Hartlepool Council has confirmed that it had been considering setting up a mutual to deliver youth services, but decided not to proceed.
"There had been previous proposals to look at a youth services mutual as part of a review of youth service provision, however the council has since decided to continue with the existing in-house youth service arrangement," a spokesman said.
As part of its in-house provision, the council has set up a new partnership organisation, called the Hartlepool Young People's Foundation, which brings the local authority together with local youth services providers to better co-ordinate support for young people.
A briefing document on the foundation, published by the Wharton Trust, states that its aim is to address "weaknesses" in the current arrangements for delivering youth services.
In particular, it would "provide an equal voice" for organisations involved "with an equal balance of power", the document states.
It adds: "This model had been developed as a response to current pressures on children and young people's services. It is an infrastructure model based on the development of a new charitable trust with an independent board that would draw on the strengths of the offer in Hartlepool."
The foundation has been developed through funding from the Cabinet Office's Delivering Differently programme, which helps public bodies develop new ways of running youth services.
It plans to mirror the Young People's Foundation model developed by the John Lyon's Charity. These are run in six London boroughs: Barnet, Brent, Harrow, Camden, Westminster and Ealing.
Teresa Driver, Wharton Trust's youth and community co-ordinator, said: "In Hartlepool there is no longer a voluntary development agency, so nobody coordinates or shares information around funding.
"Obviously the youth service is shrinking so we needed a voice for young people and one point that could co-ordinate the information.
"At present the foundation has 11 organisations involved and more looking to join."
She added: "The idea is that if the council spun out into a mutual the foundation would become a member of that. The foundation will not deliver, it will be something that co-ordiantes what is going on in the town in terms of youth provision and advocate regionally and nationally."
London Borough of Lewisham is among councils to have handed delivery of its youth services to a mutual, through the setting up of employee- and young person-led youth organisation Youth First in September 2016.
In February 2017 Devon County Council passed the running of its youth services to an independent social enterprise, DYS Space Ltd.
In March this year youth work organisation UK Youth said that the sector needed to diversify how it is funded to guarantee its long-term future.
UK Youth's State of the Membership report called for more social entrepreneurial approaches, including social investment and long-term partnerships between youth groups and businesses.
According to figures published by the House of Commons library last November, the amount councils plan to spend on youth services has dropped by more than half (53.6 per cent) over the past seven years.