MULTI-NATIONAL firms will be stripped of ‘back-to-work’ contracts and responsibility handed to local councils and businesses, under Labour plans.

Ed Miliband’s party will – if it wins power – axe the private sector-led ‘Work Programme’, because it is failing to find jobs for the “hardest to help”.

Instead, cash will be funnelled through local councils, or local enterprise partnerships (LEPs), which will organise job-creation programmes for their areas.

The move comes after fierce criticism of the £5bn Work Programme, which pays private-sector giants on a payment-by-results basis.

The latest figures show 11,600 people in the North-East and North Yorkshire have been put into jobs for at least six months, by Avanta, Ingeus and G4S.

However, that is only one in seven of the 79,810 who have taken part, with the success rate lower in County Durham (13.6 per cent) and Middlesbrough (11.9 per cent).

Now, under Labour’s plans, councils or local enterprise partnerships (LEPs) would help commission back-to-work schemes, from charities and smaller private firms, or run them outright.

Interviewed by The Northern Echo, Andy Sawford, Labour’s local government spokesman, said: “The Work Programme – after an absolutely dreadful start – is, in some areas, starting to get more people back into work.

“But it’s not helping the hardest to help, because what’s clearly happening is that the private sector contractors go for those who are easiest to help. We want to help everybody.

“What councils can do is help everyone seeking work back into work, through their economic development role and way they can connect services.”

Mr Sawford said the current Work Programme contracts would not be renewed in 2016, adding: “That’s the point when this will take effect.

“Instead of big contracts, let nationally by central government, we will introduce new commissioning arrangements – with, say, either Durham County Council, or the LEP.”

Mr Sawford also vowed that ripping up the Coalition’s “unfair” funding blueprint for local councils would be a key priority.

Ministers are quietly axing a formula – drawn up by John Major’s Government, 20 years ago – to protect struggling areas with a low tax base, As a result, North-East council leaders believe rich parts of the South will soon receive higher funding than much poorer towns and cities in this region.

Mr Sawford said: “We are going to review the formula to ensure that local authority grants are based on a proper needs assessment.

“We are not able to reverse the cuts. But we will make sure that fairness is at the heart of it again, that the formula will reflect the needs of areas.”