DWP's own assessment of mandatory work activity programme finds it has 'no impact on the likelihood of being employed'

Thousands of jobseekers have been referred to a mandatory work scheme that has done nothing for their employment chances, has made them as likely to claim benefits over the long term as those not on the scheme, and has led to a proportion subsequently signing on for sickness support, government research has found.

The assessment by the Department for Work and Pensions of its own mandatory work activity (MWA) programme was filed at the House of Commons library late on Tuesday evening, three hours after the employment minister, Chris Grayling, announced he would be pumping in £5m of extra funding to expand the scheme so it could take up to 70,000 referrals a year.

The government also announced that it would toughen the sanctions regime, making it even harder to temporarily sign off benefits to avoid being forced into unpaid work for up to four weeks .

The government's peer-reviewed study concluded that being referred by jobcentre managers to mandatory unpaid work for 30 hours a week was good at pushing people off jobseeker's allowance in the short term.

However, over a three to five-month period, those who did not eventually start mandatory work were more likely to return to out-of-work benefits when compared with those who had never been referred in the first place.

Overall, out of those being referred, there was no positive or negative effect on benefit claims between the different groups which were compared. DWP researchers said this total of people returning to benefits included a 3% increase in those claiming employment support allowance, a benefit given to those people suffering with serious health problems.

The study, which compared the outcomes of more than 3,000 MWA referrals and 125,000 non-referred jobseekers, also concluded that the scheme had zero effect in helping people get a job.

"The results show that … an MWA referral had no impact on the likelihood of being employed compared to non-referrals," the 62-page report said.

Researchers found that, between May and November last year, more than 1,600 people had their benefits cut for up to six months for refusing to start a placement or leaving it before it finished. One in five of those who failed to start MWA were sanctioned. The researchers said it was "possible that the impacts will change later on as the programme develops".

In a ministerial statement Grayling said: "We've found that a month's full-time activity can be a real deterrent for some people who are either not trying or who are gaming the system. But we're also fighting a battle to stop claimants slipping back into the benefits system by the back door."

Grayling defended the scheme on Wednesday. He told the Guardian: "This was a scheme our own Jobcentre Plus advisers wanted to introduce. This impact analysis only covers the first three months of the programme a year ago and is already out of date.

"What it shows is we had teething problems in the first three months and, since then, we've taken a number of steps to tighten loopholes and are continuing to do so. It's a relatively new and experimental scheme which is improving all the time."

The National Institute of Economic and Social Research (NIESR), which was asked by the DWP to peer review the research, said Grayling's decision to expand the scheme flew in the face of the evidence that showed it was not working.

Writing on his blog, the NIESR director, Jonathan Portes, said: "This is a complete policy disaster. It is very difficult not to conclude that, whatever your position on the morality of mandatory work programmes like these, the costs of the programme, direct and indirect, are likely to far exceed the benefits.

"The analysis shows that the programme as currently structured is not working. It has no impact on employment; it leads to a small and transitory reduction in benefit receipt and, worst of all, it may even lead to those on the programme moving from jobseeker's allowance to employment and support allowance."

He went on: "It is highly commendable that the department has undertaken and published this analysis. It would be even better if that hadn't been accompanied by a policy decision which seems to fly directly in the fact of the evidence. At at time of austerity, it is very difficult to see the justification for spending millions of pounds on a programme which isn't working." A spokesman for the DWP said it was misleading to claim that the report found that "some of those referred to MWA were more likely to claim benefits", and said the report actually showed that on average people referred to MWA spent more time off benefits over 21 weeks than other jobseekers.

• This article was amended on 15 June 2012. To clarify: the original text may have given the impression that those who are referred to the scheme are more likely to sign on for benefits over a period beyond the 21 weeks covered by the research.