As Treasury ministers closely examine budgets looking for savings they could do worse than to look at the sick pay system. According to the DWP, it costs employers and taxpayers billions of pounds, leaves hundreds of thousands of people on long term benefits every year and offers very little joined up support for employees when they are ill.
There was much to be welcomed in the Black/Frost review, but there are also opportunities to go further in tackling sickness absence in the workplace. The review, which came out in November, acknowledged the importance of early health intervention in helping to reduce sickness absence and acknowledged that specialist expertise had a role to play in helping people stay in, and return early, to work.
However, we think there is scope for the Coalition to go much further – insurers recognised the advantages of joining up benefits and rehabilitation a long time ago, and we think the government should aim to do the same.
James Purnell’s DWP made a good start by changing the sick note into the fit note but according to GPs and our own research, the reform has not yet had the impact that was hoped for. Absence is still a major problem for employers with hundreds of thousands of people each year moving from statutory sick pay to long term benefits.
The Government’s response to the review should acknowledge that the sick pay system is old-fashioned and doesn’t deliver the right mixture of support for employer or employee and is not delivering value for the taxpayer in the long term. Other countries, such as Holland, have reformed their system to great effect. Indeed, even though well over a million people are already protected by their employers, many may be unaware of it.
As with all Government reviews there are specific recommendations that will need further work to clarify. For example, HR professionals and directors are asking our experts about how the Independent Assessment Service might work. The IAS is a bold idea for a national scheme but, as with all big plans, there are many practical questions. How would it work? Who would run it? Could private companies bid to run it? There are also ambiguities about how the £150 million of estimated tax relief might apply. What sort of rehabilitation support will it apply to? Who will administer the intervention? All of these issues can be resolved, working through the response to the original review.
If we are urging Government to change its policy, it is appropriate that we as an industry are very clear and open about our rehabilitation practices and our claims management and we need to make the case for the social value that we provide.
As a sector, I think we should work together in four ways to show the changes we are making.
Firstly, we need to be clear with our customers and potential customers about how our policies work. Secondly, we need to demonstrate how we respond to advances in medical care. Thirdly, we need to deliver insights to help HR and frontline managers to recognise and respond to health issues in the workplace more quickly. Finally, we need to provide early interventions with our own specialists and reduce the burden on a stretched NHS.
If we can work together as an industry to show these qualities, we will materially improve the prospects of influencing the government and industry of the benefits of our approach to sickness absence.
If we are urging Government to change its policy, it is appropriate that we as an industry are very clear and open about our rehabilitation practices and our claims management and we need to make the case for the social value that we provide
If successful, we are likely to make a significant contribution to saving taxpayers money. In 2007 David Freud published his groundbreaking report into welfare reform. The report was very clear about the benefit to the taxpayer of an individual moving from long-term incapacity benefit and back into work. In 2007, that benefit amounted to between £5,900 and £9,000 per person per year. While we recognise that such savings are not guaranteed, we strongly believe that the industry can demonstrate materially improved responses than the systems and processes currently in place. These benefits to central Government sit on top of the clear psychological, financial and well-being benefits to individuals who are able to re-enter the workplace.
Every year more than 300,000 people move onto long-term sickness benefits. If we could help a small fraction of these people to avoid long term unemployment benefits, we could save the taxpayer hundreds of millions of pounds and help a lot of people to lead more fulfilling lives.
