Who will deliver a 20% cut to the disability living allowance benefits bill? We now know the contracts will be shared among 10 private companies, including the controversial French firm Atos Origin, which has come under fire over its handling of incapacity benefit tests, known as the Work Capability Assessment (WCA).
The shortlisted companies are effectively in the frame to compete for at least four regional contracts to assess people’s eligibility for Personal Independence Payments (PIP) – a new benefit which will replace Disability Living Allowance (DLA) in April 2013.
The PIP work is the first of a number of government health assessment contracts with a total net value of between £300m and £1bn let over the next four years.
Other providers on the Department for Work and Pensions (DWP) list include the multinational security company G4S, outsourcing giants Serco and Capita, and Ingeus Deloitte, which holds the lions’ share of the work programme prime contracts.
Interestingly, A4e, the welfare to work company majority-owned by Emma Harrison currently being investigated by the DWP over allegations of fraud, bid for the framework but failed to make the cut.
The DWP confirmed that an unnamed voluntary sector provider was also unsuccessful in its bid to get on the shortlist – although charities are expected to be involved in subcontracting work.
But it is the presence of Atos – which delivers the “flawed” WCA tests under a £100m contract and has been regularly targeted by protestors (see this Guardian video for example) – which will cause most consternation among people affected by the PIP changes.
The shortlist – known as a framework – is subject to a 10 day cooling-off period and will be formally confirmed on 30 April. The DWP says it has “no date” yet for when the successful PIP contract bidders will be announced.
The framework is divided into four regional lots and one national lot. Each company will be able to bid for the PIP contract (or contracts) in each of the four regions for which it has been listed. Here’s the full line up:
• Scotland, North East England, North West England and Isle of Man: Avanta Enterprises Ltd; Ingeus Deloitte Limited; APM UK Ltd; G4S Integrated Services (UK) Ltd; Atos Origin; Vertex Ltd
• Wales, Central England: Avanta Enterprises; Ingeus Deloitte Limited; APM UK Ltd; Capita Group Plc; G4S Integrated Services (UK) Ltd; Atos Origin; Vertex Ltd; MAXIMUS Employment UK
• London, South England: Avanta Enterprises Ltd; Ingeus Deloitte Limited; APM UK Ltd; Capita Group Plc; Reed In Partnership; G4S Integrated Services (UK) Ltd; Atos Origin; Vertex Ltd
• Northern Ireland: Ingeus Deloitte Limited; APM UK Ltd; Capita Group Plc; G4S Integrated Service UK Ltd; Atos Origin; MAXIMUS Employment UK; Serco Limited
• National UK: Avanta Enterprises Ltd; Ingeus Deloitte Limited; Capita Group Plc; G4S Integrated Services (UK) Ltd; Atos Origin; Vertex Ltd; MAXIMUS Employment UK; Serco Limited
The PIP contracts are likely to prove deeply unpopular, not least because ministers have said they want to see the total DLA bill reduced by 20%, and the government’s own figures suggest up to 500,000 people could see their payments axed over the next three years. This will potentially push many individuals who lose eligibility into hardship and poverty.
Around 3.2m people, including children, are in receipt of the non-means tested DLA payments of up to £70 a week (depending on severity of condition). Recipients have a wide range of illnesses and disabilities including cancer, spinal injury, mental health problems and learning disability. The benefit is typically used to pay for equipment and mobility aids, travel costs, and expenses related to specific medical conditions such as special diets. Levels of fraud – less than 0.5% – are negligible.
Campaigners say the payments are vital to enable disabled people to work, and if the criteria are tightened it could lead to tens of thousands of employees being forced to give up their jobs. Critics – including, famously, the mayor of London Boris Johnson – have argued that disability benefit cuts will lead to poverty and social isolation for tens of thousands of disabled and chronically ill people.
The draft assessment criteria for PIP have led many disabled people to fear that they will lose their benefits from next year. Campaigners fear that the PIP changes will simply repeat of the costly chaos caused by the hugely unpopular WCA, which has led to tens of thousands of successful appeals by disabled people wrongly judged to be capable of work, and has brought the system to “the brink of collapse.”
As the Responsible Reform report, compiled by the Spartacus Report’ network of disability activists earlier this year, put it:
“PIP is perceived as impersonal, mechanistic and clearly in the mould of the condemned Employment and Support Allowance which is a cause of fear and misery for sick and disabled people.”
Ministers have argued that DLA is outdated, and that spending is too high, and that PIP will enable more precise targeting of the benefit to people “who need it most”. They successfully overcame attempts to water down the PIP changes in the House of Lords during the passage of the Welfare Reform Bill earlier this year, and say they have learned the lessons of the WCA contract.
The Coalition is yet to feel a public backlash against benefit cuts – which polls suggest remain stubbornly popular among voters. This may continue. As the reforms start to bite it is the companies making profits out of PIP assessments that may, like Atos, feel the lash of public opprobrium.
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