The coalition's flagship 'back to work' scheme has helped fewer people find jobs than if the government did nothing at all, figures published on Tuesday show.
The "deadweight cost" of the work programme was 5.5% - the amount the government predicted would get jobs without the state helping. But figures released show only 3.5% of those taking part found a job lasting over six months - meaning the scheme failed to meet its most basic target.
Figures published by the Department for Work and Pensions on Tuesday showed of the 800,000 people who started the programme, 31,000 have stayed in a job for half a year. Despite the data, the government have pledged to continue with the scheme saying it is still "early days."
Tony Dolphin, Associate Director for the economy at IPPR, told The Huffington Post UK the government must to "disappointed" by the data.
"Whatever it says in public, the government must be very disappointed by the initial results of the Work Programme," he said. "This was its flagship policy for tackling long-term unemployment but only 3.53% of those entering the Programme have found a job lasting six months, compared to the target of 5.5%.
"This is despite the fact that – as ministers have been keen to point out – employment growth in the economy has been stronger than generally expected over the last year or so.
"The contrast with the Flexible New Deal, which the Work Programme replaced, is also unfavourable. The Work Programme is finding long-term jobs for people at only about one-third of the rate achieved by the Flexible New Deal."
Labour said the scheme - launched in June 2011 which asks - was not working, with shadow work and pensions secretary Liam Byrne saying the work programme was producing results under the rate that could be achieved "by doing nothing."
"On the DWP's own benchmarks, just 2.3% have found a 'job outcome'," he said in a statement.
"That is under half the rate the DWP said could be achieved by doing nothing. Meanwhile long term unemployment has soared by over 200,000."
But employment minister Mark Hoban defended the payment by results scheme, where 70% of people remained unemploymed after one year.
"The Work 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.
"It’s still early days for the Work Programme but I am determined we’ll help hundreds of thousands more people off benefits and into work over the coming years," he says.
The CBI also defended the programme, saying: "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.
“This is an important programme which requires more to be done. While providers have the greatest responsibility for performance, government departments, local authorities, further education colleges and businesses must work together if the programme is to fulfil its potential."
Dave Simmonds, chief executive of the Centre for Economic and Social Inclusion, said: "Because the Work Programme is largely outcome funded, it means that spending on the long-term unemployed is falling at precisely the time that many will need it most."
However Number 10 rejected claims that the Work Programme was worse than doing nothing at all. "What is clear is that the Work Programme is being successful in getting people off benefits - 56% of people who entered the Work Programme are now off benefits," the Prime Minister's spokesman said.
The figures come a day after three homeless charities - Crisis, Homeless Link and St Mungo's - pressed for "urgent" reform of the scheme, saying it was failing to help homeless people.