that if you consider that the council taxpayer may be funding the other half).

The “Budget for jobs” has as much to do with politics as with practicality. Labour focus groups have shown that voters remember painfully the last recession when the Tories “did nothing” to help the unemployed or those who lost their homes. Enter Mr Brown and Mr Darling with their “Budget for jobs” and support for homeowners struggling with mortgages. “It's really important that we can go out and say we are going to do something,” as one adviser put it yesterday. If only we could encourage Paul, Shane and Carl to do the same.

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