The source added: “The upfront costs will be high but there is a genuine feeling that local leaders know about the issues in their areas best and will be able to deliver results.
“In the long term more young people will be going into work, not into a life on benefits, bringing down the welfare bill,” they added, speaking to The Times.
A spokesman for the Department for Work and Pensions said: “The Milburn and Timms reviews, due to report in November, will lay the foundation for sustainable reform, and we will not pre-empt their findings.
“We are already changing the system through the Youth Guarantee, which includes £2.5billion investment in youth employment over the next three years to support almost one million young people and help deliver up to 500,000 opportunities to earn and learn.”