DWP disability assessments cost more under new contract, NAO finds

8 Jan 16

Outsourcing Department for Work and Pensions health and disability assessments has not been value for money, with the costs of tests increasings by 65% in a new contract, auditors have found.

The National Audit Office has examined the latest contract to provide Employment and Support Allowance eligibility assessments. A report published today found costs were rising and providers are struggling to meet expected performance standards.

The DWP agreed to a request from previous provider Atos to end their ESA assessment contract in 2014. But under the new deal with the Centre for Health and Disability Assessments each test costs more, the NAO.

Tests are used to help decide if people are eligible for benefits or to help those on long-term sick leave back into work.

Under the deal signed in March 2015, the department expects to pay £595m over three years for 3.4 million assessments. This is around £190 per assessment, compared with £115 per assessment under the Atos deal. Costs have increased in part due to a higher proportion of face-to-face assessments and rising salaries for healthcare professionals, the Contracted-out health and disability assessments report found.

It also concluded that the department has reduced the number of outstanding assessments and these are being processed more quickly. ESA claims took 23 weeks to process in August 2015 compared to 29 weeks in mid-2014. The time taken to process assessments for the Personal Independence Payment, which provides assistance with the costs of disability, has also been cut, from 29 weeks to just four over the same period.

Auditor general Amyas Morse said the DWP had addressed some of its immediate operational issues in managing contracted-out health and disability assessments. However, it now needed to take action to break what he called “a perpetuating cycle of optimistic targets, contractual underperformance and costly recovery”.

Morse 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.”

Public Accounts Committee chair Meg Hillier said the report showed that both disabled people and taxpayers in general have been failed by the DWP.

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

“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.”

Responding to the repot, a DWP spokesman said: “We welcome the NAO’s recognition that we have made significant progress to improve contracted-out health and disability assessments. We are determined to support more people into work and provide individuals who can’t with the correct support that they need – the effective assessment of people’s abilities is key to this.

“To ensure that support is targeted correctly and that we achieve value for money, we operate a strict competitive contract tendering process and factor all costs into departmental spending plans. This also ensures that the quality of the assessments for claimants improves at the same time.”

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