This morning the National Audit Office released its report into the Department for Work and Pensions' management of health and disability assessment contracts.
Due to various delays and problems in implementation, the savings they will now expect to see in the near term are small when compared with the total spend on disability budgets. Savings are expected to be £0.4 bn by 18-19 (Personal Independence Payments (PIP) and Disability Living Allowance(DLA)) but the total spend on disability benefits in the three years to 18-19 is expected to be £92 bn.
Progress is being made in terms of speeding up applications processes - in August 2015 the average PIP assessment took 4 weeks, down from a high of 29 weeks in mid 2014. However there are still problems with capacity, as highlighted by a 280,000 case backlog in Employment and Support Allowance (ESA) assessments.
Some of the capacity is due to contractors' difficulty in recruiting and training the necessary numbers of staff, particularly in London and the Home Counties. Shortages of supply have pushed up salaries, contributing to an increased cost per assessment (ie the average Atos ESA assessment is up from £115 to £190).
The NAO reports improvement in the manner in which the department manages contracts but there are still problems around the setting of unrealistic targets, often based on aspiration rather than evidence basd assessments of what the contractors can deliver. These overly ambitious numbers lead to problems later when it becomes clear that they are not being met.