Scheme must find work for thousands more than expected

Companies running the government’s flagship £5bn back-to-work scheme will have to find work for hundreds of thousands more people than expected over the next four years, according to government figures.

Numbers released by the Department for Work and Pensions show a massive increase in the number of jobseekers looking for work through the programme as a result of high unemployment over the next four years.

The prospect of a prolonged downturn, as predicted by the Office for Budget Responsibility, will mean one third more people joining the scheme than expected, stretching providers to breaking point.

As providers are paid mostly by results, this casts further doubt on their ability to spend what they have pledged in helping jobless people back to work. Tony Wilson, director of policy at the Inclusion think-tank, said: “The weaker labour market outlook means more people on the work programme and a much bigger challenge for providers.

“In the short term we estimate that this will mean an extra £100m in up-front payments. However, this is likely to be more than offset by increased costs, as providers support more people for longer in what will be a tougher jobs market.”

The news comes just days after the government’s own auditor said it expected providers to be successful in placing only just over a quarter of those who are easiest to help into new jobs – well under the 40 per cent predicted by the industry. Experts have estimated this could mean losses of up to 50 per cent for some providers.