Taxpayers ‘left to foot bill for DWP’s assessment failures’ as costs set to double

Disabled people have been failed by the government’s inability to manage the assessments for disability benefits that are carried out by outsourcing giants Atos Maximus and Capita, according to the chair of an influential committee of MPs.

Labour MP Meg Hillier, who chairs the Commons public accounts committee, spoke out after a damning report by the public spending watchdog, which found spending on assessments was set to double in just two years while the three companies were failing to meet the required standards.

The assessments help determine eligibility for employment and support allowance (ESA) and personal independence payment (PIP), and also aim to support people on sick leave back into work as part of the new Fit for Work service.

But the National Audit Office (NAO) said the Department for Work and Pensions (DWP) had failed to achieve value for money from the health and disability assessments it had contracted out to Atos, Maximus and Capita.

In 2014-15, DWP spent about £275 million on assessment contracts, but this is expected to more than double to £579 million by 2016-17.

Between April 2015 and March 2018, DWP expects the three companies to carry out about seven million assessments, at an estimated cost of £1.6 billion.

It also expects the contractors will increase the number of healthcare professionals they employ by more than 80 per cent, from 2,200 in May 2015 to 4,050 in November 2016.

NAO said the cost of the assessments was rising and Atos, Capita and Maximus were “still struggling to meet expected performance standards”.

It points in the report to DWP’s contract with Maximus, which took over the provision of ESA assessments from Atos in March 2015.

Under the contract, the government expects to pay Maximus £595 million over three years for 3.4 million assessments, at a cost of about £190 per assessment, compared with £115 per assessment under the previous contract with Atos – an increase of 65 per cent.

DWP has told NAO that the increase in cost is partly due to Maximus carrying out a higher proportion of face-to-face assessments than Atos, and paying higher salaries for healthcare professionals.

The estimated cost of hiring and training a London-based nurse to carry out ESA assessments has increased from an average £26,000 in spring 2014 under the Atos contract to £44,000 for a London-based nurse in 2015-16 under Maximus.

The report also says that despite Atos and Capita now taking an average of four weeks to process a PIP assessment, compared to 29 weeks in mid-2014, and Maximus taking 23 weeks for an ESA assessment (compared to 29 weeks previously), by last August there was still a backlog of at least 280,000 ESA assessments.

NAO also warned that Maximus was “not on track to complete the expected number of assessments” for 2015-16 – DWP set a target of nearly one million ESA assessments – and “has missed assessment report quality targets since the start of the contract”.

It said that both Atos and Capita have failed to meet PIP assessment report quality targets since October 2013.

NAO said DWP had expanded its performance management team and managed the transition between ESA providers “smoothly”, after Atos requested an early exit from its contract.

Amyas Morse, NAOs, said DWP had “addressed some of its immediate operational issues” in managing the assessments but “now needs to take action to break a perpetuating cycle of optimistic targets, contractual underperformance and costly recovery”.

He added: “The department is paying more for assessments, but providers are still not meeting expected performance levels. 

“The department needs providers to complete the planned number of assessments so that it can achieve the significant benefit savings it expects to make over the next few years.”

NAO called on DWP to “develop an overall commercial strategy for assessments, set challenging realistic targets for providers and engage with providers to learn from previous experience”.

Hillier said: “The department’s approach has been unclear, its targets untested and consistently missed and future delivery is under threat.

“With the annual cost of assessments now expected to rise to a staggering £579 million in 2016-17, taxpayers have been left to foot the bill.”

She added: “Contracting out the delivery of public services does not absolve the department from its responsibilities to ensure that taxpayers’ money is well-spent.

“The department needs to do more to ensure private providers deliver a better deal for sick and disabled people, as assessments have a huge impact on their ability to access vital cash to live with dignity.”