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Connexions partnerships are making good progress helping young people into work and education and are improving their advice and guidance services, according to the National Audit Office. But a lack of resources means that the service may not be reaching as many young people as planned, said inspectors.

In its report, the NAO called for Connexions to be placed on a firmer financial footing with a switch to three-year funding mechanisms to allow more effective planning.

There are fears that Connexions budgets will be further undermined by a change to VAT regulations that comes into effect this month. In future, partnerships will be unable to recover VAT incurred buying services, children’s minister Margaret Hodge told the House of Commons.

"We are asking Partnerships to look at improving their tax efficiency by moving to different structures where they feel this is appropriate," she said.

Meanwhile, the National Association of Connexions Partnerships welcomed the the report as proof that partnerships are making a difference to young peoples’ lives.

The NAO found that, as of November 2003, the proportion of 16 to 18-year-olds not in education, employment or training had been reduced by 8 per cent in areas where the service had been established the longest and 3 per cent

in all areas. Connexions partnerships were confident that the government target of 10 per cent would be achieved by November 2004.

The report also found the service was well regarded by users. However, inspectors said there is a risk Connexions may not reach as many young people as originally intended. Tight budgets means partnerships have employed fewer personal advisers than expected.

Inspectors’ recommendations include local and regional targets for reducing the number of young people not in education, employment or training and a clear target date for most personal advisers to have completed Connexions training.