Co-morbidity round table – Give us a break

Our ageing workforce means tax breaks for back to work wellness services should at least be on policymakers’ agenda. James Brockett investigates

Dr Steve Iley, AXA PPP healthcare
Dr Steve Iley, Axa PPP healthcare

The government will have missed an opportunity if it does not introduce tax breaks for back-to-work health services, as the policy could have a valuable role to play in promoting employee health, according to experts at a Corporate Adviser round table sponsored by AXA PPP Healthcare.

One of the recommendations of the Frost-Black report, published last November, was that tax relief could be given on vocational rehabilitation and medical treatments offered to basic rate taxpayers. But ten months on, there has been no official response from ministers and little public debate on the issue, leading industry insiders to speculate that the idea has been dropped.

“I think the Treasury has always been anxious about this,” Professor Stephen Bevan, Director of the Centre for Workforce Effectiveness at The Work Foundation. “The question that gets asked is – where is the evidence base that tax incentives actually have a sustained effect on employer behaviour? And particularly employer behaviour that actually has a tangible impact on employee health and productivity, rather than just take-up. I think that the Treasury view is that there is not sufficient compelling evidence that it makes a difference.”

But Steve Herbert, head of benefits strategy at Jelf Group, said that while incentives alone would not motivate employers to invest in employee health, they could act as a vital ‘lubricant’ that would bring products and services to their attention.

“The tax breaks aren’t the answer – but they could be the bit that makes it all happen,” said Herbert. “Employers need to buy into the whole package of getting people back and keeping them in the workplace and all the rest of it, but the thing that will give that medium-sized group of employers the initial incentive is that it’s going to be cheaper to provide.” He drew a comparison with the pensions industry, where tax breaks on pensions contributions have been used for many years to achieve the ‘social good’ of retirement saving.

If the policy were to be taken forward, a question mark remains over which products and services might attract any tax relief, and how easy it would be for providers to separate out their offerings accordingly.

AXA PPP healthcare
In association with AXA PPP healthcare

Dr Steve Iley, head of medical services at AXA ICAS, said that while it would be “politically quite difficult” to offer tax breaks for PMI, he thought that the relief could be designed to be carefully targeted at rehabilitation. “There are already tax breaks for return-to-work if the condition was work-caused,” said Iley. “If they extended it to anything that’s going to help you return to work – so vocational rehabilitation in its widest possible definition – that would be relatively simple to build into a system and might be something that’s possible.”

But Justin Crossland, senior consultant at Towers Watson, was more sceptical that the practical difficulties could be overcome.

“Actually implementing it, integrating it with other benefits such as the traditional PMI; I’m not saying it wouldn’t have some merit, but it would be challenging,” said Crossland. He added that even with a tax break, employers would “still have to find the additional spend” to invest in benefits and would therefore need “compelling ROI” in order to do so.

Stephen Jarrett, healthcare practice head at Helm Godfrey, was also not sure that employers would be attracted to rehabilitation services that came without Group Risk protection.

“Once again, I think it comes down to culture,” said Jarrett. “The reality is that I’ve probably got a lot of clients who are very much in tune with income protection, and they see it as a rehabilitation piece – it is to get somebody back to work. But from their perspective, if it’s not an insurance piece, why would they want to know about it?” He said that changing this attitude would require some degree of education.

Furthermore, Katharine Moxham, spokesperson for Group Risk Development (Grid), suggested that treating vocational rehabilitation services separately from Group Risk in the way that was envisaged was not altogether justified.
“I think group income protection providers will say that they pioneered vocational rehabilitation in the UK, and they are far ahead of anyone else in that area,” said Moxham. “I think when you look at their products now you need to think of service as opposed to insurance: it is a number of services that you as an employer and your employees can draw on to get that individual back into the workplace. And if that for any reason doesn’t work – and it doesn’t sometimes – then here is your security blanket underlying that.”

She added that her organisation’s survey of employers had shown that tax breaks would heighten employer appetite for group risk: 68 per cent said they would be more likely to offer Group Life policies if an incentive was offered; 61 per cent said the same about critical illness cover; and 60 per cent for income protection.

Challenged as to why the industry had not been more vocal on the issue and had not used evidence to make the public argument for tax breaks, she replied: “Grid particularly is conscious that these discussions are sensitive, and my role as spokesperson is not to shout from the rooftops what we are talking about behind closed doors, it’s to promote the group risk industry. If that means I have to say something then I say something. We did engage with the report in a way that the industry has never done before and there was a sense of disappointment,” she added.

Referring to the policy agenda more widely, Stephen Bevan highlighted that policymakers’ view of the topic could be clouded by the fact that many employers only adopt a wellbeing strategy as a staff perk or as a way to boost their employer brand, as opposed to being a genuine effort to boost employee workforce health and productivity.

“That’s a perfectly legitimate position to take, if you are seeing investment in this type of activity as an aspect of your labour market competitiveness and your employer brand then just be honest about it,” said Bevan. “If you’re not interested in whether it actually makes your workforce healthier and more productive then say so. But I just think from a market segmentation point of view I’d just like people to be honest and say what they’re really interested in.”
Alex Bennett, health and risk consultant at Bluefin, believes there is no reason why employers cannot pursue an integrated approach, combining occupational health services with traditional insurance products, and active health management with voluntary benefits.

“If you take an employer’s total spending, then a portion of that will be under their control, with an occupational health practitioner, looking at return-to-work and the working environment; but a whole other portion is just insurance benefit design, that’s voluntary access to a benefit which is written by an insurance company,” said Bennett. “There is scope for that to change, and that’s where I think platforms and technology have got a role to play. Flexible benefit design, for example, gives a way in which employers can say: ‘this is our core provision to keep you protected at work, and these are the benefits we think you might want to purchase’.”

Whether or not tax breaks for employers materialise, Stephen Bevan said that his longer-term concern was there was a ‘policy vacuum’ around workplace health with little co-ordination among policymakers from the different departments – Health, Business, Work & Pensions, and the Treasury – which ought to have a stake in the issue. Short-term thinking was also a problem, with evidence showing that some effective interventions – such as those to combat obesity in young people – could take up to 30 years for the full benefits to be reaped in the economy.

“We’ve got policymakers who only set priorities within an electoral cycle, which is four or five years, and they operate in policy silos,” said Bevan. “So we know for example that if the NHS spent £11 million more over five years to treat people with rheumatoid arthritis three months earlier, the DWP would benefit to the tune of £31 million per year… but why would a minister for health deliberately put the health budget up by £11 million a year when the NHS doesn’t see any direct benefit from it?”

He said he was concerned that health at work was ‘nobody’s job’ in government, especially now that Dame Carol Black, who had a cross-departmental brief, has stepped down. He bemoaned the fact that the Department for Business in particular does not get more involved in workplace health issues.

“I think it’s lamentable, actually, and when challenged on it, they say ‘well it’s not really a priority for us’. So this tells us the problem we have here, that we don’t see the health of the workforce as an economic issue: we see it either as a healthcare issue or as a social policy issue,” said Bevan.

He added that health was usually ‘nobody’s job’ in individual businesses too.

“Whenever I talk to organisations and ask whose job it is to make sure that the workforce is healthy enough to deliver competitiveness and productive capacity, then fingers get pointed at people in health & safety, people in occupational health, people in HR, perhaps wellness people who put the fruit bowls out – it’s no-one’s real job. No-one is accountable,” he concluded.