Its one of those ideas that sounds great in theory, but is going to be very difficult in practice and probably counterproductive.
N Ireland had a similar scheme that ran until the late 90s whereby long term unemployed people could do full time voluntary work whilst on unemployment benefits. It was completely voluntary, but extremely popular.
It also sent employment rates through the floor - that is, if you were on this scheme you were massively LESS likely to get paid work.
There's a good reason that in general you are only allowed to undertake very limited amounts of voluntary work while on JSA.
Not only does being in voluntary work take away your time for jobhunting, there's also a hard to pin down but definite psychological effect - if you are in work, working hard, and doing good and useful things (as these people were), then it feels like you don't NEED to get a job, since you already have one.
I take the point that this is meant to be aimed at the (in practice pretty small) number of the ltu who are pretty much unemployable. But funnily enough, I don't see the voluntary groups etc falling over themselves to take those people on.
Inevitably the people they'll pick up are - for example - the 50 somethings who are good reliable workers but ltu because of local labour market conditions. Jobcentre workers will send them towards this programme because they have nothing else to offer them, and they know that they'll be welcomed with open arms.
On the bright side, lots of useful work will probably get done, paid for by the state, by workers who would love to have a productive job but can't get one any other way. But then on the other side of it, they'll probably be jobs that were previously being done by people being paid properly that have been cut & are now on the dole . . .