The government's control over its Work Programme, a 'welfare to work' scheme, is being hit by IT rollout delays.
The programme, which replaces all of the government's similar existing schemes, is intended to help unemployed people back into the workforce.
But a National Audit Office report, issued today, found that the IT project aimed at supporting the scheme "was not fully functional when the programme was launched" eight months ago, severely affecting operations, and is still not running.
"A consequence is that the department will not be able, until March 2012 at the earliest, to carry out automatic checks to confirm that people who find work have stopped claiming benefits."
The management information system, which was not named, is now set to cost £8.6 million - four million pounds over budget.
The NAO insisted that the Department for Work and Pensions, which is running the scheme, "needs to ensure that improvements to the IT system are delivered on schedule", because of the current risk of fraud and error "going undetected".
While criticising the launch speed of the programme, the NAO said that the new scheme did address many of the concerns over previous programmes by paying welfare to work scheme providers by results.
The government was also "over-optimistic" about the programme being likely to help 40 percent of participants back in to work, the NAO said, when 26 percent was more likely given the areas of highest unemployment. The government additionally needed to ensure scheme providers did not cut corners to achieve results.