Work Programme: Report highlights problems 21 March 2013 Last updated at 21:32 By Michael Buchanan, Social Affairs Correspondent BBC News An official report on the government's main welfare to work initiative, the Work Programme, has highlighted significant problems with the scheme. It says that financial pressures mean that some contractors are struggling to provide the necessary support. The Centre for Social and Economic Inclusion (CSEI) conducted the report on behalf of the Department for Work and Pensions (DWP). The DWP said the performance of contractors is improving. The £5bn work programme was launched in June 2011 and is primarily aimed at getting people who have been unemployed for more than a year into a job. It is delivered by a series of 18 prime contractors working for the government and hundreds of smaller sub-contractors. Providers are paid by results, meaning they get most of the fee for finding someone a job once that person has been in work for an extended period of time, up to two years. Official figures on the performance of the work programme during its first year, published last November, found that just 3.5% of people on the scheme had been found a job lasting at least six months. The report says that prime contractors on the Work Programme are passing the risk of failing to find someone a job to their subcontractors and some sub-contractors have been forced to lay staff off due to the lack of referrals. Once underway, referrals to the programme from Job Centre Plus in the initial months were much higher than anticipated, a consequence of rising unemployment and a weaker than expected economy. This led, says the report, to an increased use of group sessions and online help rather than the one-to-one support that was envisaged. The CSEI says that the prime contractors, fearful of investing resources in someone who does not get a job and therefore failing to get a fee from the government for their work, are passing the risk to sub-contractors. Insufficient The failure to find enough jobs is causing some sub-contractors financial problems with some telling the researchers that their continued involvement is unsustainable. A key element of the work programme is that contractors are paid larger fees for finding and keeping in work people with lots of difficulties, such as major disabilities. But the report found that the fees, which can, for instance, be thousands of pounds higher for keeping someone who was on Employment and Support Allowance in a job, are failing to attract contractors. Researchers say the payments may be insufficient to cover the cost of helping such people into a job. In a statement, the DWP said "More than 200,000 people have already got into a job thanks to the Work Programme, and long-term unemployment fell by 16,000 in the last three months. It's widely acknowledged that getting the scheme up and running so quickly was a major achievement and performance is improving. By paying providers according to the results they achieve, there's a real incentive for them to get people into work.