The findings were revealed in an independent review commissioned by Education Secretary Michael Gove and undertaken by Alison Wolf, the coalition government's adviser on reforming vocational education for the under-19s, who recommended a complete shake-up of the system in England, including funding.

Wolf, who is professor of public sector management at King's College London, told the Financial Times that she felt the move was necessary after being shocked to find "a complete disintegration of the youth labour market", which had been ignored by successive governments obsessed with encouraging students to gain paper qualifications.

She warned that the take-up of apprenticeships in the 16 to 19 age group was only "likely to get worse, not better if you don't change things", adding: "You want more apprenticeships? Pay for them. You want more workplace skills? Pay for them."

But general wage subsidies were not the answer to encouraging employers to offer more apprenticeship places, Wolf said. Instead they should be given financial incentives to offer wider training opportunities. This meant paying employers "when they are providing the bits [of training] that we can theoretically justify...general education – training that would be useful to the learner even if they moved to another employer".

Wolf also called for the "proper funding" of internships for 16 to 18-year olds, adding that work experience still paid even if it did not lead to formal training. But the entire financing system needed overhauling as it was "beyond belief in complexity", Wolf said.

The government currently paid for a range of different courses that meet approved criteria, which meant that "all the incentives are to put people in for things that are very easy to pass, which they have nearly passed already".

As a result, Wolf recommended bringing the financing of vocational training more into line with the schools system by assigning each 16 year-old a chunk of money rather than tying it to specific qualifications or frameworks.

Another problem today, however, was that between a quarter and a third of English teenagers were wasting their time on college courses that did not lead to jobs or training schemes, she said.

As a result, Wolf encouraged the creation of technical schools, which would teach 14 to 19 year-olds high-level technical courses that were developed in conjunction with employers and universities.

The coalition government is already planning to open new University Technical Colleges for the age group, with the goal of bridging the gap between vocational and academic education. The proposed curriculum would offer a mix of core academic subjects such as english and maths as well as vocational specialisms such as engineering, business or medical care.