Tax relief for businesses for health interventions is a great start, says Unum's John Letizia, but we should push for more
With economic growth stalling and a perceived lack of fiscal flexibility stemming from the UK's finances, few commentators were expecting this year's Budget to deliver any major headlines.
Yet, in a Budget that George Osborne stated was to help those "...who aspire to work hard and get on... start or grow a business and save for retirement," there were, nevertheless, a number of noteworthy measures designed to encourage growth and benefit the nation's businesses by targeting sickness absence.
Long-term sickness absence of six months or more costs the UK economy £6.5 billion a year in direct costs alone, so it is no surprise that both the business world and the Government have endorsed the findings of the Frost / Black Review of Sickness Absence.
The question was the extent to which the Government would financially support the findings of the review in this year's Budget, in the form of tax relief measures.
It was therefore encouraging to hear that the Government will introduce a targeted tax relief so that up to £500 paid by employers on health-related interventions recommended by the Health and Work Assessment & Advisory Service (HWAAS) is not treated as a taxable benefit in kind.
It is certainly refreshing to see such a clear statement of intent from the government on the issue of sickness absence. Targeted tax relief for businesses for health interventions and rehabilitation could have a real impact helping businesses keep experienced and highly-skilled employees in work.
However, there is still more to be done to deliver on the Frost/Black recommendations. For example, the wording of the Budget statement suggests only standalone treatments will qualify for tax relief, once they've been recommended by the HWAAS.
However employers can invest in up-front services such as Income Protection, which not only provide return-to-work support, but also offer financial protection for staff if they are absent for extended periods.
Including such up-front provision by employers would help the policy be implemented to best effect. It's important that the forthcoming consultation process adequately addresses this point and we'd urge the insurance industry to be proactive in this exercise.
The cost of disability and sickness in the UK workforce - for the Exchequer and for employers - is exacerbated by our relatively under-developed market in the very products that could help insulate us against the financial shocks of sickness.
One in 10 people will go on long-term sick leave during their working lives, yet nine in 10 don't have a back-up plan in place to protect them financially if this happens. This of course has a knock-on effect on the cost of disability and sickness to British businesses and taxpayers more generally.
The initial measures made by the Government may seem slight, however this is in fact the clearest signal given to date that a new approach to sickness absence is in the offing, and ultimately, the hope is that the 2013 Budget proves a springboard for a more fundamental change.
We need to take a lead now, with Government departments working together on creating joined up policy measures that tackle this issue not just in the short-term, but for many years into the future.
John Letizia is head of public affairs and CSR at Unum
