Efforts to transform experience of disability benefit claimants face risks, PAC finds

- Concerns that DWP has not done enough to communicate with public and claimants on revising health assessments

- Govt’s approach to programme could leave taxpayer vulnerable to higher costs and delays

There is a risk that Government will deliver a new service for disability benefit claimants without the important improvements to the claimant’s experience. In a report published today, the Public Accounts Committee warns that, with the Department for Work and Pensions (DWP), ready soon to test an improved service at scale, it faces significant risks that the PAC has seen derail other major government programmes.

Despite providing essential financial support for some of those most in need, applying for disability benefits can currently be lengthy and stressful for claimants. The DWP established the Health Transformation Programme (HTP) in 2018 to digitalise the process, enable online applications, improve case management, and triage claims. The report warns that the greatest risk to this work is that the DWP focuses exclusively on the delivery of a new digitalised service, without achieving the important transformational change for the experience of claimants.

The Government is more likely to improve the service if it works with disabled people and their representative bodies, but the report raises concerns that the DWP has not done enough to communicate and engage with the public and claimants about what they can expect from the revised service. While some charities and stakeholder groups welcome the Department’s proposed changes, the Department has not promoted the Programme widely to the public. The DWP does not currently intend to consider a national campaign to improve awareness until it reaches the stage of scaling up the programme, which will not happen for a couple of years.

The DWP expects the HTP to cost £1bn, of which it has spent £168m up to March ’23. It expects to achieve benefits equivalent to £2.6bn by improving the speed and accuracy of decisions, giving claimants better support, and improving claimants’ trust in decisions made. But the report warns that the DWP’s approach to working with contractors could leave the taxpayer vulnerable to contractual disputes, higher costs and delays.

Sir Geoffrey Clifton-Brown MP, Deputy Chair of the Public Accounts Committee, said:“Disability benefits are designed to help people both with extra living costs and with everyday life. The Government’s work to reform the complicated, stressful and lengthy application process is hugely significant for the approximately 3.9 million claimants, their relatives and advocates. These reforms will only be successful if they truly transform service users’ experience, rather than simply delivering the bells and whistles of a new digital platform.

“The DWP set up the programme in July 2018 to transform the health assessment and PIP application process. It aims to do this by digitalising the process enabling online applications, improving case management and triaging claims. As a result, the Department told us that the claims process would be simpler, more user friendly, easier to navigate, more joined up for claimants and better value for money.

“We were informed that this will involve the introduction of a large new IT programme estimated to cost £1bn, producing benefits of £2.6bn. The Government’s record of introducing large IT programmes has not been good. But the witnesses demonstrated that the implementation so far has been thorough and well thought through.

“So, one of our recommendations is to produce annual reports stating a) how well its evaluation of the new service is progressing against targets, and b) assessing whether it is on track to achieve its benefits for claimants and taxpayers.

“These reforms are at a critical juncture now that they are soon to be at the test stage, a point at which our Committee has seen other major government projects come off the rails. The DWP must expand its focus to genuinely put claimants right at the heart of this work if it is to achieve the wider benefits of this programme, and we hope the recommendations in our report serve as a helpful guide in this regard.”

PAC report conclusions and recommendations 

The success of the Health Transformation Programme depends on the Department’s ability to genuinely transform the experience people have when applying for disability benefits.The Department wants the Programme to reduce the running costs of administering benefits by digitising the process, introducing an online application process, and using data to triage claims to reduce the need for face-to-face assessments and to redirect claimants to more suitable support. It wants this to also improve claimants’ experience and trust in its decision making by speeding up the assessment process, making decisions more quickly, removing the use of paper and using case managers to help claimants with the whole process. It expects the Programme to cost around £1 billion and to deliver benefits equivalent to £2.6 billion. Of these benefits, half (£1.3 billion) are wider societal benefits from increased engagement in the labour market and increased claimant employment. These wider benefits rely extensively on the Programme transforming claimant’s experience and improving claimants’ trust, which may be more challenging to achieve than the process improvements. Without these wider benefits, the Programme would be far less likely to be value for money.

