A committee of MPs has added to the widespread criticism of the government's Work Programme, describing it as "extremely poor".
The Public Accounts Committee (PAC), responsible for ensuring the government gets value for its spending, reported that the Work Programme was currently getting only 3.6% of clients into sustained work, far below the target set by the Department of Work and Pensions (DWP) of 11.9%.
The PAC, which includes MPs from all major parties, also stated that the Programme was achieving worse job outcomes than jobseekers would be expected to gain with no help at all.
Margaret Hodge, who chairs the committee, was particularly concerned about the service provided to those with disabilities or long-term illnesses and young people.
She said: "It is shocking that of the 9,500 former incapacity benefit claimants referred to providers, only 20 people have been placed in a job that has lasted three months, while the poorest-performing provider did not manage to place a single person in the under-25 category into a job lasting six months."
Hodge was also critical of the DWP for publishing performance data from the Employment Related Services Association (ERSA), the trade body representing Work Programme providers, saying: "This is just not on."
It is not normal practice for a government department which collects its own performance figures to use, unchecked, those from an outside organisation.
The PAC was concerned that poor performance, and the low payments that come with it, meant there was a real risk that providers could go out of business or be removed from the Programme, separating unemployed people from their advisers.
"Given the poor performance across providers, there is a high risk that one or more will fail – either they will go out of business or the department will cancel their contracts," the report says. "The Department will need to keep a close eye on which providers are most likely to fail and must manage all consequential risks."
Hodge said, that although the Work Programme was crucial, its performance "was so poor that it was actually worse than the department's own expectations of the number of people who would have found work if the programme didn't exist."
"None of the providers managed to meet their minimum performance targets. The best performing provider only moved 5% of people off benefits and into work, while the worst managed just 2%."
All 18 Prime Contractors, the main co-ordination and delivery agencies for the Programme, have been placed on "performance improvement plans", while seven have been sent formal warning letters in recognition of their unacceptable performance.
A DWP spokesperson said: "The Work Programme gives support to claimants for two years and it hasn't even been running that long yet, so it's still early days. We know the performance of our providers is improving … Long-term unemployment fell by 15,000 in the latest quarter."
The link made between the fall in long-term unemployment and the Work Programme is unproven, with its current performance suggesting the efforts of other agencies and jobseekers themselves may be more relevant.
The department criticised previous back-to-work schemes, saying they had paid out "too much up front regardless of success. But by paying providers for delivering results, the Work Programme is actually offering the taxpayer real value for money."
Kirsty McHugh, chief executive of the ERSA, said, "The public accounts committee should rightly focus on the Work Programme achieving value for money for the taxpayer, and data published by ERSA shows that the Work Programme is the most cost effective scheme relative to any comparable scheme so far.
"'These outcome statistics relate to the earliest days of the Work Programme and caution is needed before we can judge its overall effectiveness.
"However, robust data published by ERSA last November shows that the Work Programme is placing more people into work month on month and we can already see the programme having a demonstrable impact in reducing long-term unemployment as evidenced in this week's labour market statistics."
The next release of statistics from the Work Programme is due in March, and the improvements predicted by the DWP and ERSA will be proven or disproven then.