Yahoo Finance Hunt mulls big tax breaks for companies to combat long-term sick epidemic
Jeremy Hunt is considering handing big tax breaks to employers that hire in-house doctors and nurses as the Treasury prepares a crackdown on long-term sickness.
John Glen, the chief secretary to the Treasury, said life had become “too comfortable” for some people on benefits, adding that a “carrot and stick” approach was the best way to entice some of the 2.5 million people who are economically inactive for health reasons to start looking for work.
“I just don’t believe that all of those people are completely incapable of some level of work,” he told The Telegraph.
The number of people who are economically inactive because of long-term sickness has climbed by about 360,000 since the start of the pandemic amid record NHS waiting lists.
This figure has alarmed ministers, and Mr Glen said he was working closely with Mel Stride, the Work and Pensions Secretary, to get the numbers down.
The Treasury is also examining ways to allow businesses to cut their tax bills if they invest in occupational health services.
Billed by the Treasury as another “super-deduction”, the reliefs will potentially hand companies an extra tax break on profits if they hire occupational health staff or plough more money into services to help with chronic conditions such as back pain or mental health illness.
Musculoskeletal and mental health illnesses are the two biggest drivers of health-related inactivity in the UK.
The proposals have not been finalised and a consultation is expected in the coming weeks. It will focus on broader tax incentives that include salary sacrifice and other reliefs that will cut tax bills for both workers and companies to boost investment in these areas.
The Chancellor has already signalled he will look at tearing up red tape to make it easier for staff to obtain professional qualifications for these roles.
Rishi Sunak’s flagship super-deduction business investment policy allowed companies to cut their tax bill by up to 25p for every £1 they invested in plant and machinery.
While it is thought that any occupational health relief will follow a similar structure, proposals for the precise level of relief have not been finalised.
The proposals are part of an ongoing drive to boost Britain’s workforce. Official data suggest around half a million people who are economically inactive for health reasons would like to find a job.
Mr Glen said more needed to be done to stop people from becoming too ill to work and helping those who have left the workforce to return.
“We’ve got to stop it becoming a default that you take a visit to the doctor, and you’re signed off as long term sick,” he said. “I think people don’t see that as the right way forward for us as a society.
“We’ve got to maintain compassion for those who need support, but also be realistic about the fact that for some, this is a short term condition that needs to be supported and for them to be maintained in the workforce.”
The former management consultant added: “There has to be some sort of carrot and stick approach to this, because if you make life too comfortable, then you don’t allow people to pause to reflect on what options are before them.”
Previous analysis for The Telegraph shows around 3.7 million people are paid jobless benefits without ever having to look for work following a surge in claims of mental health issues and joint pain during lockdown.
These people have been granted an exemption from finding a job, meaning that taxpayers face bankrolling their benefits indefinitely.
Mr Glen described work as “therapeutic for the soul”, adding that greater longevity meant many people also faced a lower standard of living because they had not saved enough for retirement.
“Nobody’s talking about forcing people who are seriously ill to work but we’ve got to challenge the fact that Covid has meant we’ve had significant changes in our workforce. People have made conscious decisions not to work. For some that will be unrealistic.”
Mr Glen also suggested that the recent turbulence in the UK bond market could mean more spending cuts in the Autumn Statement.
While he hailed a recent growth upgrade by the International Monetary Fund, which if sustained could reduce borrowing substantially, he added that the Treasury’s priority was to reduce inflation and get debt down. “We’ve got rules that we’re going to intend to stick to, even if that means taking tough decisions.”
Mr Glen, who is in charge of the Treasury’s Spending Reviews, added that he had “challenged” Cabinet colleagues to reduce departmental spending further.
“The mindset has got to shift from how much more people need as to how money can be spent better to achieve those outcomes,” he said.