There is a risk that the Department will deliver a new service without the important improvements to claimant’s experience. The Department intends to make a lot of changes to the process of making a claim before it launches the new health assessment service in 2029. In advance of this, it plans to build its own case management IT system and develop the new service. It then needs to use a ‘test-and-learn approach’ to trial changes and identify what works to improve the claimant experience. The Department needs to have identified exactly what its new health assessment service will look like by 2027 to either invite the private sector to bid for new contracts or prepare to bring the service in-house. The Department recognises that if its test-and-learn activity reveals the proposed changes do not deliver the intended transformation in claimant experience, it can still issue the contracts for 2029 based on the current service. Given the extent of changes it wants to trial before 2027, we believe the greatest risk to the programme is that the Department focuses exclusively on the delivery of a new digitalised service, without achieving the important transformational change in the experience of claimants on which the wider benefits of the programme rely.

Recommendation 1: The Department should publish a revised business case, no later than spring 2024, with details on how its desired transformation of the health assessments for disability benefits will result in the promised benefits for claimants and how it will track and assess progress towards this.

The Department’s approach to monitoring the Programme’s progress and performance has so far focused on process and not on the transformation of the service for benefit claimants. The Department has not yet completed the work needed to define how it will track progress with its test-and-learn activity. The Department published an evaluation strategy in May 2023 which sets out its nine key performance indicators for the Programme. These are focused on the process of running the service, such as the average cost of the service or the capacity and demand for health assessments, rather than tracking the experience of claimants. The Department has not set out what performance measures it will use to ensure that the Programme delivers the benefits promised for claimants, such as increased trust in services and decisions made. The Department does not yet have the data it needs to undertake testing and to judge if the new Health Assessment Service is successful, but intends that the outline business case for the Programme, expected in 2024, will set out how it will fill these data gaps. 

Recommendation 2: The Department should publish, as part of its new business case and through annual progress reports, outcome indicators that include the benefits of the Programme for claimants, which it, Parliament and the public can use to:

• evaluate its testing of the new service, including establishing baseline performance against the 47 key performance indicators;
• assess whether it is on track to achieve the benefits it intends for claimants; and
• monitor claimants’ experience of the Health Assessment Service and Functional Assessment Service.

The Department’s approach to working with contractors as part of the Programme could leave the taxpayer vulnerable to contractual disputes, higher costs and delays.  Integrating digital systems is a common source of contractual failure and dispute. Contractors can use difficulties in the roll-out of a new system as justification for not providing the services expected, or performing to the standards agreed as part of the contract. The National Audit Office identified three sources of this integration that the Department will need to successfully manage. The Department asserts that it has included sufficient flexibility in its contacts with providers to allow it to change them to include the scaling of the service, testing, and integration of systems that it needs. However, the Department is using standard service contracts and each change will need to be negotiated separately, which can be time consuming and introduces the risk of both cost increases and delay. We are also concerned that, without an alternative viable option, the contractors involved in testing the new service could have an advantage when it comes to letting contracts for the new health assessment service in 2029. The Department intends to keep the option of bringing the service in-house service when it decides in 2027 how to deliver the new transformed service from 2029. This will also improve its ability to negotiate with contractors. However, designing, introducing and implementing an in-house service would be time consuming and the Department would need to do a lot of preparatory work to maintain this as a realistic option.  Social Security Scotland directly employs its health care professionals for functional health assessments rather than using contractors. The Department has committed to working with Social Security Scotland to understand how this works in practice and what it could learn for the new service.

Recommendation 3A: The Department should set out, as part of its Treasury Minute response, how it will:

• incentivise contractors operating under standard service contracts to work with it to expand the test-and-learn activity to the level needed with excessive time and cost implications; and

• manage the risk of that FAS contractors will gain a competitive advantage should the Department decide to contract out the transformed health assessment service in 2029;

• manage the procurement process to promote competition between contractors in order to reduce the costs to the taxpayer.

