The Demos think-tank has just come out in support of a program of 'national civic service.' It's an idea that has enjoyed previous support.
I haven't, yet, had time to look at the details of their proposal, since it's admissions interview time (i.e. the busiest time of year for an Oxford tutor). I'm generally opposed to compulsion, but do think it sounds like it has many benefits for all involved, so much would depend on how it's implemented.
I dislike the idea of compulsory service or making students pay, but would cautiously welcome it if it was a way for the unemployed to gain skills/experience and do something useful in exchange for their benefits (i.e. if it was incentivized rather than strictly compulsory).
I note with interest that one of the authors is my former classmate Sonia Sodha, who has appeared on this blog before. She seems to be doing well in the policy world...