Outsourcing social security - where the public comes last

Stephen Struthers explores the outsourcing of social security.

The Department of Work and Pensions (DWP) has not only reduced some social security benefits for vulnerable people in the name of 'austerity', but under Iain Duncan Smith, it has added insult to injury by contracting out public services to private companies who have failed to provide a proper service.

For some years, 'Work Capability Assessments' which establish whether people of working age are so limited by ill health or disability that they are eligible for Employment and Support Allowance (ESA), has been contracted to for-profit companies.  The current contractor, Atos, a French IT services company, has become  notorious for the way in which it is carrying out this contract.

Claimants are assessed for their 'fitness for work' in offices which may not even be accessible to some disabled people. There are continuing issues of simple efficiency and quality control. In July, MPs described the current backlog of 700,000 cases awaiting assessment as 'unacceptable' and said 'People with health conditions and disabilities should not be left for months with uncertainty about their benefit entitlement.' DWP has changed the contract a number of times, made inaccurate forecasts of numbers, and failed to supervise the contract effectively.

The quality of these assessments is so poor that even people with terminal illnesses have been declared 'fit for work' and so ineligible for benefits.  These are inexcusable, but part of a pattern; more than 1 in 10 decisions stating claimants were 'fit for work' were reversed at an appeals tribunal in 2012. As a result, DWP spends £70 million a year dealing with appeals.

Speaking recently in parliament, Glenda Jackson gave an eloquent description of this fiasco and the mindset which produced it.

You would expect DWP to have learnt something about running decent public services from this experience.  But no, a similar pattern of failure by contractors has occurred in carrying out assessments of eligibility for Personal Independence Payments (PIP) - a benefit for anyone who has a physical or mental disability and needs help to participate in everyday life. Indeed, Atos lied to get the contract in the first place, claiming that there were agreements in place with various NHS organisations. And again, once an assessment has been made, claimants are often unable to find out what is happening or when they will get a decision, as it frequently takes over six months for these to be made. Atos and DWP blame each other for the delays and refer enquirers to each other.

MPs who investigated concluded 'The Department and its contractors have failed to provide an acceptable standard of service to claimants. Claimants have experienced difficulties in arranging appointments, assessment providers have cancelled home visits at the last minute, and assessors have failed to turn up when claimants have travelled to assessment centres.'

Benefit claimants are not the only ones to suffer from the DWP’s obsession with running public services by contract. The 'Work Programme' has been run by private companies since 2011 and has also fallen well short of expectations. Although its purpose is to help people who face substantial difficulties such as disability or lack of skills get work, the National Audit Office (NAO) finds that despite millions of pounds of public money going to these companies, there is little evidence that the Programme is any better than having no scheme at all.

As with other public services, contractors 'game' their activities to maximise their returns from easy pickings, irrespective of the actual aims of the service. For example, in the Work Programme, contractors have reduced what they plan to spend on the hardest-to-help people who are 'parked' and ignored, so that they can concentrate on getting paid for those who are easier to help and have better employment prospects. The NAO found that contracts are so slack and monitoring by DWP so weak, that even companies that fail to meet their targets are claiming incentive payments. This year, for example, at least an additional £25 million is expected to be paid out despite poor performance. And every year, the fragmented and complex Work Programme provides a bonanza for the lawyers who draft contracts for the 18 different prime contractors and around 700 sub-contractors.

It is not chance that causes the DWP’s services to fail to meet the needs of their users so spectacularly. When public services are fragmented and parcelled out to companies who care more for their shareholders than service users, when there is widespread confusion about who is accountable and who is responsible for what, and when ministers and companies blame each other for the shortcomings, they are hardly likely to serve the public well.  The evidence is clear that they don't.