Voluntary organisations that delivered the government’s Pathways to Work initiative bore an "unfair share" of the risks involved, a report by an influential committee of MPs said yesterday.
The Department for Work and Pensions established the £760m Pathways programme between 2005 and 2007. The scheme aimed to reduce the number of incapacity benefit claimants.
But the Public Accounts Committee report said the government failed to monitor the treatment of small voluntary organisations that delivered work for the programme as subcontractors.
"The department had an objective to build a healthy market, but has failed to develop an adequate understanding of the supply chain," the report said.
"It has not monitored how well prime contractors are sharing rewards and risks with the more than 80 specialist subcontractors involved.
"We have concerns that effective small private and voluntary organisations working in local communities are being asked to take an unfair share of the risk by prime contractors."
The Pathways programme is being replaced by the new government’s Work Programme.
The report welcomed the creation of the Merlin standard, a new code of conduct for contractors and subcontractors taking part in the Work programme, for tackling "unfair treatment" of subcontractors.
Chris Grayling, the employment minister, said: "This report is hugely disappointing and just underlines how misplaced many of the previous government's labour policies were. They just never got to grips with the challenges of getting people back to work."