Devolving the Government’s back-to-work programme to a local level would help save £500m and create 90,000 extra jobs, a group of 22 ‘co-operative’ councils are claiming.

In a new report, the Co-operative Councils Innovation Network (CCIN) said the Whitehall programme to help the long term unemployed had failed to get people back into jobs and devolving part of the scheme to locally-led cooperative employment schemes would be more successful.

Unlocking Our Wealth calls for the services to be commissioned locally by people who understand the local market and have a greater chance of success.

The 22 councils have pledged to strike local deals with 1,000 businesses and to use their buying power to promote innovation and collaboration with local businesses and social enterprises.

Leader of Lambeth Council, Cllr Lib Peck, said: ‘For those in our communities who are really struggling to find and hold down a job, the nationally designed Work Programme is not working. The rigid national skills system is training young people for jobs that don’t exist, while employers face enormous shortages in other sectors. The same money would go much further if it were spent locally by local authorities who know the employment challenges in their patch.

‘Cooperative councils are innovating, not waiting. But we need government to recognise that the status quo isn’t working. A package of funding (including money for skills, employment and health) should be devolved to councils to enable them to provide tailored packages of support to help those who are most excluded get into sustainable work.’