NAO finds faults in disability assessments contract

17 Aug 12
The National Audit Office has found ‘weaknesses’ in the contract with the private firm responsible for assessing people’s medical fitness for work, including inadequate penalties for ‘underperformance’.
By Richard Johnstone | 16 August 2012

The National Audit Office has found ‘weaknesses’ in the contract with the private firm responsible for assessing people’s medical fitness for work, including inadequate penalties for ‘underperformance’.

A letter from auditor general Amyas Morse to Labour MP Tom Greatrex said the Department for Work and Pensions had not set ‘sufficiently challenging’ targets in the contract with Atos Healthcare.

Atos assesses claimants of disability benefits on behalf of the DWP, as part of the government’s attempts to move people off welfare and into work. The assessments were introduced in 2005 for new claimants but from October 2010 have applied to everyone moving from Incapacity Benefit to its successor Employment and Support Allowance.

The NAO examined the DWP’s management of the deal with Atos following a request from Greatrex, who raised concerns about whether the department was receiving value for money.

Morse’s letter said the medical tests formed a ‘crucial source of evidence’ when determining individual benefit entitlements. Around 738,000 face-to-face medical assessments had been completed, costing the DWP £112.4m in total.

However, Morse highlighted that last September the department identified ‘weaknesses’ in the governance structures in place to support the contract.

Atos has generally met the agreed thresholds on the quality of medical assessments, the NAO said, but that the time taken to clear each case was ‘below the standard’ in 2009 and also since mid-2011.

Despite meeting these targets, some 38% of appeals against an ESA decision are upheld.

‘Consequently, we have recommended that the department put in place arrangements to better understand why decisions are overturned on appeal,’ Morse said.

‘We have also recommended that the department consider tightening the performance requirements on the contractor in relation to the quality of assessments.

‘We do not consider that the current contractual targets are sufficiently challenging, and in our view this allows the contractor to deliver a significant number of assessments before financial penalties become due.’

The NAO review had ‘also concluded that the department has not sought adequate financial redress for contractor underperformance’. The contract specifies that ‘service credits’ penalties can be applied when Atos has failed to meet one of the agreed standards. However, just 10% of the service credits triggered have been applied, Morse said.

The DWP insisted Atos was not being allowed to under-perform and a review of the contractual targets was being carried out.

A spokeswoman for Work and Pensions Secretary Iain Duncan Smith said: ‘The contract has changed considerably since it was signed by the last Labour government – it continues to evolve as we have it under constant review.

‘In 2010, the Work Capability Assessment was not working properly and since then we've substantially improved it. It is a complicated area but we are committed to making it a success to ensure it is both fair and accurate for the user and value for money for the taxpayer.’

Last month disability charity Scope criticised the assessments, saying they were ‘failing miserably’.

Chief executive Richard Hawkes said today that the high numbers of appeals following the tests did little to reassure disabled people that decisions were being made in a fair and appropriate way.

‘This is a flawed assessment that doesn’t take into consideration all the barriers disabled people face finding work,’ he added.

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