FUNDING for a scheme offering paid work placements for long-term benefits claimants is set to be cut by almost £220,000 a year.

Stoke-on-Trent City Council has so far used the paid placement schemes to help about 360 people come off jobseekers' allowance and incapacity benefit in the past four years.

But the council can no longer justify the £773,000 annual cost of the project, which works out at £8,589 for each successful applicant.

Instead, it wants to use some of the funding to help residents set up small businesses, which are likely to have a bigger impact on the city's unemployment figures.

The council's portfolio holder for enterprise and culture, councillor Hazel Lyth, said the authority also wanted to offer applicants a broader range of work placements to pass on a more varied range of skills.

It will therefore be splitting the contract with six separate work providers instead of one.

Until now, the project has been delivered solely by Groundwork Stoke.

But from next month, the council will also work with Epic Housing, Stoke-on-Trent CAB, Remploy, Gingerbread and Brighter Futures.

Each organisation will provide placements for residents aged 19 and over who have been unemployed for more than 12 months.

The trainees will be paid up to £4,000 each at the minimum wage rate, and the average cost of training 165 applicants and getting 90 into work is expected to fall to £6,111 per successful candidate.

The council has also suggested that the funding will be cut further in future years, and that it expects providers to explore ways of making the scheme pay for itself.

Ms Lyth, below, said: "What we are actually seeking to do is divert some of the funding that has previously been used in order to widen the scope of the employment.

"We have got a number of providers offering that support.

"We will still be delivering waged placements, but we are looking to provide some extra support for people who might be starting their own businesses as well."

Ms Lyth also stressed that it was unfair to judge the success of the waged placement project purely on how many applicants had found permanent work, as all the trainees would have benefited from the work experience they had gained.

She said: "The number of jobs that have been created is by no means a limiting factor in terms of the number of experiences that have been created that would not otherwise have come about.

"We are paying for the experience and the benefit to the community as well as the employment outcomes."

She added: "We are not diverting any money away from the issue of worklessness, which is one of our biggest issues in the city.

"But providers have to think more innovatively about the outcomes that they provide."

Portfolio holder for regeneration and economic development, councillor Adrian Knapper, said he supported the move to broaden the range of work on offer through the scheme and make the most of the available funding, adding: "In the current climate, it is important to help."