Millions of people could be without a job or in work for which they are overqualified within the next decade, a council leader warned yesterday.

Local Government Association (LGA) incoming chairman David Sparks said that urgent government action was needed to tackle a future unemployment “twilight zone.”

He added that the current system for helping the unemployed find work was in need of radical reform.

In his keynote speech to the LGA annual conference today Mr Sparks is due to predict a “lost generation” of eight million people who face low-paid, insecure work and reliance on benefits because of a “skills mismatch.”

And he warned that the true scale of unemployment and underemployment was being hidden because headline figures did not focus on people who work part-time or are overqualified.

Calling for new Youth Jobcentres bringing together different services, Mr Sparks said: “Local authorities — not central government — best understand the needs of their residents and how to address their skills needs.”