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Full report: Personal Independence Payment: early progress

The Department for Work and Pensions introduced Personal Independence Payment as planned in a small number of areas from April 2013. Since then backlogs have developed in the assessment process, leading to delays and uncertainty for claimants, according to today’s National Audit Office report.

Personal Independence Payment is a non-means-tested benefit to support disabled people with their daily living and mobility costs. It replaces Disability Living Allowance for working age people and aims to match support more closely to claimants’ needs. By 25 October 2013, 166,000 people had started new claims for Personal Independence Payment.

According to the spending watchdog, the Department used a phased roll-out to reduce the risks in the programme, but left little time to test whether it could handle a large volume of claims. When the assessment process took longer than expected backlogs soon developed; by 25 October 2013, the Department had made only 16 per cent of the number of decisions it had expected.

Claimants are experiencing long delays to benefit decisions, and the Department is not able to tell them how long they are likely to wait, potentially creating distress and financial difficulties. By October 2013, there were 92,000 people whose claims were outstanding with assessment providers – Atos Healthcare and Capita Health and Wellbeing – almost three times the number expected by the Department at this stage.

In response to its concerns about the readiness of providers to deal with a further expansion of claims from October 2013, the Department postponed the reassessment of many existing Disability Living Allowance claims. In a late decision, the Department announced on 21 October 2013 that ‘natural’ reassessments would not be rolled out nationally from 28 October as planned, but would be phased in by postcode area based on the Department’s assessment of the capacity of both assessment providers.

Today’s report highlights that the Department introduced Personal Independence Payment despite its compressed timescale and has learnt from past experience in the way it manages contracted assessment providers. However, to achieve value for money, the Department will need to show that it can reduce delays for claimants and deliver planned savings while maintaining the quality of its decisions.

Today’s report finds that, in the current Spending Review period to April 2015, the DWP will not achieve the savings it originally expected. Because of the revised timetable for reassessments, savings during this period will fall from £780 million to £640 million. The Department, however, still expects to achieve long term savings of £3 billion annually by 2018-19.

Among the NAO’s recommendations is that the DWP should set out a clear plan for informing claimants about the likely delays they will experience while it works with providers to improve performance.

“It is too early to conclude on the Personal Independence Payment programme’s overall success and all major programmes run the risk of early operational problems. However the Department did not allow enough time to test whether the assessment process could handle large numbers of claims. As a result of this poor early operational performance, claimants face long and uncertain delays and the Department has had to delay the wider roll-out of the programme. Because it may take some time to resolve the delays, the Department has increased the risk that the programme will not deliver value for money in the longer term.”

Amyas Morse, head of the National Audit Office, 27 February 2014

Notes for Editors

3.6 million
Total claimants to be assessed for Personal Independence Payment by the start of 2018

£3 billion
Expected annual savings in benefit expenditure from 2018-19

16%
Expected Personal Independence Payment decisions made by 25 October 2013

1.7 million
Recipients of Disability Living Allowance to be reassessed for Personal Independence Payment by the start of 2018

92,000
Claims outstanding with contracted assessment providers at 25 October 2013 (against an expected 32,000)

107 days

Actual time for non-terminally ill claimants to receive a decision in our sample of early claims (against an expected 74 days)

28 days
Actual time for terminally ill claimants to receive a decision in our sample of early claims (against an expected 10 days)

£780 million
Department's initial expectation for savings to benefit spending during the current Spending Review period up to April 2015

£140 million
Estimated shortfall in benefit savings during the current Spending Review period up to April 2015

1. The Department for Work and Pensions is bringing in Personal Independence Payment to replace Disability Living Allowance for people who are between 16 and 64 years old. Claimants represent some of the most vulnerable in society. Many face long-term health conditions including physical, sensory, mental, cognitive, intellectual or any combination of these. In 2012-13, DWP spent £13.7 billion on Disability Living Allowance for 3.3 million claimants.

2. The Department is using Personal Independence Payment to match support more closely to claimants' needs. For non-terminally ill claimants there will be no specified conditions that give people automatic entitlement, a change from Disability Living Allowance, and the Department will periodically review all awards that last two years or longer. All terminally ill claimants automatically qualify for the daily living component and awards are usually time limited.

3. From October 2013 the Department began to reassess a small number of Disability Living Allowance claimants whose benefit requires a review. This is known as a 'natural’ reassessment and covers Disability Living Allowance claims where: claimants report a change that affects the rate of payment; fixed term awards expire from February 2014; and children turn 16 years old.

4. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained by using the relevant links on our website.

5. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Amyas Morse, is an Officer of the House of Commons and leads the NAO, which employs some 860 staff. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of almost £1.2 billion in 2012.