A unified narrative that offers SMEs, micros and the Just About Managing tangible assistance is the best way for the benefits sector to influence Government’s shaping of the tax and regulatory framework. That was the message Cicero Consulting executive chairman Iain Anderson delivered at the Corporate Adviser Healthcare and Group Risk Summit in London on Tuesday.
Anderson argued that the given the likely Treasury belt-tightening resulting from Brexit uncertainty and other global macro factors, ministers would be receptive to proposals that look to improve health and productivity for lower income groups. He added that the insurance industry should be encouraged that former Legal & General director of communications John Godfrey is now working in Number 10.
But Jelf Employee Benefits head of benefits strategy Steve Herbert played down the idea of any changes happening at all. He argued the Government will be so preoccupied with Brexit that the DWP/DH Green Paper could easily be kicked into the long grass, and urged advisers who believed in the productivity boosts offered by health and protection benefits should go out there and promote them, rather than wait for a tax break.
Sami Consulting fellow Richard Walsh said the group and individual protection markets see each other as ‘enemies’ and argued they needed to overcome their differences and work together to develop new propositions for the great portion of the population who are not covered by protection products.
Anderson said: “Experian provide data to the Treasury and the political parties – it is the data the IFS is starting to lift the lid on. This Experian data, and the Treasury data, gives a macro picture from the ‘experts’ that those with least affluence suffer most next year, and in 2018 and in 2019.
“So government is going to grasp any policy that makes people’s lives better. Healthy lives fills part of that narrative for Government. If you can frame your argument in a way that is more micro, at a constituency, firm-wide level, and show this is a softer way to get into the inexorably rising cost of the NHS. I don’t hear the industry linking these arguments. There are politicians who want other ways to get into the long-term sustainability of the NHS. It seems to me your sector falls completely within that conversation.
“The industry needs to beware being too fractured. People in the room have different motherships and some of those motherships are not based in the UK, and Trump changes things. There will be a question of capacity in the UK as a result of Trump. When I was last in the States in October, all that people wanted to talk to me about was Brexit – now everything people want to talk about is very deeply domestic.
Herbert said: “I think the Green Paper is great, and well-intentioned. But the reality is that we have got a cross-party Green Paper that came out in October. By the end of November we saw the Chancellor come out and increase IPT and take away salary sacrifice for health-related benefits. I would say don’t wait for the Government to give us tax breaks. If you believe in health-related benefits, go and make it work. The next 10 years is going to be dominated by Brexit and Trump. There is not going to be a lot of civil service time for dealing with this or money sloshing around to pay for tax breaks.
“Think of productivity – Hammond said in his Autumn Statement that it takes the UK five days to produce what the Germans produce in four. But we are behind the US, France and Italy. We have Brexit, we don’t know what it will look like. Health-related benefits can help the UK’s productivity. They can get people back into the workplace quicker and they can help with employee engagement, but only if they are communicated properly.”
Walsh said: “There is a schism between group income protection and individual income protection – they are different products that are treated differently, but we are not enemies. It almost feels like we are sometimes. If you talk about the JAMs, the self-employed, people in SMEs, you are going to have to look at getting the two sectors to work more closely together, rather than seeing themselves as completely separate. And I am afraid that the stark reality on the group side is that although the number of people covered has gone up, the number of schemes has gone down. We need to get out of our comfort zone. This is an issue as much for insurers and reinsurers as for advisers.”
Anderson and Herbert also argued that lower numbers of immigrants was already putting further pressure on the UK economy.
Anderson said: “19 per cent of NHS workers being EU nationals or migrant workers and the NHS is concerned. I was in a conversation with a leading UK supermarket chain. They do not believe the numbers coming out of Government five months after the vote, saying that there has been an increase in net migration. What they are seeing is supply chain issues hitting their business. That is not just fruit and veg, that is folk taking the decision that from a currency point of view it makes no sense to be here. So they are now talking to Government about this labour impact, as well as the currency impact. That will clearly have an impact more widely.”
Herbert said: “A lot of people on national living wage are foreign nationals doing the jobs Brits didn’t want to do, so wages will have to go up, pushing up prices. That means there will be even less money in the economy.”