COUNCILS in East Lancashire have welcomed government plans to ensure that local people are employed in multi-million-pound redevelopment contracts.

The idea to write local employment clauses into contracts came from a parliamentary inquiry which said that the North-South divide really did exist, but the government had been trying to hide it.

The controversial claims were spelled out by the Commons select committee on employment, which confirmed how the North generally lost out to the South.

It pointed out that unemployment throughout most of the South -- with the exception of London -- was way below the national average, but unemployment in parts of the North was almost three times the rate in the South East.

To tackle such economic imbalances the MPs called for a change in the law so councils in "economically deprived areas" could insert "local labour" clauses in their contacts, which are currently illegal under both British and EU legislation.

Hugh Simpson, head of Burnley Council's economic development unit, said: "The council obviously agrees that it's important that regeneration programmes benefit local unemployed people."

The council is already encouraging employers to take on local people under its Think Local campaign. The law is very restrictive.

"We would welcome the flexibility that this would provide, but we would have to be cautious that the skills could be made available," he added. Hyndburn Council chief executive Mike Chambers said: "Local labour arrangements were quite common in local government contracts at one time.

"They can be an effective means of ensuring local people get additional opportunities for employment and training.

"Councils would obviously need to take care to spend taxpayers money wisely.

"We would not support the blanket application of local labour clauses in every contract. It is better to judge the likely effects in each case."

Steve Hoyle, assistant director of regeneration at Blackburn with Darwen Council, said the principle had already been built into the council's regeneration programme to ensure that redevelopments benefited local people.

During the City Challenge initiative, voluntary clauses were written into building and regeneration contracts to encourage builders to take on local people with a subsidy for training.

"These new plans would reinforce what the council is trying to do, which is creating a prosperous economy and tackle economic and social development," he said.

But the committee says it is important multi-million pound regeneration programmes actually benefit local unemployed people.