Exclusive: Ministers under fire over loss of 600 jobs for region's young

Bids for 3.5m by councils, voluntary groups and other organisations to create at least 619 fixed-term jobs in Yorkshire were rejected when the Future Jobs Fund was cancelled.

The scheme – which targeted jobless 16 to 24-year-olds and the long-term unemployed with minimum wage jobs and training – was introduced by Labour after a report by Barnsley Council leader Steve Houghton but the coalition axed it a year early, claiming it was poor value for money and a "short-term fix".

Ministers insist their Work Programme – being introduced this year to offer extra support to help the long-term unemployed back into work – will be more effective and are banking on enough private-sector jobs being created to offset a cull of the public sector.

But supporters of the Future Jobs Fund – which is expected to have funded 100,000 jobs by the end of March – insist a state-funded job creation scheme is vital in areas which have been heavily dependent on the public sector.

A report into worklessness last year by experts at Sheffield Hallam University concluded there was a "powerful case" for job creation schemes in weaker economies.

Coun Houghton said axing the scheme was "simply the wrong thing to do at the wrong time" and said 600 people had already benefited from the scheme in Barnsley, picking up vital skills, with some of them going on to find private sector jobs afterwards.

He added: "The truth is the evidence shows that in high workless areas – in the East Midlands, East London and the North – jobs simply aren't there for people and this nonsense that says the private sector is simply going to step in is just that – nonsense. We're going to need job creation programmes over the next 10 years.

"We may not need it nationwide – clearly in the South East and strong economies it's less important – but in the Barnsleys of this world, parts of Bradford and South Yorkshire, there's a huge unemployment problem.

"We're not going to get people back into the labour market unless we stimulate it. The Future Jobs Fund was a very good model of how to do that. We should be maintaining or improving it."

Yesterday Prime Minister David Cameron used a trip to the North West to insist the Government was focused on creating jobs in the regions, but stressed the importance of taking decisions locally.

The Government's decision to axe the Future Jobs Fund will end it a year early in March, however. Ministers argue it was "poorer value for money" than other initiatives for young people, costing up to 6,500 per placement, and say the coalition's Work Programme will "bring better targeted and more effective support to young people and the unemployed".

But last month the Commons work and pensions committee warned that growing numbers of school leavers and graduates face unemployment this year as a result of the decision and said many graduates gained "valuable experience" in work funded through the scheme.

New Department of Work and Pensions statistics reveal that organisations whose bids were rejected when the scheme was axed include Hull City Council, which wanted 1.2m to create 180 jobs, North Yorkshire County Council which applied for 689,000 to create 189 jobs, and Hull Community and Voluntary Services, which had applied for 1m to create 160 jobs. Yorkshire and Humber Regional Forum hoped for 195,000 to create 30 posts, and North East Lincolnshire Care Trust Plus wanted 390,000 for 60 jobs.

A spokesman for the Department of Work and Pensions said the Future Jobs Fund was "expensive" and its apprenticeships programme was a better way of getting young people into "sustainable employment".

"Recent early analysis shows that half of people are back on benefits after completing their Future Jobs Fund job underlining that these positions were a short-term fix," they added.