Job Centre
A Job Centre sign is seen at the Job Centre sign at the Department of Work and Pensions government officesReuters

The UK government faces overpaying contractors of one of its flagship welfare reforms by £25m in bonuses due to contract "flaws", according the National Audit Office.

The independent parliamentary body said that The Work Programme, which provides support, work experience and training for up to two years to help benefit claimants find and stay in work, is not working as the Department for Work and Pensions intended it to, with regard to incentive payments.

"Flaws in contracts and performance measures have led to unnecessary and avoidable costs," a report from the NAO said.

"The DWP may have paid contractors £11m ($18.8m, €13.8m) in the period to March 2014 for performance they may not have actually achieved and could overpay contractors £25m over the remainder of the programme unless it changes its approach."

But the NAO said that the ministry, which is led by the Secretary of State for Work and Pensions Iain Duncan Smith, has recognised where it has needed to make changes to contracts.

"It has been actively negotiating with contractors to make improvements but it is not yet clear how much the Department will need to compensate contractors for changes," the NAO explained.

The organisation also said that the performance in respect to getting people seen as easier to help into work has improved since the first published data.

Of those people claiming Jobseeker's Allowance aged 25 and over, 27% of people who have completed the programme have moved into employment lasting six months or longer.

The NAO explained this amount is similar to previous comparable programmes, but is less than the DWP's original forecast (39%), minimum performance levels (33%), and bidders' original expectations (42%).

"The Work Programme has improved on its poor start with performance to date reaching that of previous schemes. There are signs that performance is still improving," said Amyas Morse, head of the NAO.

The DWP must now deliver the significant increases in performance it expects, in particular improving outcomes for harder-to-help groups."

But a DWP spokesperson said: "The Work Programme is helping more people than any previous employment programme and has already helped half a million people start a job and 300,000 into lasting work.

"The NAO says that we've already saved more than £40m over and above any previous employment programme, and that we'll save £450m on benefits compared with any scheme that has gone before."