Youth unemployment could be dramatically reduced if benefits are given to 16- 27-year-olds only if they are in education or training

Youth unemployment in England could be hugely reduced if young people had to enrol on a college course or training programme to claim jobseeker's allowance, a committee of MPs said today.

A report by the cross-party schools select committee advises the next government to copy the Netherlands and hand out benefits to 16- to 27-year-olds only if they are in education or training.

Figures from international economic development organisation OECD show that unemployment rates last year for under-25s were at 6.7% in the Netherlands and 15% in the UK.

In England, those who claim jobseeker's allowance do not have to be in education or on a training course but must show they are actively seeking work. Young people up to the age of 24 are only allowed to pursue a part-time training course of 16 hours or less. If their course is longer, they lose benefits.

The Dutch model would motivate more school-leavers who are not in education, employment or training – "neets" – to find work and gain skills, the MPs argue.

The number of neets reached a record year-on-year high at the end of last year at almost 15% of 16- to 24-year-olds. The government could fall foul of its target to reduce the proportion of 16- to 18-year-olds to 7.6% this year – from 9.6% in 2004.

Barry Sheerman, chair of the committee, said the MPs had been struck by the Dutch policy. "It is time to take a more radical approach and to look at the example of the Netherlands, where rates of youth unemployment are consistently low and where young people up to the age of 27 have a more unified support structure," he said.

"In the Netherlands, relatively generous levels of benefits and other support are offered to young people in exchange for greater compulsion to take up education and training. We recommend the government considers the merits of this approach."

The MPs also called for a one-stop shop to give more help to those in their 20s who are unemployed and under-skilled. Under the scheme, young people would receive a medical consultation, counselling, and advice on housing, benefits and careers in the same place.

The proportion of 18- to 24-year-olds who were neets was at 17.1% for the last quarter of last year, compared to 15.9% for the same period in 2008.

In December, the government published a strategy on how it would reduce the proportion if Labour were re-elected. It promised to increase investment in education and training for over-16s by £202m in 2010-11 and provide more than 100,000 extra government-funded training places. The Conservatives have promised to reduce the number of neets by creating 100,000 more apprenticeships and providing the same number of extra college places.

But the head of the Rathbone charity, which provides education and training for young people, told the MPs there had been too many initiatives and they were too focused on short-term results.

The general secretary of the University and College union, Sally Hunt, said the current system was a minefield and "impossible for neets to navigate". "It's as if it has been designed deliberately to put people off," she said.

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