The £1bn government’s youth contract is “is not sufficient” to address the current unacceptably high level of youth unemployment, according to a group of MPs.

The Work and Pensions Select Committee says the contract was “a good start” but would not solve the problem of youth unemployment without a return to economic growth and a significant number of new jobs.

The MPs warned that there was “a real risk” that the scheme would miss its targets.

The scheme, launched in May, includes wage incentives of up to £2,275 for employers that take on under-25s under the Work Programme. It also aims to provide an extra 250,000 work experience places.

In August a survey found that only one in five employers was interested in the scheme.