The work capability assessment for assessing employment and support allowance claimants’ fitness for work has been heavily criticised by the Commons Public Accounts Committee for getting too many decisions wrong and not taking into account variable conditions.

The Committee said that in far too many cases the Department for Work and Pensions (DWP) is getting fitness for work decisions wrong – 38% were overturned at appeal – at considerable cost to the taxpayer and claimant. The number of wrong decisions casts doubt on the accuracy of its decision-making and undermined public confidence in the process, the Committee added.

Perhaps more damningly, the Committee said the work capability assessment process has a disproportionate impact on the most vulnerable claimants. It said the standardised ‘tick-box’ approach fails to adequately account for rare, variable or mental health conditions and this can lead to greater inaccuracies in decision-making for these particular claimant groups.

However, it did welcome the efforts made to improve the process and encouraged the DWP to continue to review the operation of the work capability assessment for vulnerable groups.

The Committee also criticised the DWP’s reliance on private sector company Atos, which conducts the work capability assessment. It said the inability of the DWP to develop a competitive market for assessment providers has left it vulnerable, with limited leverage to remedy poor performance.

It also said that it saw no evidence that the DWP was applying sufficient rigour or challenge to Atos given the vulnerability of many of its clients, the size of the contracts and its role as a near monopoly supplier.

In 2011-12 the DWP paid Atos £112.4 million to carry out 738,000 assessments.

Margaret Hodge MP, chair of the Committee of Public Accounts, said: “The Department for Work and Pensions is getting far too many decisions wrong on claimants’ ability to work. This is at considerable cost to the taxpayer and can create misery and hardship to the claimants themselves.

“This poor decision-making is damaging public confidence and generating a lot of criticism of the Department’s contractor for medical assessments, Atos Healthcare – but most of the problems lie firmly within the DWP.

“The Department’s view that appeals against decisions are an inherent part of the process is unduly complacent. Nearly 40% of appeals are successful, with a third of those successful appeals involving no new evidence. 

“The work capability assessment process hits the most vulnerable claimants hardest. The one-size-fits-all approach fails to account adequately for mental health conditions or those which are rare or fluctuating. While the Department has started to improve, the process is still too inflexible and too often is so stressful for applicants that their health simply gets worse.

“A key problem is that the Department has been unable to create a competitive market for medical assessment providers, leaving Atos in the position of being a near monopoly supplier.

“The Department is too often just accepting what Atos tells it. It seems reluctant to challenge the contractor. It has failed to withhold payment for poor performance and rarely checked that it is being correctly charged. The Department also cannot explain how the profits being made by Atos reflect the limited risk that it bears.

“There needs to be a substantial shake-up in how the Department manages this contract and in its processes for improving the quality of decision making.”

However, speaking to the BBC, employment minister Mark Hoban accused the Committee of “scaremongering” and failing to recognise the progress the work capability assessment has made following Professor Malcolm Harrington’s three reviews of it.

“Critics might like to acknowledge the fact that independent reviews have found no fundamental reforms are needed to the current process because of changes we're making,” Hoban said.