The scheme, under which employers are given a national insurance "holiday" for each long-term unemployed person taken on, had helped only 2,312 people back into work by 6 January - nine months after its launch. It has been so disastrous that the budget has been slashed back to a nominal estimate of just pounds 1.5m, and a recent Commons statement listing measures "introduced since 1992 to help the long-term unemployed back to work" did not even mention it.
Under the scheme, only197 new jobs have been created for the whole of Scotland; 115 in Wales; and 83 for the Greater London area. Yet when Kenneth Clarke, Chancellor of the Exchequer, first announced the proposal in his November1994 Budget, he presented it as a brave new job-creation measure - "a package which will show the Opposition how to do it".
He told the Commons: "The first step is to encourage employers to look more favourably on people who have been out of work for some time. I can announce, therefore, a wholly new incentive to encourage employers to take on more people who have been unemployed for two years or more. In future, employers will get a full national insurance rebate for up to a year after taking on such a person."
The Chancellor's statement was followed up in the Jobseeker's Act 1995, allowing the NI deductions and last year's employment contributions reimbursement regulations - paving the way for the scheme, which started on 6 April last year.
Stephen Byers, Labour's employment spokesman, told The Independent yesterday: "This is yet another of Mr Clarke's broken promises. First, we had the broken promise on taxes, and now we have a broken promise on the long- term unemployed. This scheme has been a fiasco and a disgrace.
"The Chancellor's arrogant certainty ... is now seen to have failed one of the most vulnerable sections of our community. This was supposed to be one of the main planks of the government effort to get the long-term unemployed off welfare and into work. Clearly, it has failed, and it demonstrates a lack of commitment."
Social Security minister Oliver Heald, told Mr Byers in a recent Commons reply that estimates for the scheme had been cut from a first-year cost of pounds 28m to pounds 1.5m, and 296 of the 2,718 applications received up to January had been unsuccessful.