Welfare-to-work scheme 'failing'

A multi-billion-pound scheme to help long-term unemployed people into work has been branded extremely poor by MPs.

The government's Work Programme only managed to get 3.6% of the people on the scheme off benefits and into secure employment in its first 14 months, the Public Accounts Committee said.

The government said it was "early days" for the scheme and the committee's report had painted a "skewed picture".

But Labour said the programme was "worse than doing nothing".

The 3.6% of claimants on the scheme who had moved off benefits into sustained employment between June 2011 and July 2012 was a mark well below the target of 11.9% that the Department for Work and Pensions (DWP) expected to achieve, the MPs said.

The committee's report pointed out that it was also below the official estimate of how many of those claimants would have found work anyway if the programme had never been launched.

The programme was set up in June 2011 to help the long-term unemployed moved off benefits and into sustained employment. It is expected to cost between £3bn and £5bn over five years.

Work Programme providers - largely private companies - are paid on performance. They receive a small fee initially, but most of their fee is dependent on workers staying in their jobs for three or six months.

Not one of the 18 providers has met its contractual targets and their performance "varies wildly", the committee said.

MPs warned that, given the poor performance, there was a high risk that one or more providers would fail and go out of business or have their contracts cancelled.

The committee shared concerns that providers were concentrating on people more likely to generate a fee, and sidelining jobless clients who required more time and investment - a process known as "creaming and parking".

The MPs made a series of recommendations, including urging the DWP to identify why the work programme's financial incentives were not succeeding.