The Government today defended its flagship employment scheme against fierce criticism after new figures showed only 3.5% of those taking part had found sustainable jobs.
Figures published by the Department for Work and Pensions showed that 800,000 people had started the Work Programme since it was launched last year, but only 31,000 stayed in a job for six months.
Employment Minister Mark Hoban said that improvement notices had been sent to a number of organisations involved in the programme, asking them to come up with plans to improve their performance.
He said that 56% of people who joined the scheme have come off benefits, with one in five of the earliest participants spending at least six months off benefits.
Labour leader Ed Miliband said the Work Programme was turning out to be a "miserable failure".
During a visit to Stevenage, he said: "It is just not working. What we've seen from the Government is a failure to reform welfare."
The 3.5% figure is short of a target of 5.5% set for finding sustainable jobs.
Mr Hoban said the programme was showing "promising signs" against a tougher economic backdrop than was expected when the scheme was launched in June last year.
Providers were having to find more than one job for some long-term unemployed, but the minister said the performance of some firms varied.
"Some are hitting the standards we expected, others have some way to go. The challenge for providers is to turn more job-starts into sustainable work.
"No one should under-estimate the challenges some of the providers face in getting some of the hardest-to-reach back into work."
TUC general secretary Brendan Barber said: "It beggars belief that ministers are trying to spin these figures as good news. Fewer than one in 25 have found sustainable jobs through the Work Programme, with the figures for young people even worse.
"Just 2.5% of young people moved into a long-term job and today's findings once again highlight the folly of cutting programmes like the Future Jobs Fund, which had a much better record of getting young people back into work and which was saving the taxpayer £7,000 a year."
Katja Hall, the CBI's chief policy director, said: "We should remember that today's statistics show performance for the first year of a scheme where the greatest gains will come over the long term.
"In challenging economic circumstances, the Work Programme has already helped to turn around the lives of thousands of people and is delivering the taxpayer value for money."
John Walker, chairman of the Federation of Small Businesses, said: "It is disappointing that only 3.5% of people stayed in a job for more than six months through the Work Programme. Our own research shows that small firms and self-employment are the most important routes back into work for the long-term unemployed.
"However, those firms are being hit by weak demand and rising cost of doing business.
"The single most effective way of helping the long-term unemployed back into work is to support small firms hiring. This means cutting the red tape burden for small firms taking on staff."
The Employment Related Services Association (ERSA), the trade body for the welfare to work industry, said criticism of the scheme was unfair, predicting that an increasing number of people will be helped into a sustained job.
The ERSA said the programme was proving better value for money to the taxpayer than any comparable welfare to work scheme in the past 20 years.
The Work Programme will save the taxpayer around £1 billion, with an average "cost per job" of just over £2,000, compared with £3,300 under Labour's New Deal, or £7,800 for Employment Zones.
Under the Work Programme, providers can earn between £3,700 and £13,700 per person, depending how hard it is to help an individual, with an initial payment of between £400 and £600.
Mr Hoban said the programme is succeeding in getting people off benefits and into work.
"It's still early days, but already thousands of lives are being transformed," he said.
"One in four people have been in work, more than half of the early starters have been off benefit and performance is improving.
"Previous schemes paid out too much upfront regardless of success but, by only paying providers for delivering results, the Work Programme is actually offering the taxpayer real value for money.
"Clearly these figures only give a snapshot picture as we're one year in, and the Work Programme offers support to claimants for two years, but these results are encouraging and something providers can look to build on."
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