Parliament debates GIP incentives

Group income protection could be the key to promoting the Government’s aim of greater investment in employees’ health and wellbeing, Disability minister Penny Mordaunt MP told a debate in Parliament yesterday.

Speaking at a Westminster Hall debate on long-term health problems and work outcomes, Mordaunt reiterated the positive support for GIP set out in the work, health and disability: improving lives green paper.

Mordaunt told the debate, which took place hours after Number 10 announced a snap General Election, that the Government did not wish to lose momentum on the policy initiative that is considering a number of options for fiscal incentives to promote GIP amongst employers, with a particular focus on small businesses.

The chair of the all-party parliamentary group on insurance and financial services, Craig Tracey MP spelt out the advantages of GIP in delivering cost-effective insurance to employees without underwriting that would benefit employers in terms of staff productivity and absence and called on the Government to deliver tax breaks. Mordaunt, who is minister for disabled people, work and health, said the Government was considering responses to the green paper.

Mordaunt also referred to a Government trial currently ongoing whereby employers are given reduced business rates if they actively target employees’ health and wellbeing, although no external service provider is required to benefit from this rate reduction.

Mordaunt said: “We want employers to do more to invest in their employees’ health and wellbeing, and thereby to reap the benefits that such investment brings. That includes actively considering whether group income protection could be part of the answer in promoting the health and wellbeing of their workforce.

“I can assure my hon. Friends that we want to seize the momentum that the Green Paper has built and bring forward a White Paper very swiftly. Work can continue outside of the civil service, in the private sector and the third sector, which will play a critical role in delivering the support. We want those organisations to continue thrashing out the issues so that we can arrive at a White Paper in good time.

“On the issue of statutory sick pay and income protection, through the consultation we have been exploring how employers can actively promote health and wellbeing and manage sickness absence, including whether statutory sick pay should be reformed to better enable supportive consultations and a phased return to work. We also know that group income protection insurance, which offers preventive programmes, wellbeing services and income protection elements, can offer benefits and has the potential to help employers retain disabled employees and those with health conditions.

“Analysis by the Centre for Economics and Business Research indicates that long-term absences among employees who have access to and use early intervention and rehabilitation services tend to be nearly 17 per cent shorter than those among employees who do not.

“A number of health trials are going on at the moment, and we wish to run further trials with our innovation fund. Many of them touch on the incentives for employers to make the investments and follow good practice in their workplace. For example, one trial is introducing a wellbeing premium—a reduction in local business rates provided the business puts in place particular things to support the mental health and emotional wellbeing of its staff.”

Tracey said: “Group income protection insurance is purchased by employers, who cover their staff. One virtue of that is that, save for the very highest earners, there is no medical underwriting, which means that insurers do not ask any questions about employees’ medical history or existing conditions. People with health problems are covered at no additional cost.

“Research from one provider, Unum, found that seven out of 10 people with serious health problems who used its return-to-work service got back to work with the same employer. The most common conditions for those returning to work were mental health and musculoskeletal problems, which are the two health problems prioritised in the Green Paper

“In my role as chair of the all-party parliamentary group on insurance and financial services, I have received representations from across the sector that make the case for tax incentives for employers to invest in group income protection for their staff. Insurers, their trade bodies and employers, through EEF, make the case that a tax incentive for employers would be the most effective way to increase coverage. They argue it would raise awareness of the benefits of providing the insurance, would act as a signal from the Government that group income protection is something good that employers should consider investing in, and would stimulate demand for and supply of this insurance.

Working with its members, the Association of British Insurers has produced an economic evaluation highlighting the gains to taxpayers if a modest incentive increased coverage. Fewer people would fall out of work or would require state support. Those in work and those who were too ill to work and so receiving an insured income would continue paying taxes on their salaries. Will the Minister explain how the Government intend to support a much greater role for group income protection insurance? Are they minded to consider the case for a temporary tax incentive for employers, particularly SMEs, to invest in it?”

Unum head of public affairs John Letizia says: “This was the first time that group income protection has been central to a constructive debate in Parliament on workplace health. It was positive to hear the minister being so warm when speaking about group income protection. The fact that the General Election has been called means big decisions will be on pause for another six weeks, but the minister made clear the Government’s intention to bring forward a White Paper as soon as possible. She also pointed out that those outside government can still carry out work on issues relating to the Green Paper in the meantime.”

Grid spokesperson Katharine Moxham says: “We are very pleased that GIP has been identified by Government as having a greater role to play in the delivery of the goals outlined in the Work, Health and Disability: Improving Lives green paper, and has been so positively debated in Parliament. We are keen to work closely with Government on extending the reach of Group Income Protection so that more people have access to this valuable benefit through their workplace. Representing the group risk industry, we are perfectly positioned to provide technical input, develop material and provide clarity on how best to encourage employers to offer income protection to their staff.

“Employers that already offer Group Income Protection will be aware of the multi-facetted nature of the support available alongside financial protection and we would very much welcome any Government-backed initiatives that extend its reach.”