NEW figures have thrown doubt on the Government’s strategy for a jobs recovery in the North-East – by revealing private companies are also culling thousands of posts.

David Cameron has insisted the huge loss of public-sector jobs would be outweighed by an expansion of private-sector employment, as interest rates remain at rock bottom.

This week, the Prime Minister insisted those efforts to reboot the economy were succeeding, telling MPs: “I think we are seeing some positive signs of rebalancing.”

But the statistics, revealed by the Centre for Cities thinktank, show a net loss of 8,200 private-sector jobs in the North-East – on top of a morepredictable decline of 32,600 posts in the public-sector.

Worryingly, the figures are for the year to June – since when growth forecasts have been cut, amid growing evidence that the economy has ground to a halt.

The report pointed out that, nationwide, only 41,000 private- sector jobs were created in the three months to June – far fewer than the 111,000 public- sector jobs that were lost.

And it concluded: “Currently, the private sector is struggling to create jobs at the rate required to offset the privatesector jobs lost during the recession and to cover shrinkage in the public sector.”

Phil Wilson, Labour MP for Sedgefield, said the statistics bore out the bitter experience in his constituency, where youth unemployment has leapt by 30 per cent in the past year.

He said: “They prove that the Government’s policy is not working. They have a strategy to reduce the deficit – but growth is not part of it.

“You can’t cut the deficit unless you have a growing economy and you get people back to work and paying taxes, instead of keeping them on benefits.

That risks a lost generation, as in the Eighties.”

In fact, the North-East was far from alone in suffering a net loss of private-sector jobs in what was, effectively, the first year of the coalition Government, according to the Centre for Cities.

There were even bigger reductions in the West Midlands (13,500), the South-West (21,700), Scotland (27,800) and Wales (35,000) – but better news for Yorkshire (up 8,200).

However, the Office for National Statistics suggested the figures should be treated with caution, because Centre for Cities had listed all education and health jobs as public sector.

In fact, said a spokeswoman, both sectors contained a sizeable number of private-sector employees, in universities and social care, for example.

Conservative ministers have insisted the private sector will “mop up” publicsector job losses once investment is no longer “crowded out” by state spending.

But critics of the economic theory have argued it takes no account of how closely private investment is linked to spending by local councils, for example.