Also did A4E actually secure all those jobs or are they just claiming the credit for some people who managed to find work off their own bat with no help from Workfare.

Welfare to work scheme co-ordinating firm goes bankrupt

The government's controversial welfare to work initiative has suffered another blow after it emerged that a social enterprise firm hired to get the long-term jobless into employment has gone into liquidation, claiming banks refused to lend it money to stay afloat because they considered the work programme to be too financially risky.

Eco Actif, a community interest company based in Sutton, Surrey, closed suddenly on Friday morning. It provided employment support for around 500 people in the south-east of London, operating as a subcontractor in a regional supply chain headed by the welfare to work company A4e.

Its chief executive, Amanda Palmer-Roye, said Eco-Actif had performed well in getting people into work and had a £1m order book but had been unable to raise the capital to sustain itself under the government's payment by results system, under which firms must wait 18 months between delivery and payment.

In a letter to staff, Palmer-Roye said Eco Actif had approached both conventional banks and social finance providers for backing but had been refused on the grounds that the work programme was too high-risk and that "prime contractors are not passing sufficient funds to the ultimate delivery organisations to make sufficient surplus to finance any loan".

The letter added that its association with A4E had been a matter of great concern to potential investors.

The government's flagship employment scheme is facing an "almighty mess", Labour has said, after a revision of official forecasts showed 1 million fewer people would be eligible.

In the latest blow to the work programme, in which companies are paid by results to find work for the long-term unemployed, the government has almost halved the number of people expected to use the scheme. There are now fears that people hired to find work for the unemployed could in turn lose their jobs.

Liam Byrne, the shadow work and pensions secretary, said: "Chaos is engulfing the government's flagship back-to-work scheme. Unemployment is at a 16-year high and yet welfare to work now appears to be in the hands of the Keystone Cops."

The government disclosed in May that 1.4 million people would be eligible for the scheme, rather than the 2.6 million forecast in December. This represents a 43% fall in the number of people expected to go through the work programme between now and 2015-16.

Government sources acknowledged there was a surprising spike last December in projections by the Office for Budget Responsibility of the number of people who would apply for jobseeker's allowance. The OBR, the government's independent economic forecaster, has repeatedly revised downwards its forecasts for economic growth.

Reviewer of fitness-to-work benefit tests to stand down

The man in charge of reviewing the government's controversial fitness-to-work benefit assessments is to stand down, the BBC's Panorama has learned.

Professor Malcolm Harrington has called for a big overhaul of the process of testing claimants' ability to work to make it more "fair and humane".

He said ministers wanted a "fresh set of eyes" - but denied this was because of changes he had asked for.

Officials said he had only been recruited for a limited period.

Atos, the firm that runs the work capability assessment designed to encourage people to move off benefits and into employment, has won contracts worth more than £400m to test whether disabled people should continue receiving benefits..

The Department for Work and Pensions (DWP) announced the award of three contracts in England and Wales, with Atos unexpectedly winning the lion's share of the work. The smaller of the three contracts, covering Wales and parts of central England, was won by the outsourcing company Capita.

In a decision that has potentially far-reaching consequences the Judge held that the decision to strip our client of his benefits for six months was unlawful because the DWP failed, as required by law, to provide information to him about the consequences of not participating in the scheme. Mr Wilson received the DWP’s standard form letters requiring his attendance on the Community Action Programme. These letters, which have been sent out to thousands of other people mandating their attendance on such schemes, failed to comply with the basic notice requirements that would allow the DWP to lawfully impose benefit sanctions.

Over the last year, across the country, tens of thousands of people have been stripped of their benefits and must now be entitled to reimbursement by the DWP.

Tessa Gregory of Public Interest Lawyers stated:

“As of January 2012, over 22,000 people[2] had been stripped of their benefits for failing to participate in the Work Programme alone. That figure must now have doubled. Today’s decision should mean that many of those subjected to benefit sanctions will be entitled to reimbursement by the Department of Work and Pensions. It is truly extraordinary that the Government has found itself in this position by failing to provide basic information to those affected.

We welcome the Court’s ruling on this issue but we continue to maintain that the Regulations themselves are unlawful and ought to be quashed. We are seeking permission to appeal the Court’s findings in this regard.”

The DWP said: "We are delighted, although not surprised, that the judge agrees our schemes are not forced labour.

"Comparing our initiatives to slave labour is not only ridiculous but insulting to people around the world facing real oppression."

She added that the scheme was making a real difference to people's lives. "Those who oppose this process are actually opposed to hard work and they are harming the life chances of unemployed young people who are trying to get on."