Sheffield Futures, a ?xA3;10 million charitable trust with 600 staff came into being on 1 April. It is the product of a merger between an existing registered charity, Sheffield Careers Service, and Sheffield Council's youth services department. Staff from the council have been transferred to the new charity, joining 200 careers staff who worked for the pre-existing charity.
Unison, which represents the majority of Sheffield council workers, opposed the plan.
Mike Higgins, Unison's community and voluntary sector organiser in Yorkshire, said: "This is a further erosion of public services in Sheffield. Public accountability is diminished now it's a voluntary service. We're worried about the quality of service and the terms and conditions of employees - the two are intrinsically linked," he said.
Dexter Whitfield, director of the Centre for Public Services, a research think-tank on public services, based in Sheffield, was worried it would result in a two-tier workforce.
"All evidence in Sheffield and beyond shows that when councils do this they do so for purely financial reasons, hoping to cut costs. Reduced terms and conditions and inferior pensions are the result and women's jobs are often particularly affected," he said.
But Jim Reid, Sheffield Futures' chief executive, said this was "absolute rubbish". He denied the council was trying cut costs. "Hand on heart, both ourselves and the city council are agreed that this is not like contracting out. The council cannot absolve themselves of strategic responsibility for adequate youth services," he said.
He argued that the new charitable trust meant youth services would get more cash and be better prioritised. "We've already got grants worth ?xA3;1 million from the Single Regeneration Budget and European funding, and we're looking into lottery funding," he said.
Outsourcing the services had secured funding over a longer period, said Reid. "We've got guaranteed three-year funding for these services - no other city council has this. Their funding cycles are usually one year at a time," he said.
The charitable trust took two years to set up and was developed in consultation with trade unions including the Community and Youth Workers' Union.
Sheffield Futures will spearhead the delivery of the "Connexions" service in the city, the Government initiative bringing careers and other youth services together, currently being piloted in 12 areas nationally.