Government's Work Programme only helps one person in three find a job

The Government will today order private firms running its schemes to help the jobless find work to “raise their game” as official figures show its £5bn Work Programme has made a disappointing start.

Only one in three people starting the programme have found a job, according to statistics compiled by the 18 companies and voluntary groups running the welfare-to-work projects.

The Government’s own figures, to be published today, will show that a smaller proportion – possibly one in five – of the unemployed helped into work keep a job for six months.

Ministers deny their scheme has flopped but will warn the poorly performing companies they could miss out on future contracts unless they “get their act together”. The firms include A4E, whose founder Emma Harrison stood down after it faced allegations of fraud. Government officials say the programme’s early results will improve over time and that the double-dip recession has made it harder for people to stay in work for long spells. Under the scheme, the private providers are paid by results, receiving a small initial fee when a jobless person joins it and a much bigger payment if they clock up six months in work.

The Employment Related Services Association, the welfare-to-work trade body, said 207,831 people had been helped back into jobs since the programme began in 2011, which means that 29 out of every 100 joining it found work. More than 20,000 people are finding jobs each month, a figure rising all the time, it said.

Ministers seized on the trade body’s finding the cost per job found is £2,097, significantly less than the £7,495 under the Flexible New Deal brought in by the previous government.

But Liam Byrne, the shadow Work and Pensions Secretary, said: “The Work Programme is clearly not working. It’s in gridlock and the result is a bill for long-term unemployment that is going through the roof.  Yet to balance the books George Osborne is mounting a £14bn raid on tax credits which means thousands are now better off on benefits and millions are now working in poverty. What we need is a big plan to get Britain back to work. ”

Labour claimed the number of referrals to the programme had halved to 48,620 between July last and this year, despite a 188,000 rise in the number of long-term unemployed.

Labour accused the Government of “moving the goalposts” after Mark Hoban, the Employment Minister, told Conservative and Liberal Democrat MPs it is “too early to judge” the scheme. Another criticism of the programme is that providers are being paid  bonuses of between £4,000 and £13,000 even when unemployed people got jobs without their help.

These can be paid if the jobless already had an offer of work but had not started it. The Department of Work and Pensions argues that the payments compensate private providers for taking on people unlikely to find work, for which they will receive little money.