Young people will have their benefits scrapped if they refuse job offers or training under new plans set to be revealed by Rachel Reeves.
The Chancellor is also expected to pledge to end long-term youth unemployment by guaranteeing any young person paid work if they have been unable to find a job or training for at least 18 months.
The “youth guarantee” will see thousands of young people who are unemployed or unable to work due to sickness offered help by authorities.
However, if this is refused, their benefits could be cut.
Almost one million people aged between 16 and 24 are not in education, employment or training.
Every year, tens of thousands of young people go from study straight into long-term sickness.
Ms Reeves will say this is “bad for business, bad for taxpayers, bad for our economy, and it scars people’s prospects throughout their lives”.
She will also will promise not to “leave a generation of young people to languish without prospects” in her speech to the Labour Party conference, and will promote a society based on “contribution” in which “hard work is matched by fair reward”.
Although a budget has not yet been set for the youth guarantee, it is expected to be funded through a share of the £1billion promised in the spring for extra employment support.
Rachel Reeves will announce the scheme during her speech at Labour’s annual conference in Liverpool
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Ms Reeves will add: “Every young person will be guaranteed either a place in a college, for those who want to continue their studies or an apprenticeship, to help them learn a trade vital to our plans to rebuild the country, or one-to-one support to find a job.
“More than that our guarantee will ensure that any young person out of work for 18 months will be given a paid work placement. Real work, practical experience and new skills.”
The proposal will “commit this government to nothing less than the abolition of long-term youth unemployment”.
However, the guarantee will not be without some conditions.
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Work and Pensions Secretary Pat McFadden will support the idea
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Those who refuse to take up any offers made to them will risk losing some, if not all, of their benefits.
Work and Pensions Secretary Pat McFadden will say: “We will not stand by while a generation is consigned to benefits almost before they’ve begun.
“We will not accept that school pupils, full of promise, become adults, full of frustration.
“We cannot, we will not, allow wasted talent to become Britain’s story. The youth guarantee is how we will offer every young person a change to get up and get on.”
It is understood these conditions will apply to young people claiming jobseekers benefits, however it is not known whether they would also be imposed on those claiming for long-term sickness.
More details about the guarantee will be revealed in the budget in November.
Earlier this year in pilot projects, administration of the scheme was given to mayors and councils responsible for facilitating coordination between local employers, colleges, housing bodies and other organisations.
This scheme is building on the “youth guarantee” announced in November last year which pledged that every 18 to 21-year-old in England would have access to an apprenticeship, training, education opportunities or help to find a job.
However, experts criticised this for excluding around half of the 948,000 Neets – those not in education, employment or training – in the broader 16 to 24 age bracket.
Stephen Evans, Chief Executive of the Learning and Work Institute think tank, said: “This is a welcome announcement that can make a real difference.
“But we need more details on the length and type of placements.
“And with only one in four Neets on benefits and required to search for work, it’s important this offer is open to all young people who need it, regardless of their benefit status.”