The Department for Work and Pensions (DWP) is not yet achieving value for money in the management of contracts to provide health and disability assessments, according to the National Audit Office (NAO).
In a report the NAO said the cost of assessments was rising, providers were struggling to meet performance standards and the DWP “does not have a clear strategy for contracting out assessments and risks damaging market interest through tight procurement timetables, inflexibility towards critical assumptions and lack of transparency”.
The NAO said between April 2015 and March 2018 the DWP expected to carry out around 7m assessments, which are used to decide eligibility for benefits or to help the long-term sick back into work, at a total cost of £1.6bn.
The report said the cost of an Employment and Support Allowance (ESA) assessment had increased to £190 under the provider the Centre for Health and Disability Assessments (CHDA), compared to £115 under the previous contractor Atos, though this was in part due to a higher proportion of face-to-face assessments and rising salaries for healthcare professionals.
The NAO said the number of outstanding assessments had been cut and they were being processed more quickly, down to four weeks for Personal Independence Assessments (PIP), compared to a peak of 29 weeks in mid 2014, while ESA claims are down to 23 weeks.
However, there is still a backlog of at least 280,000 ESA assessments at August 2015 and CHDA is “not on track to complete the expected number of assessments for 2015 and has missed assessment report quality targets since the start of the contract”.
“Both Atos and Capita have failed to meet PIP assessment report quality targets since October 2013,” said the report.
The NAO said the DWP had increased its “capacity for performance management” from 48 people to 80 and it had managed the transition between ESA providers “smoothly”.
“The department continues, however, to struggle with setting targets and requirements with clear evidence and failed to adequately test bidders’ assumptions, for example about staff training, during the contract tender process,” said the report.
Amyas Morse, head of the NAO, said: “The department has addressed some of its immediate operational issues in managing contracted-out health and disability assessments but now needs to take action to break a perpetuating cycle of optimistic targets, contractual underperformance and costly recovery.
“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.”
The government is expecting to make savings of £400 million on annual disability benefit spending.