The Labour government’s £760m Pathways to Work scheme, which aimed to move people off disability benefits and into work, has been criticised by a report by the government’s spending watchdog the Public Accounts Committee (PAC).

PAC said the scheme had a limited effect and when it did get someone into work it cost at least £6,000 a time. Between 2005 and 2009 the number of people on incapacity benefits reduced by just 125,000 and the committee said it could not be clear how many of these were due to the Pathways project.

The scheme aims to provide targeted support and earlier medical assessments. It has mainly been provided by private contractors, who are said to have performed worse than Jobcentre Plus. The report says that ‘private providers performance was universally poor in helping claimants to go on the programme. They tended to cherry-pick their clients and still achieved only one-third of the targets for mandatory participants’.

PAC’s Labour chairwoman Margaret Hodge said: “The Department for Work and Pensions deserves credit for attempting to tackle the intractable problem of moving people from incapacity benefits into work. But its key programme for doing so, Pathways to Work, was not well implemented and has had limited effect.”

The current government is thought to be looking to run a similar scheme, based on payment-by-results.

Work and pensions minister Chris Grayling 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.”