Failing to pilot a new benefit for disabled people resulted in a ‘fiasco’ of delays and unnecessary stress for vulnerable claimants, according to MPs.

An inquiry into personal independence payments (PIP) – which replaced disability living allowance last year – found the switch was badly managed by the Department for Work and Pensions (DWP) and hamstrung by the failings of private contractor Atos, which carried out assessments for the benefit.

Many claimants had to wait six months for a decision and terminally ill people waited on average 180% longer than expected, said the public accounts committee.

Describing the implementation of PIP as ‘nothing short of a fiasco’, committee chair Margaret Hodge said the DWP had ‘let down some of the most vulnerable people in our society’.

She added: ‘The department’s failure to pilot the scheme meant that the most basic assumptions, such as how long assessments would take and how many would require face-to-face consultations, had not been fully tested and proved to be wrong. This resulted in significant delays, a backlog of claims and unnecessary distress for claimants who have been unable to access the support they need to live, and in some cases work, independently.’

She said Atos appeared to have included ‘incorrect and potentially misleading information’ in its bid for the contract. ‘Atos stated in its tender document that it had “contractual agreements” in place with a national network of 56 NHS hospitals, 25 private hospitals and over 650 physiotherapy practices to provide assessments. This turned out not to be true.’

The committee called on the DWP to ensure new systems and policies are ‘fully tested’ before being implemented nationally. It said benefit decisions must be speeded up and urged it to ‘challenge inaccurate or exaggerated claims made in bids’ by contractors.

A DWP spokesperson said the committee’s report was based on ‘old statistics’, adding that a faster process for people with terminal illnesses had been introduced ‘with clearance times reducing to our target of ten days’.

‘A higher proportion of people are getting the highest rate of financial support for daily living under PIP than DLA.’ The DWP said a National Audit Office report published in February ‘acknowledged this reform started on time and on budget, and we have reduced risk by rolling it out in phases’.

A spokesperson for Atos Healthcare said: ‘The department made clear that they were not misinformed during the tender process, that at the point of go live they knew our capacity, our partners and the number of centres we would be using. We completely refute any allegation of misinformation during the procurement process for personal independence payment. Not only have we written to the committee to clarify our position but we invited the National Audit Office in to scrutinise our documentation.

‘That we could not have binding contracts in place before we signed a contract with the DWP is simply common sense and in no way misleading. What we did have were detailed written proposals from the suppliers.’