National Audit Office report published on Transforming health assessments for disability benefits

The Department for Work and Pensions' (DWP) plans to transform the application and assessment process for disability benefits face challenges that it will need to carefully manage if it is to avoid cost overruns, further delay, or a watering down of its ambition, according to a new report by the National Audit Office (NAO).

DWP's Health Transformation Programme (the Programme)¹ aims to simplify and make the assessment process more accessible for the 3.9 million working-age people who receive at least one of the principal disability benefits².

The Programme was launched in 2018 and is expected to run until 2029. In its business case for the Programme in 2021, DWP planned to spend around £882 million on developing the Health Assessment Service and £97 million on the Functional Assessment IT service. This is in addition to the £2,095 million expected cost of the 2024-29 Functional Assessment Service. It has already spent £171 million, mainly in setting up the Programme, the interim contracts, and the new test areas.

DWP expects to achieve efficiency savings of around £2.6 billion over the life of the Programme from 2021-22 to 2035-36, a net present value of £1 billion.

In March 2023, DWP published its health and disability White Paper setting out a new policy approach "to help more disabled people and people with health conditions to start, stay and succeed in work".³ The Programme will provide the mechanism through which DWP will implement many of the objectives it has set out in the White Paper, including plans to remove the Work Capability Assessment.

In its report - Transforming health assessments for disability benefits - the NAO found that the Programme is ambitious, and represents an opportunity to substantially improve the cost, timeliness, and accuracy of functional health assessments while improving the experience for claimants and increasing the trust they have in the system. However, DWP's approach of transforming services over multiple contracts with in-house transformation areas is innovative, and DWP does not have any examples where this approach has previously been successful to use as a guide.

There have already been delays both due to the COVID-19 pandemic and DWP's evolving commercial approach.⁴ There also remain gaps in DWP's approach that it still needs to fill. The NAO sets out eight challenges that DWP must carefully manage, including:

• It is not yet clear how all of the reforms set out in its recent White Paper will affect the Programme's timetable, cost, and benefits. DWP is still working up the detail of its plans and aims to complete a new business case for approval by spring 2024.

• DWP's approach will require negotiation and the contractors' cooperation. The Programme requires three phases of integration: rolling out the interim IT solution for providers to use between 2024 and 2029; testing the new Health Assessment Service with providers in specific geographic areas; and (subject to approval) rolling out the full Health Assessment Service to the 2029 contracts.

• DWP does not yet have all the data and metrics required for testing and judging if the new Health Assessment Service is successful. DWP is still developing its test and evaluation strategy and has not specified exactly what information it will need from the Health Assessment Service to test new practices and judge that the service is ready to proceed to each stage of its rollout.⁵

Among its recommendations, the report calls for DWP to review the Programme plan and update its business case to factor in the White Paper reforms. With several stages before the proposed implementation date, DWP should also test and learn what is best for the new services between now and 2029, and set out how the Health Assessment Service will be benchmarked.

Gareth Davies, the head of the NAO, said:

"While the Programme is ambitious and has the potential to make savings and improve the experience of those being assessed, the scale and complexity of the transformation leaves it at high risk of delay, cost overruns, and of not achieving the intended benefits.

"Government should set out and publish a revised business case to improve transparency so that Parliament has a greater understanding of the Programme and the challenges in implementing it."  

ENDS

Notes for Editors

1. The Programme is one of the largest transformation and service delivery programmes by value in government's current portfolio.
2. DWP published Transforming Support: The Health and Disability White Paper in March 2023. This outlines a range of reforms to the support provided to disabled people and other health conditions.
3. DWP has delayed the Programme and revised its plans including following a programme reset and the impact of the COVID-19 pandemic, although the planned implementation date has only moved by one year to 2029.
4. DWP published its evaluation strategy in May 2023, which sets out a high-level approach for evaluating and tracking the performance of the Programme, including nine top-level key performance indicators. Of these nine key performance indicators, DWP told us that it has data and has developed metrics with baselines for six. DWP's key performance indicators do not give a complete picture of its ambition for the Programme. DWP has also identified at least 45 other metrics which better capture the fuller ambitions of the Programme. Of the 54 key performance indicators and other metrics, DWP told us that it has already developed and baselined metrics for 27.