A leading figure at a centre-right think tank has accused ministers of failing to grasp the scale of the unemployment crisis and claimed that government welfare reforms will not be sufficient to solve “huge structural problems” in the labour market.

Matthew Oakley, the head of economics and social policy at Policy Exchange, told a Westminster debate that the Work Programme will not do enough in the short term to address long-term worklessness and youth unemployment.

He said: “There are still huge structural problems in the UK labour market, and despite all of the talk from ministers I don’t think that any of them have the answers.

“The Work Programme is effective and will prove to be a good thing, but we need to actually be honest and sell the message that there is an awfully long way to go.”

Oakley called for a longer-term policy approach to welfare that offers more personalised support for jobseekers, delivers on ministerial pledges to make work pay and incorporates conditionality measures to encourage self-improvement through learning and working.

Oakley said: “Despite what the coalition says, we don’t think that enough personalisation happens, and people on jobseekers’ allowance or income support have to wait for six months to get onto the Work Programme. That is a long time for people to become demoralised and demotivated.

“Instead let’s send them to a specialist service from day one. That will involve changing the Work Programme contracts and it is also going to entail joining up employment and skills agendas across Whitehall.”

Oakley also urged ministers to adopt incentives over sanctions to break the costly cycle of low skills and generational worklessness.

He added: “The sanction of ‘three strikes and you’re out’ is not helpful, and when you apply it you actually damage the lives of the dependents you are trying to help.”