The Government has today called for a major review of the sickness absence system in Great Britain in order to help combat the staggering £100 billion that working age ill health costs the economy every year.
The independent review, jointly chaired by David Frost, Director General of the British Chambers of Commerce and Dame Carol Black, National Director for Health and Work, will explore radical new ways on how the current system can be changed to help more people stay in work and reduce costs.
Under the current system employers bear the costs of short term sickness with the State, and ultimately the taxpayer, absorbing the cost of longer-term ill-health, with over 300,000 people leaving work to claim sickness-related benefits each year - making up around half the total flow on to Employment and Support Allowance (ESA).
Once out of work these people face an even greater risk of their health deteriorating even further, and the potential of themselves and their families falling into poverty.
Ministers are determined to end this vicious cycle and are clear that in these difficult economic times, the country cannot afford to continue to bear these costs.
The review, which is jointly sponsored by the Department for Work and Pensions and the Department for Business Innovation and Skills, will include a panel of experts from business, trade unions and health representatives and will be conducted in the context of the Growth Agenda.
It will also feed into the wider Employment Law Review, which is looking at measures to reduce red tape and remove the burdens on business, encourage growth and maximise flexibility for employers and employees.
Also announced today is an additional £12 million of funding for health and work programmes, including the Fit for Work Service and Occupational Health Advice lines. Both have already proved highly successful in providing support for both employers and individuals in the early stages of sickness absence.
Lord Freud, Minister for Welfare Reform said:
Too many people, through no fault of their own, have fallen on to a life on benefits because of the failures in the sickness absence system. This isn’t fair to the taxpayer but most of all it isn’t fair to the individual.
We all have a stake in reducing sickness absence, but it’s not clear who is best placed to take responsibility for this change.
I am delighted that Dame Carol Black and David Frost have agreed to lead this review which will answer these questions and inform Government thinking on how the current system can be changed.
Employment Relations Minister Edward Davey said:
This is an important review which will help tackle the problems faced by business and individuals. Managing sickness absence more effectively will be a win-win situation for all - businesses, individuals, the taxpayer and crucially, the economy. It could improve productivity, boost growth and mean that many more people no longer have to rely on taxpayer handouts.
Dame Carol Black, National Director for Health and Work said:
From my work as a doctor and now as National Director for Health and Work, I’ve seen the damaging effects of prolonged sickness absence on individuals and their families, and on the wider community, besides the costs to business and the economy.
I’m also delighted with today’s announcement that a number of initiatives, including the Fit for Work Service and the National Occupational Health Advice Lines, are to receive further funding, to maintain their efforts to help people return to and stay in work.
David Frost, Director General of the British Chambers of Commerce said:
Sickness absence undoubtedly has a huge impact on businesses - particularly on smaller firms that struggle with the processes and procedures required, not to mention the direct costs involved. The private sector must focus on growth if we are to sustain the recovery, so it is right that the Government has chosen to look at ways to reduce sickness absence in the workplace and get people back into employment.
I look forward to working with Dame Carol Black to reduce the unsustainable bill on both employers and the state caused by sickness absence, and making radical recommendations to achieve this.
Notes to Editors:
The review, which will report later this year, will:
- explore how the current sickness absence system could be changed to help people stay in work, reduce and share costs for the taxpayer and businesses and contribute to economic growth;
- examine whether the balance of these costs are appropriately shared between individuals, employers and the State;
- make tangible recommendations for change; and
- ensure that recommendations for change are consistent with promoting private-sector growth and minimising burdens on business and in particular small- and medium-sized businesses.
The review will look at sickness absence trends and practices across the public and private sectors and across different segments of the private sector (such as firm size). It will examine differences between segments to establish causes and understand best practice.
Fit for Work Services bring together support such as healthcare, employment, skills, housing and debt advice, and will benefit employers, employees, and in turn the taxpayer by reducing pressure on general practice and other health-related services.
- The national Occupational Health Advice lines are valued by employers and provide practical occupational health advice for small and medium-sized businesses on handling individual employee health problems at work.
Facts and Figures:
- According to the Black Review of the health of Britain’s working age population, around 150 million working days are lost each year to sickness absence - that’s approximately six days for each worker.
- Over 300,000 people each year are estimated to flow from work onto ESA/IB - around 50 per cent of the total on flow.
- Nearly two thirds of those who flow from employment onto sickness related benefits have a mental health condition or musculoskeletal disorder.
- Expenditure on ESA/IB/SDA amounts to £13 billion per year.
- The total cost of working age ill-health to the Government is over £60 billion per year (benefit expenditure, lost tax revenue, NHS costs).
- The total cost of working age ill-health to the economy is over £100 billion per year. Of this £30-40 billion can be attributed to mental health problems.