The National Audit Office (NAO) has described the Government's projected figures for its Work Programme, the flagship scheme aimed at getting the long-term unemployed into work, as "over-optimistic".
The NAO has said that, while the Government had estimated that 40% of people in the programme would find work, its own projection was that only 26% would do so.
Perhaps most damningly, the NAO suggested that the Government had implemented the programme without a pilot scheme or thorough consideration of alternatives. It also pointed out that some of the providers for the programme might encounter "serious financial difficulty" during their work on it.
A report published today said that the Government's original estimate will be affected by regional variations in employment levels and job availability.
"The Department for Work and Pensions (DWP) has introduced the Work Programme quickly, in just over a year, and this has had benefits, but the speed with which it was launched has also increased risks," reads the report.
"The department and providers have made assumptions about how many people the programme will get back into work but there is a significant risk that they are over-optimistic.
"The NAO's analysis suggests that 26% of the largest group of job seekers in the programme will get jobs, compared to the department's estimate of 40%. Some contractors in areas of high unemployment may struggle to meet nationally set targets. It is possible that one or more contractors will get into serious financial difficulty during the term of the contracts," the report continues.
The NAO additionally highlighted the fact that an IT project introduced to support the Work Programme was not fully functional when the programme began, and a result of this is that the DWP, which is overseeing the scheme, will not be able to carry out automatic checks on benefit claimants until March 2012 at the earliest. Consequently, says the NAO, there is an increased risk of fraud and error going undetected.
The DWP responded to the criticism with a statement saying: "As part of the Work Programme's design, we had to calculate the levels of performance we expected providers to achieve. The NAO has done its own calculations, reflecting performance achieved under previous programmes. We are confident that we have contracted for more positive results.
"The report also sets out the cost to the department of terminating Flexible New Deal contracts, in order to introduce the Work Programme quickly. The Work Programme is designed to improve on the performance of the programmes it replaced [including Flexible New Deal] with groundbreaking new features like: payment primarily by results; more stretching job outcomes; more freedom for providers; an innovative funding mechanism; different payments for claimants with different needs; and more competition between providers in live running. As the report states, the department expects these innovations to drive improved value for money over the next five years."