Chancellor Gordon Brown says the government may introduce penalties to force youngsters to stay in education or training until the age of 18.
The Chancellor, Gordon Brown, has said he would seek to take away benefits from young people who refused to take up education or training opportunities.
In a major speech, Mr Brown backed plans to raise the school leaving age in England from 16 to 18.
In a BBC interview he advocated a "carrot and stick" approach - education maintenance allowances (EMAs) balanced by "compulsion if necessary".
He set out his long-term vision for "a roadmap to lifelong learning" starting at age 16.
He wanted to ensure all aged 16 to 18 were in some form of education, as part of a drive to improve the UK's skills.
And he would consider new financial incentives to "make education pay" for those likely to leave school at 16.
His priorities would be "excellence, excellence, excellence", he said.
Earlier this month, the Department for Education and Skills confirmed plans to raise the school leaving age by 2013.
Earlier this month, the Department for Education and Skills confirmed plans to raise the school leaving age in England, in effect, by 2013.
Statistics indicate 267,000 16 and 17-year-olds are currently not in education or training.
Statistics indicate 267,000 16 and 17-year-olds are currently not in education or training.
Compulsion
Compulsion
New financial incentives to be announced by the chancellor are likely to build on the existing education maintenance allowances (EMAs), worth up to £30 per week.
The chancellor's interview remarks fleshed out his suggestions in a speech in Scotland, hinting at some measure of compulsion.
In a speech in Scotland, Mr Brown hinted that the government may have to consider some measure of compulsion for those who do not take up existing training and employment options.
Young people will have to be in training or education until 18
Young people will have to be in training or education until 18
And he also called for employers to take a more active role in training young people.
He also called for employers to take a more active role in training young people.
He proposed adapting the existing "Train to Gain" scheme to provide work-based training for 16 to 18-year-olds, alongside his commitment to double the number of apprenticeships to 500,000.
He proposed adapting the existing "Train to Gain" scheme to provide work-based training for 16 to 18-year-olds, alongside his commitment to double the number of apprenticeships to 500,000.
The chancellor reiterated the government's commitment to reform of the adult-training system and committed to more reform of the further education system to make it more responsive to employer needs.
The government would, if necessary, "merge or take over failing colleges".
'Inclusive globalisation'
Mr Brown said his personal aim was to build a society "where an inclusive globalisation means permanent recurrent life-long education" and the place to start was with 16 to 18-year-olds.
"Universal education from five to 16 was achieved in 1972, but for 30 years as the world has moved on the span and reach of education remained the same," he said.
"Our goal should now be that we are the generation that had made it possible for children not only to start education at three but to continue in education or training until 18.
"This is about all our futures. Our ambition for education: to raise the floor and to remove the ceiling, a higher floor for all to build from, with no ceiling on talent, no limit to potential, no cap on aspiration."