Recommendation 3B: The Department should set out as part of its Treasury Minute response how it will identify and learn lessons from the approach taken by devolved administrations, to help it retain bringing the service in house as an alternative delivery option.

We are concerned that the Department has not done enough to communicate and engage with the public and claimants about what they can expect from the revised service. The Department is more likely to achieve its ambition to improve the service if it works with disabled people and their representative bodies to identify the best ways of delivering functional health assessments. The Department has engaged with national and local stakeholder groups and has held 18 stakeholder workshops with over 72 different organisations. The Department asserts that it has used customers’ feedback to help it design parts of the service, for example the wording on the screen and how claimants navigate through the process. Some charities and stakeholder groups welcome the Department’s proposed changes, specifically, its decision to trial having more specialist assessors for specific health conditions. However, the Department has not promoted the Programme widely to the public. Given the scale of the project and the number of clients that it will be impact, the Department agrees that it should consider a national campaign to improve claimant awareness of the changes it is proposing to adopt. However, the Department does not currently intend to consider this until it reaches the stage of at scaling up the programme, which will not happen for a couple of years.

Recommendation 4: The Department should set out as part of its Treasury Minute response how it will:

fully involve claimants in the design and implementation of the changes it plans to the disability benefits system; and

raise awareness nationally of the changes it is making to the health and disability benefits system and what this will look like in practice for claimants.

The Department has not worked out how it will manage the inevitable differences between claims made and processed in its new test areas and in areas using the current service. A key objective of the Programme is to help the Department make the benefit decision ‘right the first time more of the time’. Around 15% of initial decisions where the claimant was not awarded the full amount for their PIP payment are later revised by the Department through mandatory reconsideration or having been overturned at appeal. The Department is testing improvements to health assessments and the PIP application service within its health transformation areas in London and Birmingham. By 2026, the Department intends to process up to 20% of new claims using the new service. The Department hopes that these claimants will experience a faster process and improved accuracy in initial decisions. The Department claims that it has a low tolerance for inconsistencies between the new service it is developing and the existing service, and that both services should apply the same legislation and provide the same standard of service. There is an opportunity for the Department to learn from improvements they are making in the current service and input these to the new services so that they can be much improved for clients.

Recommendation 5: The Department needs to monitor and publish data on the services provided in each transformation area and by each provider, so it can identify and manage any differences in the standard of service being delivered. This should include measures of how initial health assessment recommendations are changed by DWP officials and decisions are altered at mandatory reconsideration and appeal.

It is not acceptable that the Department has spent £168 million on the Programme, and is about to commit to a further £2 billion for the Functional Assessment Service, without being transparent to Parliament about whether it is meeting Accounting Officer standards. All programmes in the Government Major Projects Portfolio (GMPP) should have an Accounting Officer (AO) assessment conducted and summary published at the earliest possible opportunity. Despite having spent £168 million on the Programme since 2018, the Department has not published an AO assessment. We have reported previously that HM Treasury has not done enough to support Accounting Officers to comply with its requirement to complete and publish AO assessments. The updated HM Treasury guidance published May 2023 states that, AO assessments should be published at the earliest decision-making point. The Department asserts that, until the new guidance was published, the Accounting Officer assessment was required to be published at the time of the outline business case and the Programme had not reached that stage. The Department claims that it sought to be transparent about the Programme through other means, but these do not provide sufficient assurance about stewardship of resources which is specific to the Programme. The Department has committed to publish an Accounting Officer assessment alongside its outline business case in Spring 2024.

Recommendation 6: HM Treasury should write to the committee within three months, listing any other GMPP programmes that have not published their Accounting Officer assessments, that would be expected to have been already published under its latest guidance. It should also include a rapid timetable for the relevant Departments to publish summary AO assessments now.