Stemming the flow
by Tom Gregory
Around 300,000 people a year flow through from Statutory Sick Pay (SSP) to Employment and Support Allowance (ESA). This costs the taxpayer around £385 million annually, even before including indirect costs such as administration and loss of output. It also leaves the recipient with a meagre £69.57 a week on average from ESA. This expense to the taxpayer and the individual can be prevented as Demos’ new report, Of Mutual Benefit demonstrates.
The solution is simple: early intervention. What is needed is a return to work scheme that targets the worker in the first four to six weeks of being off – a critical period in determining whether the employee will return to work or not. Such a scheme identifies the worker’s needs and works with the employer and other stakeholders to ensure that those needs are met. Studies have shown that this process yields a 43 per cent improvement in the probability of employees returning to work. These programmes already operate in the UK and cover around 11 per cent of workers, but this is mainly concentrated amongst the jobs at the top. The report argues that Statutory Sick Pay should be reformed, so that these programmes can be made more available.
The report identifies major savings from the implementation of such a system. Fewer people will be on SSP for the maximum 28 weeks, which saves the employer money, and fewer will flow through to ESA, which saves the taxpayer money. The report finds that a reduction to the ESA bill from early intervention alone, means a potential saving of £139 million a year. This is achieved through fewer people passing through the different stages of ESA claims – from the assessment stage, to being deemed fit to work or having to enter a ‘work related activity’. Some people are not able to return to work, even with early intervention, so the report has assumed that the ‘support group’, those who are too ill to work, remains unchanged. But there is still a large saving, part of which could be used to increase the amount these disabled people receive. And there are other benefits for those who are enabled to return to work: an increase in their incomes and an improvement in mental wellbeing from being in work.
Last month the Government announced that Dame Carol Black will be producing a report on sickness absence. This is an excellent opportunity to tackle the problems inherent in SSP. Early intervention, as it is already practiced in the UK, should be at the heart of it. This report shows that such reforms can be mutually beneficial: for the recipient, the employer and the taxpayer.