A group of MPs has questioned whether the Coalition's flagship welfare to work scheme is helping the most disadvantaged long-term unemployed people.

According to a report issued today by the Work and Pensions Committee, the Work Programme's payment-by-results pricing structure encourages employment contractors to ‘park' jobseekers – such as people with disabilities, homeless or those with drink or drugs problems - deemed incapable of securing long-term work.

Additionally, the Department for Work and Pensions (DWP) underspent £248m on the scheme because of provider under-performance, the MPs found.

Dame Anne Begg, chair of the Committee said: ‘The Government must do more to ensure that the Work Programme provides effective support for all jobseekers, not just the ones who are easiest to help.'

Cllr Peter John, London Councils' executive member for skills and employment, said the report echoed the umbrella group's own recent finding that the Work Programme is underperforming.

‘Our research shows boroughs have expertise in supporting these groups and locally-led employment schemes are up to seven times more effective than centrally-set ones,' Cllr John said.

In response, a spokesman for the DWP said performance was clearly improving, citing figures showing by last September more than 207,000 people had found jobs through the Work Programme.

‘The payment-by-results model goes further than any previous scheme to encourage providers to help all claimants, including the hardest to help,' the spokesman said.

‘The key point is they earn the majority of their payment for helping someone into work and keeping them there.'