THE Government was last night urged to change course on the economy after figures revealed the worst unemployment picture in the North-East for 15 years.

The number of people out of work leapt by 18,000 in the three months to July, meaning the region again has the highest unemployment rate in the country, at 10.7 per cent.

Only London had a bigger rise.

The unemployment rate is the highest since October 1996, when it also stood at 10.7 per cent, and is the highest of any region in the UK since 1997.

The latest unemployment figures completed a desperate day for the coalition Government after unions representing millions of public sector workers served notice of plans to ballot for industrial action in the row over pension reforms.

They included Unison – the country’s biggest public sector workers’ union – along with Unite and the Fire Brigades Union, raising the prospect of a series of co-ordinated strikes, beginning with a day of action on November 30.

Last night, local Labour MPs seized on the gloom over unemployment and claimed it was evidence that Government policies were not working.

In total, 136,000 people were registered unemployed between May and July in the North-East – the highest since a figure of 150,000 in January 1995.

The number of young people, aged between 18 and 24, claiming jobseekers’ allowance also increased to 27,200, a year-on-year rise of 4.1 per cent.

Meanwhile, in Yorkshire and Humberside, an extra 6,000 people were registered unemployed from a total of 243,000 – a rate of 9.1 per cent.

Nationally, unemployment rose by 80,000 to more than 2.5 million.

Alex Cunningham, Labour MP for Stockton South, said: “These are deeply worrying figures for the region.

“Unemployment is continuing to grow steadily despite supposedly coming out of recession over a year and half ago.

“I’m especially worried about the thousands of young people being left without a way into employment at the start of their adult lives.

“I’m urging the Government to consider ways to stimulate the region’s economy, and they could start with taxing banker’s bonuses to create jobs and training for our young people and release extra cash for investment in regional development.”

Helen Goodman, Labour MP for Bishop Auckland, said: “The increase in unemployment calls into question the Government’s economic policy.

“The North-East once again bears the brunt of the fall-out from the cuts, and I am urging the Chancellor to change course and begin significant reinvestment in public services.

“Locally, we have done so much work to attract investment and jobs – and this is another blow.”

Northern TUC regional secretary Kevin Rowan claimed Government cuts were “bleeding the life out of the North-East economy”.

He said: “We need urgent remedial action to stem the flow and save us from a bleak future – fewer jobs, poorer services, a generation without any hope of meaningful employment and a downward spiral of decline and stagnation at best.”

Tony Dolphin, a senior economist with left-leaning think-tank the Institute for Public Policy Research, said the time had come for a change of course.

He said the Government’s fiscal plans should be revised to allow the financial deficit to be eliminated over a longer period, and called for a tax cut targeted at those on low incomes or an increase in capital spending to create much needed jobs.

In exchanges in the Commons, Labour leader Ed Miliband said Government plans for the private sector to replace jobs lost as a result of public sector spending cuts were not working.

But Prime Minister David Cameron, while acknowledging the unemployment figures were “disappointing”, blamed the last Labour administration for the difficulties, claiming it had “robbed young people of their future by piling up debt”.

Mr Cameron said: “All Governments right now are having to make difficult decisions about cutting public sector spending.

“This Government is reducing the welfare bill and reforming public sector pensions. If we weren’t taking those steps, you would have to make deeper cuts in terms of the rest of the public sector.”

He said the Government’s “growth plan” included cutting corporation tax, freezing council tax and creating enterprise zones, including two in the North-East.

Mr Cameron added that the Government’s Work Programme was helping people into jobs and that since May last year, half-a-million private sector positions had been created. There were also 360,000 apprenticeships for young people starting this year, he said.