Under the government proposals thousands of children from poor families in the city will receive a payment of up to £30-a-week if they stick with education.

Southampton is to be used as a pilot centre over the next three years for the scheme to be revealed by Chancellor Gordon Brown today.

The Chancellor will tell a conference on homelessness that the government is determined to "reclaim the lost generation of young people" who are not in jobs or education.

The scheme, in different forms in 14 areas across the country, will pay 16 to 18-year-olds up to £40-a-week if their parents earn less than £13,000.

In Southampton the maximum figure will be £30-a-week, but any child whose parents receive less than £30,000 a year taxable income will be eligible for some cash on a sliding scale. Across the city around 2,700 children will receive cash. The money is to cover the cost of their upkeep but will go to the child rather than the parent.

And it is understood it will be paid directly into teenagers' bank accounts with no firm stipulation as to how youngsters spend the cash.

Southampton was chosen because it is an area where the number of people who leave school early is well above the national average.

The others are expected to be Nottingham, Cornwall, Doncaster, Gateshead, Leeds, Middlesbrough, Oldham, Stoke-on-Trent, Walsall and the London boroughs of Lambeth, Lewisham, Southwark and Greenwich.

June Bridle, chair of the city's education and employment committee, said: "I don't think this is a carrot or an inducement. I think it will make it easier for those who want to continue their education. Often the one thing that deters many young people from continuing their education is the fear that they themselves or their families will not be able to support it."

The pilot scheme will cost £70 million but £300 million if adopted nationally.

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