THE Government's controversial back-to-work scheme has appointed two business to tackle long-term unemployment in the North-East. Employment Minister Chris Grayling has likened the Coalition's new Work Programme to a "giant employment dating agency" and claimed it will "transform" the lives of millions of unemployed people. Critics claim it is a step towards the privatisation of Job Centre Plus, and will do little to improve opportunities in areas of high unemployment, such as the North-East. Nationally, the £5bn scheme aims to support two and a half million claimants of jobseeker's allowance and sickness benefits back into work over the next seven years.

Private employment specialists Avanta and Ingeus have been tasked to deliver the programme in this region. They will be paid for supporting people into employment and helping them stay there, with higher payments for supporting the hardest to help.

The move comes as the latest Government figures found that nine people are chasing every vacancy in the North-East, the highest rate in the country.

Avanta will employ about 100 staff across the region, and open an office in Newcastle, as confidence-boosting courses and one-to-one mentoring sessions will be used to place more than 80,000 people in work.

The company is working on similar contracts in the North-West and in the South-East. Andy Bowie, Avantas director of business development, admits the North-East poses "a significant challenge" to his organisation.

"The Government set us some very tough targets and we can only make a profit and retain our contract if we hit those targets," said Mr Bowie. "But we wouldn't have taken this on unless we were confident that we could deliver.

"The South-East is starting to see jobs being created, so in that area our role is more about placing people in work. In the North-East we face a different challenge, which is to create vacancies; support people into self-employment, and identify hidden jobs that are not advertised through traditional means."

Across the region local authorities, and hundreds of voluntary groups and charities including Mencap, the Citizens Advice Bureau and the Princes Trust will use their specialist knowledge to help deliver the programme.

However, the Work Foundation research group warned the scheme could widen the North-South divide.

Neil Lee, senior economist at The Work Foundation, said: "The Work Programme is based on a national payment structure and does not take into account local and regional variations in labour demand. Economic growth is faltering and parts of the country, still dealing with the fallout from the recession, are facing significant public sector job losses.

"As the Work Programme is based on payment by results, contractors carry the initial risk. There is therefore the danger that private contractors will focus on investing in places where they are more likely to get people into work to secure a return on investment. The financial risk may also be passed down to small, local voluntary sector organisations, which could be knocked out of the market as a result.

"If there are significant variations in performance across different areas, the Government should look again at the payment structure to reflect differences in labour demand and the associated additional cost of supporting people in these areas. Doing this will ensure people get the support they need, regardless of where they live."