30/05/2012 10:08 BST | Updated 30/05/2012 10:22 BST

Chris Grayling Warns Work Programme Providers: Failure Is Not An Option

Employment minister Chris Grayling has warned providers and contractors for the government's Work Programme scheme that they face losing their contracts if they don't achieve ambitious targets, amid signs of growing disquiet about the project's ability to get people off benefits and into work.

Grayling was speaking to a gathering of stakeholders in central London to commemorate the Work Programme's first birthday, and amid reports that those third parties actually implementing the scheme doubted whether it could hit its targets in the current labour market and rising uncertainty triggered by the Eurozone crisis.

Acknowledging that the scheme had seen "a difficult winter where the labour market was tough," Grayling could only say that the Work Programme was "enjoying a pretty good spring."

The statistics he mentioned seems to suggest that the number of people finding work through the work programme was slowing. In the first three months around 22% of people put through the programme had entered into a job - amounting to around 60,000 jobs.

However the minister said total number for the year was "coming up on 100,000".

Speaking to Huffington Post some Tory sources have privately expressed concern that while the Work Programme appears to be doing well in fairly affluent areas, it is failing in more deprived parts of Britain where the skills base is lower.

Speaking on Wednesday, Grayling could only state that among "section one" claimants - adults over 25 with no complicating factors such as criminal records or medical conditions - the job entry rate was above 25% "in many parts of the country."

In what was meant to sound like an upbeat assessment of the Work Programme's first year, Grayling warned the providers and contractors that they would be replaced if the results didn't come through. "Competition means if you're not coming up with the results, some-one else will, and they will get the work," he said.

"Some organisations won't make it, some will end up dropping out of the work programme," he added. "I make no apology for setting a tough challenge and demanding the very best."

His comments follow the embarrassing termination of a welfare-to-work contract with the company A4E, which has been investigated over allegations of fraud.

Grayling confirmed that huge numbers of people were being moved from incapacity benefit to Jobseekers Allowance - saying that 37% of people had been found medically fit to work, far more than the government originally forecast.

He also said that there was a big problem with NEETS (young people who're neither in in employment, education or training) not being registered in the system, suggesting that a "hardcore" of them never went into a JobCentre plus.

"Contractors are going to have to go out and recruit them," he said, claiming that if the government's welfare to work programme was to succeed it would have to become a "giant employment dating agency".

Grayling also hinted that a pilot scheme involving mandatory work for those on long-term benefits was being devised behind the scenes, possibly to be used on people who have failed to secure a job through the work programme after two years.

He said he'd sat in on some interviews with JobCentre advisers and believed some people were continuing to claim benefits despite working in black market jobs.

"One was clearly spending every day in bed with his girlfriend," he said, to laughter from the audience.

"I don't care how it happens, I just want the industry to be the best," he said.