New Investigation into Atos Healthcare

Public spending watchdogs are to launch a new investigation into Atos Healthcare, the company that carries out controversial medical tests for people claiming sickness and disability benefits.

The National Audit Office (NAO) move emerged as the Government disclosed that Atos has been paid £754m  for the tests since 2005. It has also landed other government contracts, including IT work for the Home Office and Highways Agency.

Lord Freud, the Welfare Reform Minister, revealed that annual spending on the medical services contract had risen from £73.3m in 2005-06 to £114.3m in the  year to March.  He said the increase in the budget is due to a rise in the number of tests.

He was replying to a written House of Lords question this week by Lord Alton of Liverpool, a crossbench peer who  asked the NAO to intervene.  The NAO has told Lord Alton the extension of the Atos contract to a new benefits regime for the disabled is “an area of interest” to it and it has begun discussions with the Department for Work and Pensions (DWP).

Lord Alton said: “The Atos contract with the Government has become like a licence to print money. Astronomical sums are involved. Worrying questions have arisen about whether the terms of the company's tender have been met; whether performance matches promise; and whether a project undertaken on the pretext of giving value for money has done so. When millions of pounds of public money is being diverted to private companies, it is crucial that there is accountability, transparency, and public confidence. I welcome the NAO's decision to scrutinise the Atos contract and think the Public Accounts Committee should ask Atos and the DWP to appear before them."

Stephen Timms,  Labour’s employment  spokesman, said: “This  Government has been warned time and again to get a grip of this contract, but the truth is Iain Duncan Smith [the Work and Pensions Secretary] has let Atos spin out of control and the taxpayer and vulnerable people are picking up the pieces.  Anyone taking the Work Capacity Assessment  today is now eight  times more likely to end up in a tribunal than a job and the cost of those appeals has soared by 40 per cent  in the last year alone. Ministers have got to fix this mess – fast.”

 The multinational firm, which sponsored last year’s Paralympic Games in London, has been criticised by employment rights groups for the allegedly harsh way it assesses the sick and disabled. Some 40 per cent of people claiming incapacity benefit  appealed against its rulings and 38 per cent of them were successful. Despite that, the company won a further contract to assess the new personal  independence payments for the disabled.  The Government has been criticised by MPs for allowing a virtual monopoly to develop.  But ministers insist that Atos only makes recommendations about claims, with final decisions taken by the DWP.

Atos has said that it has met its obligations in delivering a “complex and challenging contract” and implemented all the changes recommended by the independent reviews .

More than 40 per cent of the reports carried out on disability benefit claimants by the back-to-work assessor Atos are flawed and unacceptable, according to an audit commissioned by the Government.

Following months of complaints about allegedly unfair and slapdash decisions made by Atos, the Department for Work and Pensions  audited around 400 of the company’s written reports into disability claimants, grading them A to C. Of these, 41 per cent came back with a C, meaning they were unacceptable and did not meet the required standard.

The lowest grade does not necessarily mean the decision was wrong, but that a serious error or omission occurred, such as no evidence to justify the recommendations, or inconsistencies in the evidence provided.

The findings mean the company will be stripped of its monopoly on deciding whether people with disabilities are fit to work. The DWP said the poor quality of the company’s written reports were “contractually unacceptable” and announced on Monday it would be inviting other companies to bid for fresh regional contracts by summer 2014 to help reduce waiting times. Liam Byrne, the shadow Work and Pensions Secretary, said: “This is a direct consequence of three years of appalling contract management by Iain Duncan Smith.”

More than 600,000 of the 1.8 million assessments carried out by Atos since 2009 have been the subject of an appeal, at a cost of £60m. Around 30 per cent of the appeals succeeded. Mark Hoban, minister for Employment, said: “Where our audits identify any drop in quality, we act decisively … It’s vital we continue to improve the service to claimants, which is why we are introducing new providers to increase capacity.”

Richard Hawkes, chief executive of the disability charity Scope, said: “It’s about time the Government told Atos to smarten up its act. But, it’s also strikingly clear to disabled people that the whole £112m per-year system is broken.”

A spokeswoman for Atos said: “Our priority is the quality of our work and, following the recent audit, we quickly put in place a plan to improve the quality of written reports.”